RI, Japan to boost economic ties

RI, Japan to boost economic ties

Agencies, Tokyo

President Megawati Soekarnoputri secured a promise on Tuesday
from Japanese Prime Minister Junichiro Koizumi to boost economic
ties, but no aid pledges, at a time when Indonesia is determined
to leave the protection of the International Monetary Fund.

Koizumi said Tokyo and Jakarta should work toward the eventual
conclusion of a bilateral economic partnership agreement (EPA).

"Our two nations need to discuss this thoroughly," he was
quoted by a Japanese foreign ministry official as saying.

This mandate also includes discussions on resuming talks on an
investment agreement that has been suspended for several years,
an agreement likely to be crucial for Indonesia.

The two countries also agreed to take an initial step toward a
free trade accord.

Japan currently has a free trade agreement only with
Singapore, but is in discussions on others with the Philippines
and Thailand.

The foreign ministry official said it was still far too early
to discuss the content of any possible economic partnership, but
that it was envisioned as being "quite broad".

Koizumi and Megawati also agreed that reforms pledged by
Indonesia to improve its investment climate would help expand
Japanese investment there and in turn further boost the nation's
recovering economy.

High on the agenda for Megawati and her Cabinet is ensuring
continued Japanese support for Indonesia's economy after the IMF
cash stops coming.

Chief economics minister Dorodjatun Kuntjoro-Jakti told
Reuters on Monday that he hoped for a long-term commitment from
Japan, but officials in Tokyo said Indonesia needed to do more to
improve its investment climate, including legal reforms.

Japanese finance minister Masajuro Shiokawa also told Megawati
that the prerequisite for Japan's investment in Indonesia post-
IMF would be for the nation to implement sound macroeconomic
policies.

Japan is Indonesia's second largest trading partner after the
United States with Indonesia's non-oil and gas exports to the
country reaching US$6.3 billion and Indonesia's non-oil and gas
imports from the country totaling $4.2 billion last year. Japan
is also the largest foreign investor in Indonesia and the largest
creditor to the country.

Japan is also the main buyer of Indonesia liquefied natural
gas (LNG).

Prior to her departure to Japan and other countries, oil and
gas industry players in Indonesia asked Megawati to lobby the
Japanese government to persuade Japanese firms to continue buying
LNG from Indonesia.

Several Japanese buyers, including Kansai Electric, Kyushu
Electric, Nippon Steel and Tohoku and Tepco, will see their
billion dollar contracts with the country's largest LNG plant in
Bontang, East Kalimantan, expire in 2010. The contracts with the
companies total 10.15 million tons per year.

The result of Megawati's talk with the Japanese government on
the issue was still unclear.

Meanwhile, the Japanese Embassy in Jakarta said in a statement
made available to The Jakarta Post that on Monday that Japan's
Minister of Land and Infrastructure Chikage Oegi signed a tourism
cooperation with Indonesian Minister of Tourism and Culture I
Gede Ardika, who accompanied Megawati on her visit to Japan.

Both ministers agreed to boost cooperation in tourism by,
among other things, promoting mutual visits of their nationals to
the two countries.