'Recovering Japan means investment comeback for RI'

'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.