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Japan, RI plan new investment, trade deal

16 December 2004

Japan, RI plan new investment, trade deal

Rendi A. Witular, The Jakarta Post, Jakarta

The governments of Japan and Indonesia are mulling a new economic agreement, which would see the latter offering Japanese firms incentives to invest here.

The plan was discussed on Wednesday in a meeting between visiting Japanese Minister of Economy, Trade and Industry Shoichi Nakagawa and Indonesian Coordinating Minister for the Economy Aburizal Bakrie.

Aburizal said the meeting discussed the possibility of the two countries signing the so-termed "Economic Partnership Agreement (EPA)" initiated by Japan.

He said the EPA would be broader in its scope than a free trade agreement scheme.

"The Indonesian government is interested in cooperating with the Japanese government under the EPA scheme, with the expectation that more Japanese firms would invest here, and that we would boost our exports to Japan," said Aburizal after the meeting.

The Indonesian government has appointed Minister of Trade Marie Pangestu to set up a framework for the planned economic cooperation, and to discuss it with her Japanese counterparts.

Aburizal said that under the EPA, there was a possibility that Indonesia would provide a number of incentives for Japanese businessmen interested in investing here, and that Indonesia was also expecting Japan to help lift trade barriers between the two countries.

Aside from discussing initial preparations for the EPA, the two countries discussed the possibility of Japanese investment in infrastructure projects in Indonesia, under the condition that Indonesia improve its business climate.

"While acknowledging that there have been improvements in security and the political condition in Indonesia, the Japanese businessmen suggested that we should improve our taxation system and investment procedures," said Aburizal.

Japanese Director General for Trade and Policy Toshiaki Kitamura said in order to lure more Japanese investment, the Indonesian government should improve transparency, maintain the current political and security stability, combat illegal fees and improving the taxation and customs systems.

According to Kitamura, Japanese companies invested only about US$700 million in Indonesia in 2003 alone. Total Japanese investment here as of last year reached 4.4 trillion (around $42 billion).

 source: Jakarta Post