Govt lists actions to up investment
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.