To Tokyo, with inability to realize own promises

Kornelius Purba, Staff Writer, The Jakarta Post, Jakarta, korpur@yahoo.com

During her three-day state visit to Tokyo, where she will stay at the Akasaka Palace, President Megawati Soekarnoputri will clearly feel a rather different atmosphere from her previous visit to Japan in 2001, and the Japanese media will likely pay more attention to her second visit to the country. Japanese investors were ready to listen to her speak about the progress of her own reforms promise on the economy and good governance when they met with her in Tokyo in September 2001.

For the President, an official assurance from Tokyo that it will continue to keep financial loans flowing to Indonesia, including those to fill the financial gap in the state budget, is very important as part of her exit strategy from the International Monetary Fund (IMF) six-year rescue program for Indonesia. Without the IMF program, Indonesia will find it very difficult to go to the Paris Club for rescheduling of her foreign debts, while Tokyo, as largest moneylender to Indonesia, has voiced its inclination to go to Paris without IMF backup.

However, deep concern over the ongoing war in Aceh will clearly attract the most attention from her Japanese counterpart, Prime Minister Junichiro Koizumi, when they meet next Tuesday. In a very carefully worded statement, given the domestically sensitive issue for his guest, the Prime Minister will indicate his government's deep concern at the ongoing war in Aceh and Japan's readiness to help Indonesia end violence and chaos in the rebellious province.

Koizumi is expected to be able to persuade Megawati, through peaceful means, to resolve the Aceh problem by using the vigorous power of the yen, without irritating the President, who firmly believes the military option is the only solution for the province.

Koizumi's government has a strong interest in the restoration of peace in Aceh because it has now assumed the new role of peacemaker or negotiator, helping conflict-torn countries to settle peacefully their domestic problems, while sticking to noninterference principles. This is a departure from its traditional diplomatic approaches, which focus attention merely on economic interests. Japan has also been trying to help the Sri Lankan government in its negotiations with the Liberation Tigers of Tamil Eelam (LTTE).

Along with the U.S. and the World Bank, Japan, in December, hosted an international conference to discuss the reconstruction of Aceh, just six days before Indonesia signed the Cessation of Hostilities Agreement (COHA) with the Free Aceh Movement (GAM) on Dec. 9 last year. And just a few days before Indonesia declared war against GAM last month, Tokyo again tried in vain to prevent the war by hosting negotiations between Indonesia and GAM.

It will be difficult for Koizumi to accommodate Megawati's economic needs if the President is perceived to have failed to allow more effective opportunity for Japan's Aceh diplomacy to work, because Japanese taxpayers have now become more critical about expenditure of their money on Indonesia.

On the economy, a Japanese finance ministry official recently pointed out that it would not be very difficult for Indonesia to return to economic growth -- even without the IMF program -- although the country's microeconomic situation is still far from the norm it was before the economic crisis in 1997. For him, the government's own ability to be disciplined in carrying out economic reforms is the most important requirement after the IMF program is over.

Conversations with Japanese private investors operating in Indonesia indicate a more gloomy picture, because, according to them, they have not seen any significant progress in attracting foreign investment. Their concerns over increasing corruption within the government, chaotic law enforcement, worsening infrastructure like ports and power supply, and rising labor disputes, are effectively unanswered, despite the President's promises to meet their demands.

Megawati has chaired an investment task force, but some Japanese businessmen have said with frustration that she has failed to achieve any progress because the investment climate has continued to worsen.

A senior Japanese banker pointed out that investors would not wait until next year's presidential election to pour in their money, provided they could see convincing progress in the government. They do not worry much about who will govern Indonesia next year, because they do not believe a totally surprising candidate will win the elections.

The construction of infrastructure projects has practically stopped in the last six years. Japan has expressed her readiness to finance more big projects, like Tanjung Priok port, as part of the official development assistance (ODA) to Indonesia, but Indonesia is reluctant as it will create new burdens and because it also has to provide rupiah financing for the projects. Liberal Democratic Party (LDP) Secretary-General Taku Yamasaki -- regarded as the strongest lobbyist for Indonesia-- will surely raise the issue when he meets her next Tuesday.

For the President, getting fresh loans and economic commitments from Japan is easier than convincing Japanese companies that it is the best time now for them to expand or bring new investment to Indonesia. She will be a little bit surprised when Japanese top executives bluntly tell her that they have lost patience, if not confidence, in her government's investment commitment. For some, investing in Cambodia is seen as better than here.

Just a small item of advice for the President: It would be very advisable not to repeat her mistake in 2001 when she did not feel it necessary to exchange business cards with Japanese businessmen. At that time, many of them were upset because she simply left after delivering a brief speech at the Imperial Hotel.

For Japan, Indonesia is only one of her global partners -- regardless of the strategic importance of Indonesia -- while for Indonesia, Japan is her most important partner. Many Indonesians, including politicians, still believe, erroneously, that their country's position is so important to Japan that she will not have the guts to say "no" to Indonesia.

By the way, this is a golden opportunity for Indonesian Ambassador to Japan Abdul Irsan Gani to prove that the House of Representatives was totally wrong in its "objection" to his candidacy for the post, by showing his ability to ensure the President does not take the bilateral ties for granted.