RI could be a production base for Japanese firms

The Jakarta Post - 2007-04-12 10:49

Jakarta, April 12, 2007 (The Jakarta Post) - One of the Indonesian teams involved in the negotiation of the Japan-Indonesia Economic Partnership Agreement (EPA) will propose that Indonesia serve as a production base for Japanese industry in at least three sectors.

"The three consist of the automotive and spare parts, electrical components and heavy machinery sectors," said Indonesian Industry Ministry negotiator Achdiat Atmawinata upon arriving Wednesday at Narita airport in Tokyo, as quoted * by Antara.

Achdiat was in Japan to join the members of other Indonesian delegations scheduled to conduct a further round of negotiations on the EPA with their Japanese counterparts later this week.

Achdiat said that if the Japanese agreed, Indonesia would end up producing more cars for both the domestic and export markets.

He admitted, however, that Indonesia would first have to develop the necessary support industries for the three sectors, adding that Japan could do a lot to help in this regard through the transfer of

knowledge within the EPA framework.

"If the three sectors grow, additional benefits will accrue for the two countries. This is \vhere Japan can help Indonesia by providing the technological know-how, and maybe capital," he said.

"After all, Japan would also benefit," he said, adding that Japanese cars had long dominated the Indonesian market.

Besides Achdiat's team, other teams representing the Energy and Mineral Resources Ministry and the Trade Ministry had traveled ahead to Tokyo and were already engaged in negotiations.

Talking to The Jakarta Post by phone, Indonesia's chief EPA negotiator, Soemadi Bro-todiningrat, said the teams would conduct follow-up negotiations with their Japanese counterparts on the EPA's chapters on goods and mineral resources.

Soemadi said that there were still a number of demands from the Indonesian side that Japan had yet to agree to, especially as regards such issues as industrial cooperation.

"Japan's commitment to cooperation in. the industrial sector is still vague," Soemadi said in Jakarta.

"On the other hand, they are still waiting for us to agree to the User Specific Duty Scheme." This scheme would exempt designated industrial products from Japan from Indonesian import duty.

When-asked when the EPA would be signed after the original March deadline had been missed, Soemadi said that it would have to wait for the next bilateral meeting between the leaders of the two countries.

"Last time, it was President Susilo Bambang Yudhoyono who visited Japan. So, it would be ideal if Prime Minister Shinzo Abe came to Indonesia this time," he said.

In November, the President and the Prime Minister signed a joint statement announcing that the two leaders had agreed on the key elements of the Rl-Japan EPA.

"A date for the next bilateral meeting has yet to be set," Soemadi admitted.

Upon the signing of the EPA, Japan will drop more than 90 percent of its tariffs on most Indonesian products, including agriculture products, while Indonesia will remove around 35 percent of its tariffs on Japanese products over a period of between three and 15 years.