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Indonesia experience debunks claims of JPEPA advocates of increased economic gains

IBON News | September 4, 2008


As proponents of the Japan-Philippines Economic Partnership Agreement (JPEPA) continue to warn against the possibility of being left out if the pact is not ratified, the experience of Indonesia shows that its own bilateral deal with Japan has not resulted in increased economic gains.

The recently-implemented Indonesia-Japan Economic Partnership Agreement (IJEPA) promised increased exports to Japan. But as the IJEPA went into effect in July, Indonesian Industry Minister Fahmi Idris said that Indonesia’s main exports, such as agricultural products and timber, will continue to face high non-tariff barriers in the form of quality standards, while Japanese high-tech imports will be able to enter the Indonesian market with lower import taxes. The same situation is expected if the JPEPA is ratified, as Philippine pineapples and bananas would face strict phytosanitary standards before being allowed to enter the Japanese market.

Moreover, major Japanese investors in Indonesia threatened to pull out of the country unless issues such as sufficient power supply were resolved. This discredits claims by JPEPA advocates that the trade pact with Japan would guarantee a flood of Japanese investments as Japanese investors would still have to consider factors other than the JPEPA before they decide to invest in the Philippines, such as labor costs and infrastructure.

Some Indonesian analysts believe that Japan may be the bigger winner in the IJEPA, as the pact could help ensure for Japan a steady supply of Indonesian liquefied natural gas through increased Japanese investments in Indonesia’s energy sector. According to an official of the Indonesian Chamber of Commerce and Industry, Indonesia will likely become more dependent on Japan, to the detriment of local industry.

The IJEPA demonstrates how Japan’s bilateral trade agreements are not about genuine economic partnership or development but rather a tool it uses to advance Japanese corporate interests. Senators should heed this lesson and reject the JPEPA lest the country be trapped in a bad deal that compromises the Philippines’ future economic prospects. (end)

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 source: IBON