Japan urged to invest in RI manufacturing<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
Indonesia is seeking an increase in Japanese investment in the
\nmanufacturing sector through an Economic Partnership Agreement
\n(EPA) the two countries are currently discussing, to further
\nbolster Indonesian trade to Japan, a minister says.<\/p>\n
Preparatory talks between Indonesia and Japan towards
\nnegotiations on the EPA -- equal in essence to a free trade
\nagreement (FTA) -- are nearing completion.<\/p>\n
"One of our main considerations in establishing the EPA is how
\nwe can benefit from it in terms of a rise in investment from
\nJapan to Indonesia," Minister of Trade Mari E. Pangestu said on
\nTuesday after opening a seminar on the challenges and
\nopportunities of the Indonesia-Japan EPA.<\/p>\n
"This is because investment is key to better trade relations
\n-- if investment increases, then trade will usually increase as
\nwell."<\/p>\n
Mari explained that although Indonesia currently has a sound
\ntrade relationship with Japan, Indonesia's exports to the country
\nstill consist mainly of oil, gas and other mining products.<\/p>\n
"Our exports of manufactured goods are still not as much as we
\nare expecting," she said.<\/p>\n
More Japanese foreign direct investment (FDI) in manufacturing
\nindustries, Mari said, is therefore essential to increase
\nproduction capacity, as well as exports to Japan and its
\nproduction network in the region.<\/p>\n
"We expect that the EPA, focusing on investment, can realize
\nthis, so our exports of manufactured products can also increase,"
\nshe said.<\/p>\n
Trade data shows that Indonesia's total exports to Japan
\nreached US$15.96 billion last year, up 17.34 percent from 2003.
\nImports in 2004, meanwhile, also increased by 43.83 percent to
\n$6.08 billion.<\/p>\n
Speaking during the seminar, Japan International Cooperation
\nAgency (JICA) economist Shujiro Urata from Waseda University
\nsuggested that the planned EPA should also include broader
\neconomic cooperation -- apart from establishing and facilitating
\nbilateral trade alone.<\/p>\n
"The EPA should also include cooperation in developing small
\nand medium sized enterprises and human resources, as well as
\npromoting science and technology transfer," he said.<\/p>\n
In terms of FDI, however, Urata said that Indonesia still has
\na lot of catching up to do to improve its investment climate.<\/p>\n
Citing a survey from the Japan Bank for International
\nCooperation (JBIC), Urata explained that many Japanese investors
\nare still concerned about Indonesia's social and political
\nstability.<\/p>\n
Indonesia is also facing tougher competition from other FDI
\ndestinations, with investors concerned with the lack of skilled
\npersonnel, unstable prices and exchange rates, transparency in
\nthe tax and legal system, and underdeveloped infrastructure.<\/p>\n
Meanwhile, concerning the progress of the EPA plan itself,
\nMari explained that Indonesia and Japan are wrapping up their
\npreparatory talks and preliminary studies, and expect to soon
\nenter formal negotiations.<\/p>\n
Indonesia and Japan held a marathon of preparatory talks for
\nthe EPA -- in Jakarta in February, in Bali in March and in Tokyo
\nthis month.<\/p>",
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"sponsor": "Okusi Associates",
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