RI wants ’win-win’ partnership with Japan, says minister
10 November 2006
RI wants ’win-win’ partnership with Japan, says minister
The Jakarta Post, Jakarta
Indonesia is hoping for a "mutually beneficial" spirit in the economic partnership agreement (EPA) it plans to sign with Japan during President Susilo Bambang Yudhoyono’s visit later this month to Tokyo, and will seek compensation for the economic imbalances that arise from the deal.
Indonesia will ask Japan to invest in such industries as petrochemicals and steel so as to support the Indonesian manufacturing sector, Industry Minister Fahmi Idris said during his official trip in Osaka.
The compensation is necessary because Indonesian agricultural products would likely continue facing difficulties in entering the Japanese market.
"The EPA is basically a liberalization of trade, and if that’s the case, then it will surely benefit Japan more," Fahmi was quoted by Antara as saying Thursday.
Fahmi is with Trade Minister Mari Elka Pangestu and Investment Coordinating Board (BKPM) Director M. Luthfi on a trip to Japan ahead of Yudhoyono’s visit to sign the agreement.
Fahmi explained that Japan might get the upperhand in the deal, with that country’s high-tech products still in big demand in Indonesia, and set to enjoy even lower duties.
By contrast, Indonesia’s main agricultural and timber products would continue to face non-tariff, market-access barriers in Japan in the form of strict quality standards. He therefore urged Japan to invest more in Indonesian manufacturing industry within the framework of the EPA.
"Let’s just say this is to balance things up against the loses we might suffer under the agreement," he said, adding that there was a need for a joint statement to be issued during the signing of the EPA so as to ensure its fairness.
Since July last year, Indonesia and Japan have been working toward the signing of the EPA, a comprehensive bilateral economic agreement that will include not only the liberalization of trade in goods and services, but also cooperation in the fields of investment, competition policies and the movement of people.
The two Asian countries held their sixth round of EPA talks last month, aiming to overcome the remaining differences.
Two-way trade between Indonesia and Japan was recorded at US$30.05 billion last year, a 22.4 percent increase from a year earlier. Indonesia still enjoys a surplus, exporting $20.8 billion to Japan, as compared to Japan’s $9.24 billion in exports to Indonesia.
Mari had previously said that most of the differences between the two sides concerned the question of product-quality standards rather than tariffs. She had therefore asked Japan to provide technical capacity-building help to Indonesia to raise its product standards.
Fahmi, meanwhile, is now also suggesting that Japan’s private sector help Indonesia develop one of its priority industries — petrochemicals — and invest in the expansion and upgrading of existing petrochemical plants in Tuban, East Java and Banten.
During a visit to Nippon Steel, Fahmi also asked the steel manufacturer to invest in a production plant in Indonesia to support the country’s automotive component industry.
He said that such investment would generate good returns, adding that high-quality steel was badly needed by the components industry, which was expanding rapidly.
Indonesia imports up to 1.5 million tons of special-purpose steel for its automotive and electronics industry at a cost of some $1 billion each year.
Nippon Steel and fellow Japanese producer Mitsui already have a production plant in Indonesia, but this only produces galvanized roofing sheets.
