Japan's business interests
Japan's business interests
The visit here last week of the leaders of Japan's most
powerful business lobby, the Japan Federation of Economic
Organizations (Keidanren), though part of an ASEAN tour, is
nevertheless quite significant, seen from the perspective of
bilateral economic ties, notably Japanese investor interests in
Indonesia.
The fact that the most powerful business leaders from the
world's second largest economy still bothered to visit Indonesia
and held meaningful, straight-forward talks with the President,
Vice President and local business organizations would ease the
great concern that Japanese investors might completely write off
Indonesia from their business plans.
Such concerns were prompted by the disclosure here in late
March of a very negative assessment of the Indonesian business
climate by Japanese business executives, as surveyed by the Japan
Bank for International Cooperation.
Certainly, Japan has been and is still the largest foreign
investor in the country and the largest provider of official
loans. But Indonesia cannot take Japan's role for granted. The
keener competition posed by other Southeast Asian countries which
offer a much better investment climate to foreign investors,
combined with the worsening domestic infrastructure, legal
framework and industrial relations in Indonesia, could puncture
that privileged relationship.
Hence, lies the importance of the Keindanren leaders' visit
that enabled the business leaders to gather first-hand
information about the overall condition and assess the future
outlook of their role in the country amid Indonesia's rapidly
expanding economic ties with China, the new emerging economic
power in Asia.
After all, Japan cannot simply ignore Indonesia. Seen from
their own long-term interests and their future economic role in
Asia, Japanese investors cannot afford to abandon Indonesia,
despite its myriad problems now.
It is not only Japanese businesses that have suffered the
brunt of Indonesia's economic crisis and the complications caused
by the country's transition from an authoritarian to democratic
rule and from a centralized, authoritarian government to regional
autonomy.
Moreover, the thorniest issues within bilateral economic ties
have been resolved by the recent agreement on the restructuring
of Chandra Asri's huge debts to a Marubeni-led creditor
consortium and the recent decision to resume the construction of
five giant industrial and power projects worth more than US$2.6
billion involving major Japanese investors and creditors.
China's entry into the World Trade Organization early this
year and the ASEAN plan to extend its free trade area to China
within 10 years and subsequently to South Korea and Australia
make it even more imperative for Japanese investors not only to
maintain but even to expand their operations in Indonesia, as the
largest ASEAN country.
This is, we believe, the grand vision very much in the minds
of the visiting Keidanren leaders.