RI, Japan launch joint forum on investment

Leony Aurora, The Jakarta Post, Jakarta

Indonesia and Japan have launched a high-level forum involving the government and private sector to discuss and solve problems hindering investment here.

At a press conference held after the joint forum's first meeting, Coordinating Minister for the Economy Aburizal Bakrie said on Thursday that its establishment was determined by the leaders of both countries as a means to boost Japanese investment in Indonesia.

"With the new government and the success of the general election, we are seeing great interest from small and large-scale Japanese companies in investing in Indonesia again," said Aburizal.

Japanese Minister of Economy, Trade and Industry Shoichi Nakagawa said the joint forum was a new step to solving investment problems.

Several key obstacles mentioned by the Japanese during the meeting included licensure, labor laws and their implementation, and tax and customs regulations.

Nakagawa said although the delegation included senior executives of major Japanese companies, small and medium enterprises (SMEs) should not be overlooked.

"Ninety-nine percent of the companies in Japan are SMEs, and 70 percent of the workforce are hired by SMEs," he underlined.

SMEs, which account for more than 98 percent of all businesses in Indonesia, might develop into major enterprises, said Nakagawa. "Japan is ready to cooperate in developing human resources for SMEs, not only for major companies."

Following the inaugural forum, a plenary meeting is to be held at least biannually, co-chaired by Aburizal and the Japanese Ambassador to Indonesia and attended by the two countries' private sector representatives -- the Indonesian Chamber of Commerce and the Nippon Keidanren.

A planning and coordination committee will also be organized, which is to be headed by National Development Planning Board (Bappenas) chairwoman Sri Mulyani Indrawati.

Several sub-committees will also be set up to cover individual issues such as tax, labor, customs, competitiveness and SMEs.

These committees will meet as often as necessary, and are expected to resolve investment blunders immediately.

The two countries are also discussing a possibility of signing the Economic Partnership Agreement (EPA) initiated by Japan, which would be broader in scope than a free trade agreement.

If the EPA is implemented, Indonesia may provide a number of incentives for Japanese businessmen seeking to invest in the country; in return, Indonesia expects Japan to lift the trade barriers between the two countries.

Japan and Indonesia have a long-standing relationship in industry and trade. However, the level of investment has dropped significantly in the past three years due to political, economic and legal uncertainties.

Japan is one of Indonesia's largest export markets and sources of investment and credit.

A Japanese official said earlier that Japanese companies had invested only US$700 million in Indonesia in 2003. According to the Investment Coordinating Board (BKPM), however, Japanese investment approvals last year reached $1.25 billion -- but this investment is not necessarily realized.

Japanese investment approvals in RI

Year Projects Investment

(in US$million)

1997 90 5,390.5

1998 78 1,330.4

1999 72 633.8

2000 93 1,818.6

2001 99 817.4

2002 81 516.9

2003 71 1,250.3

2004* 66 1,651.1

*Preliminary data as of Nov. 30

Source: BKPM