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)