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Indonesia asks Japan to review partnership agreements

The Jakarta Post | January 17 2015

Indonesia asks Japan to review partnership agreements

Linda Yulisman

Indonesia plans to request an economic partnership agreement review with Japan to expand bilateral ties with the East Asian nation.

Trade Minister Rachmat Gobel said on Friday he would convey Indonesia’s concerns to his Japanese counterpart during his visit to Japan next week, when he is scheduled to meet with Japan’s Economic, Trade and Industry (METI) Minister, Yoichi Miyazawa.

Both countries have implemented the Indonesia-Japan economic partnership agreement (IJ-EPA) since 2008 and after a five-year period, both parties have been given the chance to reassess the execution. Indonesia claims it has benefited less than expected from the partnership and has requested a review several times, including the latest effort made during the term of former trade minister Muhammad Lutfi.

“In business, we must respect each other as well as give added value to our partners reciprocally,” Minister Rachmat Gobel told reporters at his office.

Research by the Centre for Strategic and International Studies (CSIS) released in 2013 shows that Indonesia has yet to reap optimal benefits from the IJ-EPA due to a lack of product diversification.

Among goods that have failed to fare are garments, textiles, footwear, processed food, pulp and paper and fisheries products. Tax cuts are provided to these goods, but not as low as zero percent as in a number of other products, such as iron and steel, automotive items, electronics and chemicals.

Indonesia’s imports from Japan have also outpaced its exports, with exports rising by only 9.3 percent to US$27.09 billion in 2013 from 2009, while imports surged 17.81 percent to $19.28 billion, according to statistics at the Trade Ministry.

Rachmat further said that apart from meeting with trade officials, he would also meet with executives from Japanese firms investing in Indonesia, such as automaker Toyota and printer manufacturer Epson, to discuss the possibility of boosting exports amid the government’s target to triple exports in 2019.

The Minister has also scheduled meetings with executives from Mitsubishi, Japan Business Federation and Keidanren, among others.

“I will share my views with them because my target is to increase investment [in Indonesia] and exports, while at the same time, elaborate on the vision of President [Joko Widodo] Jokowi,” he said.

In terms of investment, Japan has traditionally been one of the largest spenders in Asia’s economy. Foreign direct investment from Japan to Indonesia has increased considerably with an average 30 percent growth registered in the past five years. Japan’s realized investment in 2013 almost doubled from the 2012 figure, driven primarily by a massive business expansion in the automotive sector, settling at $4.71 billion, according to data from the Investment Coordinating Board (BKPM).

Investment, however, slowed last year amid the global economic downturn, valuing at $2.04 billion in the January-September last year.

 Fuente: Jakarta Post