Indonesia-Japan ties<\/p>\n
Japan should naturally be the next leg of President Megawati
\nSoekarnoputri's current overseas visit immediately after her
\nsummit talks with American President George W. Bush in Washington
\nlast week. And bilateral economic cooperation is certainly the
\nprimary objective of her talks with Prime Minister Junichiro
\nKoizumi on Thursday, given Japan's role as the single largest
\ncreditor, investor and trading partner in Indonesia.<\/p>\n
But unfortunately, Megawati is visiting a changed Japan with
\nits economy deep in recession, its feeble banking industry
\ngroaning under huge bad debts, unemployment rising to a
\nconfidence-damaging level and future economic prospects made even
\ngloomier after the Sept. 11 devastating terrorist attacks in the
\nU.S.<\/p>\n
As there are no major, sensitive issues pending between the
\ntwo countries, both leaders can zero in on ways of further
\nstrengthening economic ties and resolving a number of debt
\nproblems besetting Indonesia-Japanese joint ventures after the
\n1997 economic crisis.<\/p>\n
Many Japanese companies have complained about what they see as
\ndiscriminatory treatment by the government, whereby grievances of
\nthe more vocal American business community often gain more
\ngovernment attention and quicker redress than do the Japanese,
\nwho prefer to go quietly about their complaints.<\/p>\n
Topping the list of grievances among Japanese businesspeople
\nand government must be the restructuring of Chandra Asri's US$700
\nmillion debts which, after more than 20 months of negotiations
\nand several initial agreements with Marubeni, remain uncertain.
\nWhat specially hurt Japan is that the petrochemical industry was,
\nin the first place, built after special lobbying from the
\nIndonesian government in the early 1990s. That is why the bulk of
\nthe loans to Chandra Asri were derived from Japan's Bank for
\nInternational Cooperation.<\/p>\n
The manner in which the government handled, or rather ignored,
\nJapanese businesspeople's grievances has caused misunderstanding,
\nas if Indonesia had taken Japan for granted in spite of the
\nspecial relations between the two countries.<\/p>\n
Therefore there seems to be a need now for Indonesia to assign
\nspecial lobbyists, who are capable of engaging Japanese
\ngovernment and business leaders in frank, yet vigorous
\ndiscussions about bilateral matters, and have the authority to
\nbring up any issues to the attention of those at the highest
\nlevel in government.<\/p>\n
The timing of Megawati's talks with Koizumi could not be
\nbetter in view of the upcoming annual meeting of Indonesia's
\ncreditor consortium (the Consultative Group on Indonesia, or CGI)
\nin Jakarta early next month to decide on new loan commitments for
\nnext year.<\/p>\n
Megawati could learn, first-hand, Japan's official aid policy
\nnow, sounding out Japan's stance on Indonesia's plan to ask for
\nanother round of debt rescheduling to reduce debt servicing
\nburdens in 2002 and 2003. It should be noted that about half of
\nthe $5.8 billion in Indonesian debt principals due to mature
\nbetween January and next March, which were rescheduled under the
\n2000 Paris Club II pact, were Japanese credits.<\/p>\n
New soft loans from Japan, as the largest donor, have now
\nbecome even more vital than ever after the World Bank, which
\nusually contributes one-third of the CGI total commitment, has
\nslashed its annual commitment from $1.2 billion to a mere $450
\nmillion.<\/p>\n
The problem, though, is that Koizumi rode to power, in part,
\non his popular calls for the people to brace themselves for
\nseveral years of painful reform, and Indonesia is supposed to
\nendure its share of the pain, through less aid from Japan. The
\nJapanese government itself has officially announced a 10 percent
\ncut in its overseas development aid next fiscal year to contain
\nits huge budget deficit.<\/p>\n
The best way of convincing Japan and other creditors to
\nunderstand Indonesia's fragile condition and to give more aid, at
\nleast during this time of crisis, is for the government to
\ndemonstrate that Indonesia -- the government and its people --
\nalso share in the pain.<\/p>\n
Sharing the pain means firmer and more effective measures to
\nminimize waste incurred by inefficiency and corruption, by
\nimproving fiduciary control -- the management of procurement, and
\ngovernment audits -- and by proving that past problems with
\ncorruption are seriously being tackled.<\/p>\n
High fiduciary standards have been at the top of creditors'
\nrecommendations at previous CGI meetings, especially after the
\naccusation by many critics, notably non-governmental
\norganizations, that the creditors had condoned corruption in
\nIndonesia. But not much progress has been made in this area.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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