Indonesia, Japan foucus investment on four sectors

Jakarta (Antara News) - The Indonesia-Japan Joint forum has agreed to increase Japanese private investment in Indonesia with priority to four industries, namely the electronics, automotive, textile/clothing and support industries.

"Indonesia hopes for improvement in the investment climate, especially for the four industries," Trade Minister Marie Elka Pangestu said here early this week, adding that Japan is expected to increase its investment in Indonesia, despite its already big investment in various sectors in the country.

Mari was speaking to the press after heading a meeting of the Planning and Coordinating Committee along with Japanese Ambassador to Indonesia Shin Ebihara in the fifth Indonesia-Japan Joint Forum on Investment at the Central Office of the Trade Ministry here.

The Joint Forum whose members are government officials and representatives of the Chambers of Commerce and Industry (CCI) of the two countries was established to facilitate the provision of Japanese technical assistance such as for capacity building.

The trade minister pointed out that Japan`s industrial bases in Indonesia consist of the electronic and automotive industries. In the support industry, Japan is expected invest in the molding, dyeing, and casting industries, which are required to support their industrial bases, she said.

The development of the component industry will enable Indonesia to serve as a regional production center for the machinery, electronic and automotive component industries like Japan, China and several other Asian countries, according to Marie.

Indonesia became a regional production center in the 1990s, but several semi conductor manufacturers which planned to enter Indonesia cancelled their plan because of the economic crisis, she explained.

The chairman of the Japanese Economic Committee of the Indonesian Chamber of Commerce and Industry (Kadin), Kusumo A.Martorejdjo, said Kadin has given priority to the four industries in attracting Japanese investors. Kadin has also asked Japan to build a petrochemical center in Indonesia.

In the past two years, JFI discussions have expanded to the use of bio-fuel as a substitute to conventional fuel such as diesel oil, Kusumo said. The development of bio-fuel is expected to encourage Japan to expand its investment in Indonesia, he added.

In luring more Japanese investment to Indonesia, the Joint Forum on Investment (JFI) has drawn up a Strategic Investment Action Plan (SIAP), comprising the working groups of taxation and customs service, manpower, infrastructure and competitiveness, and small/medium enterprises.

Since the end of 2004, the four working groups have identified 118 action plans in the form of concrete steps to overcome investment barriers in Indonesia. Almost all of the action plans have nearly been completed, according to the trade minister.

In preparing their investment in Indonesia, Japanese investors have paid attention to several matters like transparency of procedures and customs regulations. They have even proposed efforts to overcome traffic jams.

President Susilo Bambang Yudhoyono will discuss the progress of the action plans during his planned visit to Tokyo at the end of November 2006. (*)
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