INDONESIA, JAPAN STRENGTHEN ECONOMIC AND MARITIME COOPERATION by Fardah

   Jakarta, March 26, 2015 (Antara)- Before leaving for Tokyo on March 22, President Joko Widodo (Jokowi) expressed hope that more concrete bilateral cooperation can be established between Indonesia and Japan.

         The state visit was the follow up to the talks held in November last year with Japanese Prime Minister Shinzo Abe, Jokowi remarked at the Halim Perdanakusuma Air Force Base, prior to his departure to Japan for a visit until March 25, 2015.

        Jokowi stated that the state visits are related to Indonesia's development agenda to accelerate the construction of infrastructure and to boost the manufacturing industry and attract investment.

        He noted that several Japanese manufacturing companies are operating in Indonesia and hopefully, the number will increase in the future.

        "We laud not only the capital that they have brought here but also the technology, systems, and networking that they own and could be applied in Indonesia," the president emphasized.

       The presidential entourage for the overseas trip comprises, among others, Foreign Affairs Minister Retno L.P. Marsudi, State Enterprises Minister Rini Soemarno, Trade Minister Rahmat Gobel, Coordinating Minister for Economic Affairs Sofyan Djalil, and Chairman of the Investment Coordinating Board (BKPM) Franky Sibarani.

         Welcoming President Jokowi in Tokyo, on March 23, Prime Minister Shinzo Abe lauded Jokowi's statement that Japan has greatly contributed to Indonesian economic development.

         The two leaders witnessed the signing of memoranda of understanding by Indonesian defense minister, trade minister, and the Investment Coordinating Board (BKPM), and their respective Japanese counterparts.

        Japan is Indonesia's third-largest trading partner, with bilateral trade reaching US$40.2 billion in 2014.

         The bilateral meeting also approved discussions on the renegotiation of the Double Taxation Avoidance Agreement.

        In terms of investment, Japan is the second-largest investor in Indonesia, with its investment valued at US$2.7 billion in 2014.

         In the context of investment, President Jokowi delivered a development plan to be implemented in Indonesia, particularly with regard to infrastructure.

        The president stressed that there are several opportunities for Japanese investors to invest in various sectors in Indonesia, such as power plants, construction of 24 ports, construction and repair of highways, construction of 15 new airports and renovation of the old airports, the construction of Mass Rapid Transport (MRT) in metropolitan cities and major cities in Indonesia, and the development of special economic zones outside Java island.

        The president and prime minister welcomed the plan of cooperation in infrastructure development of MRT in Jakarta as well as the Java-Sumatra train line and transmission interconnection projects.   
   The Indonesian and Japanese governments agreed to review the Indonesia-Japan Economic Partnership Agreement (IJ-EPA) to derive mutual benefits, according to a press release from the Indonesian Ministry of Foreign Affairs recently.

        The review aims to balance bilateral trade between the two countries.

        The leaders also launched the Indonesia-Japan Export and Investment Promotion Initiative in an effort to boost trade and promotion cooperation.

        The BKPM has suggested that Japanese companies should invest outside Java to support the government's development targets and to intensify the growth of downstream and value-added industries.

        "As the president has advised against Indonesia exporting raw materials, the incoming investments should be directed to the downstream industry," Head of the BKPM Franky Sibarani noted in a press release.

         He added that investment should be made in downstream industries, which have the potential to be developed outside Java as raw materials for the industries are mostly sourced from there.

          According to data provided by the BKPM, the value of foreign direct investment (FDI) by Japan in the 2010-2014 period amounted to US$12.01 billion, which is 96 percent of the total FDI in Java.

          In 2013, Japan was the largest investing country in Indonesia, with investments worth US$4.7 billion, and a year later, it dropped to the second position, with investments valued at US$2.7 billion.

             Currently, the Indonesian government is planning to build 15 industrial zones by 2019, of which 13 will be located outside Java.

        In a collective courtesy call and a business forum meeting with Japanese businesspersons and state institution officials on March 24, President Jokowi emphasized that the Indonesian government is committed to improve the investment climate in the country.

        "I want Indonesia to not only be a market but also a manufacturing base for automotive and electronic components and all export-oriented goods," he told the Japanese businessmen.      
   At the meeting with the representatives of 29 large-scale Japanese companies, Jokowi stressed that Indonesia had a comparative advantage not only as a huge market but also a production hub.

        He lauded Japanese companies that had transformed Indonesia into a production hub for the Asian and global markets, and urged them to increase their exports.

        Indonesia wants to boost exports of finished or semi-finished products rather than raw materials, and Japan has the technology and experience to help Indonesia realize its program, according to the head of state.

        He invited Japanese businesspersons to invest in Indonesia's infrastructure sector to support the construction of seaports, airports, toll roads, and railway tracks that will start this year.

        With regard to maritime cooperation, Indonesia and Japan have agreed to form a maritime cooperation forum, in particular to discuss maritime security, maritime infrastructure (marine highway program), and to improve the field work and the fishing industry.    
    "We exchanged ideas regarding issues related to the interests of both nations, including the setting up of an official-level maritime forum as a new initiative," President Jokowi stated.

        These are in line with the Indonesian government's efforts to realize the vision of maritime axis.

        Prime Minister Abe emphasized that as democratic and maritime countries, both Indonesia and Japan should promote strategic relations.

        "I am hopeful that Indonesia will expand and play an important role in the region and the world," he affirmed.

        Cooperation in the maritime sector encompasses the establishment of a maritime forum in maritime security, maritime industry, and maritime infrastructure.   
   In accordance with the government's ambition to develop Indonesia as a maritime axis, Jokowi offered 24 port development projects, which will serve as the pillars of the sea toll road infrastructure in the country, to the investors.

        "Yes, we will accelerate the implementation of the maritime axis development project," Minister of National Development Planning/Head of the National Development Planning Board Andrinof Chaniago said.

        He added that so far, the government was still looking for serious investors keen on participating in the projects, including ship procurement, which amount to Rp700 trillion.

        Chaniago further noted that besides the 24 port development projects, the Indonesian government also planned to develop supporting infrastructure facilities for the sea toll road, such as short sea shipping and cargo facilities.

         However, in 2015, the government will only focus on sea toll road projects in the eastern Indonesian regions.

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(f001/INE/O001)