Indonesian-Japanese synergy called for

Indonesian-Japanese synergy called for

JAKARTA (JP): The government is calling for Indonesian and
Japanese firms to work together to better serve regional and
international markets.

"In an effort to seize the business opportunity companies need
to establish synergy because sometimes maximum benefits will only
be obtained through synergy," Coordinating Minister for Industry
and Trade Hartarto told a seminar jointly conducted by the
Business Review Indonesia Forum International and the Japan
Institute for Social and Economic affairs.

The minister called upon Japanese companies to consider
establishing a manufacturing base in Indonesia, especially to
reap the benefits from the huge market in the Association of
Southeast Asian Nations (ASEAN) and from the implementation of
the ASEAN Free Trade Area by 2003.

He added that because European countries had long been
Indonesia's traditional export market besides Japan and the
United States, Japanese companies could establish businesses in
Indonesia to also serve the European market.

"Thus, through synergy, Indonesia and Japan can serve the huge
market in European countries, the Asia-Pacific region as well as
the whole world," Hartarto said.

The recent strong appreciation of the Japanese yen against
other hard currencies, especially the U.S. greenback, has
encouraged Japanese manufacturers to relocate their production
facilities overseas.

Hartarto suggested that Indonesian businessmen be more
aggressive in attracting Japanese companies to base their
manufacturing plants in Indonesia.

He rejected the argument that Japanese firms had shunned
Indonesia after the publication of the Japan External Trading
Organization's recent survey which showed that Indonesia's
bureaucracy was the worst among ASEAN countries.

Most promising

"No matter whether there are criticisms or not, we improve our
bureaucracy from time to time," Hartarto said, adding that
Indonesia would remain one of the world's competitive production
bases, thanks to the availability of natural resources and a
large number of laborers.

Concurring with Hartarto's views, Japanese Ambassador to
Indonesia Taizo Watanabe said Indonesia happened to be one of the
most promising investment bases for many Japanese companies.

"Almost every week I am invited to attend the inaugurations of
joint ventures or others, which involve Japanese companies,"
Watanabe said.

He noted that Indonesia would not only be a big market for
industrial products but also a very influential industrial
economy of its own.

"Indonesia will, on the other hand, have to learn to look on
Japan as a trading and joint venture partner and not so much as
donor of economic cooperation," Watanabe said.

However, the ambassador warned that as a result of the large
scale relocation of labor-intensive industries from Japan to
Indonesia, the demand for imports of materials and commodities
produced in those relocated industries in Indonesia are expected
to rise drastically in the future.

Toru Kusukawa, chairman of the Fuji Research Institute, said
that the high demand for imports of materials from Japan will
quickly change.

He explained that machinery, parts and supplementary
commodities would be needed only at the initial stage of
relocation. The export volume from Japan has increased because of
such elements.

"It is expected that when such relocation is completed, the
local contents will increase and the Japanese exports to the
region will dramatically decrease with the full scale exports
from the region to Japan of the finished products from such
relocated factories," Kusukawa said.

Last year, Indonesian imports from Japan reached US$7.74
billion, up 23.9 percent from the previous year. Hartarto noted
that the main contributor to the high increase of imports from
Japan since 1990 had been the high increase of imports of capital
goods.

Hartarto also noted that there had been a shift in the pattern
of Indonesia's commodities exported to Japan, from oil and gas to
non-oil products.

"Despite the relative stability of total exports to Japan, it
should be underlined that non-oil exports to that country
steadily increased from US$3.5 billion in 1989 to US$5.49 billion
last year," Hartarto said.

Concurring with Hartarto's claim, Ambassador Watanabe said,
"the more the Indonesian side tries to expand its non-oil exports
to Japan, the more knowledge and understanding should be acquired
about the market and the consumer trends in Japan." (rid)