Wed, 23 Feb 2000

Indonesia remains attractive to Japanese investors

JAKARTA (JP): Ongoing uncertainties on Indonesia's political, security and social fronts will not deter Japanese investors from investing in the country, a senior official at the Japanese External Trade Organization (JETRO) said.

The vice president of the organization, Tetsuo Nakata, said here on Tuesday that most Japanese investors still saw Indonesia as an attractive investment site despite the uncertainties.

"Investors will not withdraw from a country because of temporary investment problems; they always look at the long-term prospects," Nakata said on the sidelines of a business seminar jointly held by JETRO, the Japan International Cooperation Agency (JICA) and the Japan Chamber of Commerce and Industry (JCCI).

Indonesia's investment climate was already on its way to recovery, said the visiting Nakata, adding that JETRO estimated the Indonesian economy would recover within a year, with an economic growth rate of four percent by 2000.

Japan is Indonesia's largest investor, contributing some US$35 billion in direct investments throughout 1967 to 1999.

According to JETRO, the economic crisis caused Japan's investment in Indonesia to decline from $7.6 billion in 1996 to $5.4 billion in 1997, and further down to $1.3 billion in 1998 and $318 million in August 1999.

Nakata said Indonesia's still unstable social and political condition certainly made businesses in the country more at risk. But, he added, the country still offered many opportunities despite the risks.

"Investors avoid risks whenever possible but they also consider whether a place can generate profit for them," he said.

He said investors paid attention to both sides, risk and opportunities, and if the Indonesian government remained consistent in its economic reform programs, investments would rise.

"We trust the Indonesian government," he said, but added that Japan would closely watch the consistency of the new government in applying economic policies.

He said that because the Indonesian government was still new, it would take time before the country could fully regain the confidence of Japanese investors.

Asked what investment sectors were attractive to Japanese investors, Nakata answered that they were now considering to invest in the high technology sector, such as telecommunications and the internet.

"Many Japanese companies have already invested in the high technology sector throughout Southeast Asia in countries like Malaysia," he said, adding that Indonesia might very well become the next target.

Nevertheless, Indonesia's cheap labor, traditional investment sectors, such as the textile, furniture and food processing industries, would continue to attract Japanese investors, he said.

Meanwhile, Minister of Industry and Trade Yusuf Kalla in his opening speech invited Japanese investors to develop Indonesia's long neglected maritime industry.

Some 90 percent of Indonesia's marine products were exported, with shrimp and tuna among the most important products marketed in Japan, he said.

"We invite you to develop and expand this sector that demands technological and capital investment as well as expertise," Kalla said.

Chairman of the Indonesian-Japan Economic Committee, Kusumo A. Martoredjo said Japan could play an important role in strengthening Indonesia's small and medium enterprises.

Kusumo said Japan's small and medium enterprises had greatly pushed the country's economic growth and Indonesia would benefit from this experience, which institutions like JETRO, JICA and JCCI would bring.(03)