Japan's SMEs eye Indonesia amid concerns over security

Japan's SMEs eye Indonesia amid concerns over security

By Devi M. Asmarani

BATAM (JP): Japanese small and medium enterprises said here on
Thursday they were interested in setting up businesses in
Indonesia, but were still concerned by the country's security
situation.

Entrepreneurs and leaders of business associations who made up
Japan's trade and investment mission to Indonesia said during the
group's one-week visit they were considering the possibility of
investing in the country.

"I'm here to see and study the possibilities to expand and
develop Japan's small and medium enterprises in Indonesia because
there is very little room for the businesses left in Japan," said
Akihiko Kunii, an executive in Japan's National Association for
Subcontracting Enterprises Promotion. The association assists
Japan's subcontracting companies.

Kunii said Indonesia's relatively low labor costs and its vast
market potential were lures for Japanese investors.

"Even if the labor costs eventually rise, as they normally do,
Indonesia's great market potential is worth investing in."

But he said security remained Japan's businesses' main concern
because "we have to be assured that this place is safe".

Businessman K. Takashima said he, like the rest of the 11
members of the delegation, was determining the possibility of
expanding his business in Indonesia.

"Yes, I am looking, that is my main purpose here," said the
managing director of trading firm Transpac Corporation.

Takashima's company trades metal products including steel,
aluminum and copper, and exports them to Southeast Asia, the
United States, Europe and the Middle East. It recently set up a
business in Taiwan.

In 1995, he visited Indonesia to look into investment
opportunities, returning to the country five years later after
the economic crisis that swept Southeast Asia and Indonesia
subsided.

But Indonesia is not the only place Takashima is eying.

"I came here to gather information and to compare it to other
countries, including China and the Philippines."

He also admits that the political situation in the country
remains an iffy factor for Japanese businesspeople. "I think most
of the Japanese investors' major concern is political stability."

Ridwan Hassan, an Indonesian diplomat in Tokyo who is
accompanying the delegation on its visit to Jakarta, Batam and
Bali, stressed the importance of winning over Japan's small and
medium businesses.

"The large ones we don't have to worry about, they're not
going to leave. It is the small ones that we want to attract,"
said the first secretary for economic affairs at the Indonesian
Embassy in Japan.

He said most of the SMEs were faced with the decision to
expand and to relocate overseas.

"The question is, who's going to get to them first? Because
there is also China or the Philippines."

Hassan admitted that convincing the Japanese businesspeople to
consider Indonesia as a place to invest in the current situation
was not an easy job, and that getting them to visit the country
was an achievement in itself.

"This is like a fact-finding mission. They want to know what
is really going on in this country," he said.

"They are very concerned about the security and the law
enforcement here."

Since the resignation of president Soeharto in May 1998,
Indonesia has been hit by unrest triggered by political, social
or economic causes. In January, thousands of villagers and
student activists occupied the industrial estate on Bintan, an
island near Batam, over land disputes.

The protesters clashed with police, and the incident alarmed
foreign investors in the area as well as across the country.

But some people, like Michiko H. Shirasaki, remain optimistic.
She owns charcoal and woodchip factories in Surabaya, East Java,
and Ambon, Maluku. Her Ambon factory was forced to stop operating
after bloody sectarian clashes started there early last year and
spread across the province .

But Michiko, the president of Sun White Trading Co. Ltd.,
pledged she would continue her business in Indonesia and even
planned to expand operations.

"Yes, this (the unrest) discouraged me, but I am certain that
Indonesia is still a safe country."

The delegation, which arrived in Jakarta on Sunday, leaves for
Bali on Friday before returning to Japan on Saturday.