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.