'Recovering Japan means investment comeback for RI'

Following the recovery of the Japanese economy -- cumulatively the largest investor, donor and export destination for Indonesia -- the government will have more top Japanese government officials and businesspeople arriving here to sound out new investment opportunities. Japanese Ambassador Yutaka Iimura talked with The Jakarta Post's Kornelius Purba on Tuesday about the prospects for increased Japanese investment in Indonesia. The following are excerpts from the interview:

Question: How can Japan help the new government to spur investment?

Answer: There is a high level of appreciation from the international community, including from my country, that the new government under the leadership of President Susilo Bambang Yudhoyono intends to tackle the many challenges that this country faces. And also, Japan is now emerging from the economic stagnation that my country has experienced for the past 10 years. Our economy is picking up, and our business people are more outward looking. This provides a major opportunity for strengthening our cooperation. There are several aspects to strengthening our relationship.

First, improvement of the investment climate is crucial for this country, particularly for creating job and alleviating poverty. Investment from both outside and from inside the country is very important. My government is ready to cooperate with the new government to create a favorable environment for direct investment.

For example, we are ready to work with the government in order to improve infrastructure, which is essential if this country is to increase investment. We are also ready to formulate policies conducive to increasing investment in this country.

Second, we are ready to cooperate with the new government to achieve stability and strengthen democracy in this area. We are ready to cooperate to improve the judicial system, and also strengthen the civil police, combat terrorism, combat piracy, and build up the capacities of local governments. And also, if the government wants us to do so, we are ready to help with the reconstruction of conflict areas, including Aceh, Maluku and Papua.

Third, my government -- if an agreement is reached during the summit between President Yudhoyono and PM Koizumi either at the APEC summit in Chile or the ASEAN+3 summit in Laos -- will strengthen and expand our relationship. Not only economic issues are important, but also political cooperation.

After the recent visit from representatives of the Japanese chamber of commerce, Keidanren, a number of Japanese officials will be visiting Jakarta. What topics will be discussed?

Very possibly Foreign Minister Nobutaka Machmimura and also Minister of Economics, Trade and Industry (METI) Shoichi Nakagawa will be coming. Our deputy finance minister may be coming and also some other business delegations. As far as economic meetings are concerned, the main topics will be about how to improve the investment climate in this country as the President considers an increase in investment as his top priority.

The next CGI (Consultative Group on Indonesia) meeting will meet early next year. What does Japan intends to propose?

Yes, the next CGI meeting will take place probably early next year. Basically there are two things that will be discussed.

First, as we have been one of the major donors, together with the ADB and World Bank, in financing your budget deficit, we will continue to assist your country in financing the deficit. At this stage, I cannot give you the exact figure.

Secondly, we would also like to finalize our process of selecting projects for improving the infrastructure of this country. Every year, our yen loans amount to more or less US$1 billion.

We will continue to do this, but particularly focus on investment-related projects. So these are the two basic points things that we have in our mind before this CGI meeting. And also, as Japan, together with the United States and the World Bank, co-chairs the investment working group, policy discussions on the investment climate will be a very important part of the next CGI meeting.

And on Oct. 20, just before the President's inauguration, the U.S. ambassador, myself and World Bank country director Andrew Steer had a chance to meet with Mr. Yudhoyono to discuss a paper that we submitted to him.

The paper proposes two things: One, we would like to see the new government to take early, decisive action and also make a clear statement of its intentions -- if possible at the highest level. We also requested that the government set out a mid-term road map for improvements in the investment climate. These are our policy suggestions. We are not only requesting, but we are also ready to work to improve the investment climate.

Infrastructure will be an important topic to be discussed by the CGI. There is a keen awareness on the part of the new government of the need to improve infrastructure as since the economic crisis, given tight budgets and given political difficulties, you have not been able to maintain and improve the infrastructure as much as we would like to see it improved.

What investment-related projects do you mean?

This year, we have committed ourselves to the rehabilitation of Tanjung Priok port in order to enable your country to export your products. For this, you need good ports. And, unfortunately, the condition of Tanjung Priok has been deteriorating. Also power plants, and basic major road and transportation systems are very important.

What kind of investment is now the most attractive here?

There are several promising sectors. But above all, I think the automobile industry is very active in making new investments in this country, like Toyota. It's now trying to establish production and export bases here for the entire region. The motorcycle industry is also interested in expanding, while the electronics sector could be very promising areas for new Japanese investment. What is important is not only the purely domestic market in this country, but the fact that with ASEAN regional integration now in progress, we are creating a huge market in this area.