Indonesia benefiting less from the partnership to ask Japan for review

Indonesia to expand bilateral ties with the East Asian nation plans to urge Japan to review the economic partnership agreement. The Indonesia-Japan economic partnership agreement (IJ-EPA) was implemented by both countries since 2008 and after a five-year period, both parties have been given the chance to re-evaluate the execution.

Indonesia claims it has benefited less than expected from the partnership and has requested a review several times, including the latest effort made during the term of former trade minister Muhammad Lutfi.

Research by the Centre for Strategic and International Studies (CSIS) released in 2013 shows that Indonesia has yet to reap optimal benefits from the IJ-EPA due to a lack of product diversification.

Among goods that have failed to fare are garments, textiles, footwear, processed food, pulp and paper and fisheries products. Tax cuts are provided to these goods, but not as low as zero percent as in a number of other products, such as iron and steel, automotive items, electronics and chemicals.

According to statistics at the Trade Ministry, .Indonesia’s imports from Japan have surpassed its exports, with exports rising by only 9.3 percent to US$27.09 billion in 2013 from 2009, while imports raised 17.81 percent to $19.28 billion,

Trade Minister Rachmat Gobel on Friday said that he would convey Indonesia’s concerns to his Japanese counterpart during his visit to Japan next week, when he is scheduled to meet with Japan’s Economic, Trade and Industry (METI) Minister, Yoichi Miyazawa.

Apart from meeting with trade officials, he would also meet with executives from Japanese firms investing in Indonesia to discuss the possibility of boosting exports amid the government’s target to triple exports in 2019.

The Minister has also scheduled meetings with executives from Mitsubishi, Japan Business Federation and Keidanren, among others.

In terms of investment, Japan has traditionally been one of the largest spenders in Asia’s economy. Foreign direct investment from Japan to Indonesia has increased considerably with an average 30 percent growth registered in the past five years.

Investment, however, slowed last year amid the global economic downturn, valuing at $2.04 billion in the January-September last year.