Action plan readied to boost Japanese investment in RI

Action plan readied to boost Japanese investment in RI

Reiner Simanjuntak
The Jakarta Post/Tokyo

President Susilo Bambang Yudhoyono and Japanese Prime Minister
Junichiro Koizumi have announced a joint action plan aimed at
improving the investment climate in Indonesia and doubling the
volume of foreign investment in the country, particularly from
Japan, during the next five years.

Called the Japan-Indonesia strategic investment action plan
(SIAP), it consists of a list of concrete actions to fix problems
faced by investors in four areas, namely tax/customs, labor,
infrastructure and industrial competitiveness/small and medium-
sized enterprises.

"The two leaders ... stressed the importance and urgency for
Indonesia to take actions especially in these four areas," they
said in a joint statement issued on Thursday following a summit
at Koizumi's residence.

The statement said that although a majority of the actions in
the SIAP would be implemented by the Indonesian government, the
Japanese side could facilitate those actions.

The SIAP was jointly prepared by a forum of public and private
sectors of the two countries following an agreement reached by
the two leaders in November 2004 in Chile.

Susilo is in a Japan on a four-day working visit that ends on
Friday aimed at luring crucial new Japanese investment in the
country, among other things.

Japan is one of the largest sources of foreign investment for
Indonesia, where currently some 900 Japanese companies operate
with a total investment of around US$11 billion and employing
282,000 people. But Japanese companies have failed to make new
investments over the past several years due to a host of
problems.

The SIAP can also been seen as part of an action plan aimed at
accelerating investment flow from Japan as envisaged under a
comprehensive economic cooperation between the countries called
the Economic Partnership Agreement (EPA).

The EPA would cover areas such as trade in goods (tariff and
nontariff measures, rules of origin, trade remedies), customs
procedures, trade in services, investment, movement of natural
persons, government procurement, intellectual property rights,
competition policy, and dispute avoidance and settlement.

"The two leaders hereby decided that the governments of the
two countries should enter into negotiations on the EPA as soon
as possible, at the latest by July 2005," the statement says.

Coordinating Minister for the Economy Aburizal Bakrie said
earlier that talks could be concluded within a year.

Earlier in the morning on Thursday, Susilo urged Japanese
investors to immediately resume investment in Indonesia, saying
that there were plenty of reasons why now, not later, was the
right time to invest or expand business in the country.

"There is still a wide (range of) opportunities for Japanese
companies to expand in the traditional areas of Japanese
investment such as electronics, automotive, textiles and
chemicals as well as supporting industries.

"But we also want to see Japanese participation in the
development of our agriculture sector and in 'quality investment'
with strong research and development interests," he said at a
business gathering here.

Indonesia badly needs foreign investment for massive
infrastructure projects and to create jobs and sustain economic
growth. But Susilo said he was told that some Japanese investors
remained doubtful about investing in Indonesia.

Susilo said that the investment climate in Indonesia was
improving, with a pro-business government elected directly by the
people and more stable political macroeconomic conditions.