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.