Indonesia remains attractive to Japanese investors

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)