RI, Japan launch joint forum on investment

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