Businesses here for the long haul, despite problems<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Japanese businesses have long dominated the Indonesian market
\nwith their quality products, and have been undeterred by various
\nregime change. They have even become accustomed to the way of
\n\"doing business\" in Indonesia.<\/p>\n
Unlike a number of Western companies that have been here for
\nmore than a century, the arrival of Japanese corporations has
\nbeen a relatively new phenomenon, starting only in the 1950s.<\/p>\n
The influx of foreign investment from Japan reached a
\nmeaningful level, however, only after the accession of Soeharto
\nto the presidency in the latter half of the 1960s.<\/p>\n
Since then, Japan's investment in Indonesia has continued to
\nrise. According to the Japan External Trade Organization (JETRO),
\nJapanese investment in Indonesia totals 4.5 trillion yen (US$43
\nbillion).<\/p>\n
\"Historically, Japan is the largest investor in Indonesia,\"
\nJETRO President Director Kosuke Imashimizu told The Jakarta Post.<\/p>\n
The highest level of Japanese investment here occurred in the
\n1970s and 1980s, when the country had political stability and
\nplenty of cheap labor. The country's big population, meaning a
\nlarge market, was also a major draw.<\/p>\n
\"These conditions were favorable for attracting Japanese
\ninvestors,\" Imashimizu said.<\/p>\n
In addition, the yen appreciated so much that the cost of
\nproducing goods and services in Japan increased significantly.
\nThis prompted many Japanese manufacturers to relocate their
\nproduction facilities to countries with cheaper production costs,
\nsuch as Indonesia.<\/p>\n
\"China at that time was not good. The only choices were
\nThailand, Singapore, Malaysia and Indonesia. Each had its own
\nmerits,\" Imashimizu said.<\/p>\n
Back then, Indonesia offered attractive conditions for
\ninvestment, such as a large market and plentiful cheap labor. On
\ntop of that, Japan had an intimate historical relationship with
\nIndonesia, so that many businesses preferred to go to Indonesia
\nif they could, he said.<\/p>\n
However, Indonesia's competitiveness slowly declined due to
\nthe increasing attractiveness of other countries in the region,
\nsuch as Thailand and China.<\/p>\n
Then came the crisis, which prompted a number of Japanese
\nfirms to downsize their operations or to even relocate to other,
\ncheaper countries.<\/p>\n
They include Sony, which closed one of its production
\nfacilities in West Java, and most recently Kyocera, which has
\npulled out of Batam, Riau.<\/p>\n
\"Sony went because of some labor problems and ASEAN-wide
\nconsolidation,\" Imashimizu said. \"Many companies, however, remain
\nhere because they have invested too much, and most of them remain
\nhere because they have a competitive advantage.\"<\/p>\n
He said 95 percent of investors who had been in Indonesia for
\nsome time would choose to stay here.<\/p>\n
\"Although Kyocera left Batam, don't expect any more Japanese
\ncompanies to move out. On the contrary, there has been an
\nincreasing number of inquiries from Japanese companies wanting to
\ninvest in Indonesia ... Indonesia's economy is recovering,\" he
\nsaid.<\/p>\n
Many Japanese businesses in Indonesia play an active role in
\nhelping the government to improve the investment climate here.<\/p>\n
One of the ways they do this is through the hosting of
\ngatherings at the Jakarta Japan Club (JJC), which boasts as
\nmembers most of the Japanese businesses operating in Indonesia.<\/p>\n
\"This year, our corporate members are concentrating their
\nefforts on preparing a proposal for the Indonesian government on
\nhow to increase foreign investment,\" said JJC deputy chairman
\nTetsu Yagi.<\/p>\n
Yagi explained that the club submitted a similar proposal
\nfour years ago and since then had held several meetings with
\nthe Indonesian Chamber of Commerce and Industry (Kadin) through
\nthe Indonesia-Japan Joint Forum.<\/p>\n
The forum was currently preparing action plans on labor
\nissues, infrastructure, the competitiveness of small and medium
\nenterprises, and improved tax and customs clearance procedures,
\nYagi explained.<\/p>\n
He particularly mentioned problems concerning infrastructure,
\nthe law, lack of incentives and high labor costs as those that
\nurgently needed to be addressed by the Indonesian government.
\nHowever, Yagi added, \"with a better investment climate\",
\nIndonesia would be Japan's next preferred destination for
\ninvestment after rapidly growing China.<\/p>\n
\"Since the demonstrations against Japan in China, businesses
\nhave become reluctant to concentrate their efforts in only one
\nmarket,\" Yagi explained. \"We have to diversify, and Indonesia is
\none candidate for the future.\"(003)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/businesses-here-for-the-long-haul-despite-problems-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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