Antara 08/03/07

Implementation of RI-Japan EPA to begin in November

Jakarta (ANTARA News) — The Indonesia-Japan Economic Partnership Agreement (EPA) which is scheduled to be signed by the two countriesheads of governemnts on August 20 is expected to begin to be implemented in November, Trade Minister Mari Elka Pangestu said here on Friday. "We have agreed to set up a joint sub-committee to monitor the implementation of the agreement. It will take two to three months for the two countries to internalize the EPA," she said. With the agreement Indonesia hopes to be able to increase its export market share for a variety of its products in Japan. Japan at present absorbs 20 percent of Indonesias total exports.

"Our exports to Japan are expected to continue to grow 4.68 percent a year and we hope we can compete with other countries that already have similar agreements with Japan," she said.

Around 80 percent of Japans tariff items totaling 9,275 would be exempted from import tariffs. Indonesia meanwhile will exempt 58 percent of its tariff items totaling 11,163. "The business opportunities opened through the EPA could reach US$65 billion in 2010," she said. She said the EPA was also expected to increase Japanese investment in the country. She said although no investment committment was mentioned in the EPA Daihatsu automotive company and Japanese heavy equipment makers have already planned to expand their business to Indonesia. The EPA is scheduled to be signed in concurrance with the signing of two power projects, one infrastructural project and a project in the oil and gas industry. Indonesias exports to Japan in 2006 reached US$21 billion. Japanese investments in the electricity and electronic sectors reached US$2.8 billion while in automotive and transportation equipment sector US$1.6 billion.

Other Japanese investments are in the mineral and non-metal industries (US$862 million), chemical and pharmaceutical (US$780 million), trade and repair (US$661 million).

In the service sector the two countries have agreed to open access to paramedics and nurses for the old.

Japan also plans to give technical assistance to a number of sectors such as energy, manufacturing, agriculure, fishery and in export promotion and promotion of small and medium businesses. It will also help in the development of a Manufacturing Industry Development Center.

Special compensation Japan would receive relating to the technical assistance is a User Specific Duty Free Scheme that gives free access to made-in-Japan raw materials for processing by Japanese investment companies in Indonesia.

In exchange, Japan would give training to companies that use Japanese raw materials.

"To assure smooth implementation of the cooperatin contribution is expected from private businesses with regard to promoting implementation of capacity building," she said.