RI, Japan agree to start EPA talks

RI, Japan agree to start EPA talks

Reiner Simanjuntak, The Jakarta Post, Tokyo

Indonesia and Japan agreed on Wednesday to start negotiations on
an Economic Partnership Agreement (EPA), a comprehensive economic
cooperation and liberalization drive that would boost trade
between the two nations and increase Japan's investment in
Indonesia.

Meanwhile, a number of Japanese corporate players pledged to
make billions of dollars in fresh investment in Indonesia, an
indication of the increased confidence of Japanese investors, who
had made no new significant investments in the country for
several years.

The deal on the EPA was reached during a meeting between
visiting President Susilo Bambang Yudhoyono and Japanese Minister
of Economy, Trade and Industry Shoici Nakagawa. It will be
formalized by Susilo and Prime Minister Junichiro Koizumi during
a scheduled summit here on Thursday.

The EPA will not only cover a free trade agreement, but will
also include liberalization drives to increase investment and
tourism activities between the countries, as well as various
other forms of economic cooperation, including in the area of
labor exports.

Japan, for example, has agreed to hire up to 10,000 skilled
Indonesian nurses.

"I expect the negotiations on the EPA can be completed within
one year," Coordinating Minister for the Economy Aburizal Bakrie
said, adding that the negotiations could start next month.

Susilo and several top government officials are in Japan for a
four-day visit ending on Friday.

During a one-on-one meeting with Susilo, top Japanese economic
institutions such as the Japan External Trade Organization
(JETRO), the Japan Bank for International Cooperation (JBIC) and
the Japan International Cooperation Agency (JICA) pledged to
provide new assistance to help rejuvenate the Indonesian economy.

Japan is eager to see a stronger Indonesian economy under the
reform-minded Susilo, seen as a key ingredient for the political
and economic stability of Southeast Asia, a large market and
investment destination for Japan -- which has been trying to
counter the growing influence of China in the region.

Japan is Indonesia's largest donor and main source of foreign
investment, as well as one of its main export markets. Indonesia
enjoyed a trade surplus of $9.59 billion in 2004.

On Thursday, Susilo is slated to meet with top Japanese firms
such as Mitsubishi Corp., Sumitomo Corp., Itochu Corp., Mitsui &
Co., Seiko-Epson Corp., Teijin Ltd. and Matsushita, whose CEOs
could put on the table billions of dollars worth of investment in
Indonesia.

Mitsui, for example, is expected to invest $1.3 billion in
power plants and another $1.6 billion in automotive and
supporting industries, the finance sector, the chemical industry,
textiles, liquefied natural gas (LNG), nickel and coal.

Itochu's future investment plans could include a mass rapid
transportation (MRT) system, the energy sector, textiles and
natural rubber. Sumitomo may pour in some $2.5 billion in power
plants, $700 million in an MRT and $250 million in roads.

Teijin has proposed plans to revamp aging textile machinery in
West Java, where 60 percent of Indonesia's textile exports
originate from.