Tough talks await Indonesia in Japan<\/p>\n
By Kornelius Purba<\/p>\n
TOKYO (JP): Japanese Prime Minister Junichiro Koizumi and
\nIndonesian President Megawati Soekarnoputri are to meet here on
\nThursday after both leaders held separate talks with U.S.
\nPresident George W. Bush in Washington.<\/p>\n
Megawati, the leader of the country with the world's largest
\nMuslim population, went ahead last week with her scheduled visit
\nto Washington despite the Sept. 11 tragedy.<\/p>\n
On the other hand, Koizumi held a hastily-arranged meeting
\nwith Bush on Tuesday after postponing his long-planned visit to
\nIndonesia and three other member countries of the Association of
\nSouth East Asian Nations (ASEAN) following the terrorist attacks.<\/p>\n
After winning the hearts of U.S. leaders, Megawati will have a
\na more convincing stature in her talks with Japanese political
\nand business leaders, including Koizumi, finance minister Seijuro
\nShiokawa, foreign minister Makiko Tanaka, Keidanren leaders and
\ntop executives of Japan's major corporations.<\/p>\n
But the situation during her four-day visit in Tokyo is
\ncompletely different from the warm reception she received from
\nthe Bush administration due to her wholehearted support for the
\nU.S. people and government in fighting terrorism.<\/p>\n
She received a significant increase in financial assistance
\nfrom the Bush administration and investment pledges from American
\nenterprises to help strengthen Indonesia's economic recovery.<\/p>\n
In Tokyo, however, she is welcomed by a gloomier economic
\nsituation.<\/p>\n
Japan, Indonesia's largest sovereign creditor, is suffering a
\nprolonged recession with an unemployment rate reaching 5 percent
\nand declining exports.<\/p>\n
It is not difficult today to find homeless people in affluent
\nareas like Ginza, Kasumigaseki or Otemachi in Tokyo.<\/p>\n
However, wooing more financial aid and private-sector
\ninvestment from Japan is the primary objective of Megawati's
\nvisit as her government has inherited a weak economy and foreign
\nand domestic debts amounting to almost US$150 billion.<\/p>\n
"We are now facing the third most difficult period in our
\nhistory after the Meiji era and our military defeat in World War
\nII. We are mired in a very crucial moment in terms of our
\neconomy," senior Japanese diplomat Minoru Shirota told The
\nJakarta Post on Tuesday.<\/p>\n
Shirota said it was very likely that Megawati would ask for
\nsome relief for Indonesia's huge debt burdens. Shirota has years
\nof experience as a diplomat in Jakarta and is still in charge of
\nIndonesian affairs as regional coordinator of the foreign
\nministry's Second Southeast Asian Division,<\/p>\n
He indicated that Megawati's senior ministers might ask for
\ndebt reduction although he also strongly reiterated Megawati's
\nown commitment to honor the previous government's commitments to
\nJapan.<\/p>\n
"A hair cut or debt reduction is not a solution. It may
\nprovide relief in the short term, but once your demand is met the
\ninternational market will soon lose its confidence in your
\ngovernment," said Shirota in fluent Indonesian.<\/p>\n
According to the Japanese Embassy in Jakarta, until March this
\nyear Indonesia had cumulatively received 3.6 trillion yen in
\nloans from the Japan Bank for International Cooperation (JBIC)
\nand 4.2 trillion yen in other forms of official assistance.<\/p>\n
Japan has also provided 203 billion yen in grants and 228
\nbillion yen in technical assistance.<\/p>\n
Japanese loans accounted for $2.7 billion of the $5.8 billion
\nof Indonesian debt principals due to mature in March, 2002, which
\nwere rescheduled under the Paris Club II agreement last year.
\nHowever, the government has hinted at the need for another
\npackage for rescheduling debts maturing within the next two
\nyears.<\/p>\n
"I can assure you that the Japanese government is firm in its
\nposition against giving any hair cuts or debt reductions," said
\nKansuke Nagaoka, deputy director of the loan aid division of the
\nforeign ministry.<\/p>\n
However, before asking for such serious concessions from its
\ndonors, the Indonesian government must first prove that it
\ndeserves what it is asking for.<\/p>\n
Indonesia should first achieve significant progress in
\neradicating corruption, believed to have wasted a good portion of
\nforeign aid, including funds from Japan.<\/p>\n
"We know that Soeharto and his cronies abused (foreign aid and
\nfinancial assistance)," said a senior Japanese official, who
\nspoke on condition of anonymity.<\/p>\n
"But you just let them live freely without ever trying to
\ntake back the money from them and use it for your development.
\nClean up your house first before sharing the blame with us for
\nyour debt disaster."<\/p>\n
Japanese companies, which make up the largest foreign investor
\nin Indonesia, have also been complaining of what they consider
\nunfair treatment.<\/p>\n
They accuse the Indonesian government of giving better
\ntreatment to U.S. businesses than to Japanese in the case of
\nbusiness disputes.<\/p>\n
Currently, there are four Japanese-funded projects waiting for
\ndebt settlement from Indonesia: Petrochemical company PT Chandra
\nAsri, which involves Marubeni Corp., Paiton power plant,
\ninvolving Mitsui, Tuban petrochemical plant and the Tanjung Jati
\nB power plant. The projects either involve Japanese firms or are
\nmainly financed by Japanese creditors.<\/p>\n
Chandra Asri is facing a complicated situation in resolving
\nits $700 million debt to a Japanese consortium, led by Marubeni.<\/p>\n
The government has changed its promises to Marubeni at least
\nthree times in the last two years.<\/p>\n
In the latest development, the Indonesian Banking
\nRestructuring Agency (IBRA) is even considering selling out the
\ncompany to U.S. investor Goldman Sachs.<\/p>\n
Marubeni has been so frustrated that it might ask for
\nKoizumi's assistance to convey its message to Megawati during
\ntheir bilateral talks.<\/p>\n
"Your government treats Chandra Asri in such manners because
\nthe company only involves Japanese investors and creditors. That
\nwould not be the case if American business interests were
\ninvolved," said a Japanese businessman who has closely monitored
\nthe Marubeni case.<\/p>\n
Megawati has a higher profile in Tokyo after her successful
\nU.S. visit. Japan also realizes that her government needs strong
\nassistance to revive its economy.<\/p>\n
However, her negotiations with Japanese leaders will be much
\ntougher compared to her meeting with the Bush administration.
\nJapanese private companies are also waiting to know her vision
\nconcerning their presence in Indonesia before making new business
\nplans in Indonesia.<\/p>\n
The writer is a staff writer of The Jakarta Post.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/tough-talks-await-indonesia-in-japan-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }