News Focus: INDONESIAN EXPORTERS YET TO MAKE USE OF RI-JAPAN ECONOMIC COOPERATION

By Eliswan Azly
Medan, N Sumatra, July 17 (ANTARA) - Two weeks have gone by after the Indonesia-Japan Economic Partnership Agreement (IJ-EPA) took effect on July 1 as of this month, but Indonesian exporters have not yet been able to make use of the agreement.

Practically, a nil percent import duty is not yet enjoyed by Indonesian businessmen who have exported their products to Japan.

"On the other hand, Japanese exporters immediately started making use of this rare facility. This condition is quite lamentable, because it is the Indonesia businessmen themselves who will suffer the loss," a special staff of the trade ministry, Halida Miljani, said here early this week.
Speaking on the occasion of familiarizing tens of businessmen attending the event in North Sumatra with the Indonesia-Japan EPA organized by the Trade Ministry representative office, she said that 80 percent of 9,275 Indonesian export commodities to Japan since July 1, 2008 were already liable to a nil percent import duty.

"Around 10 percent or about Indonesian 886 items will have their import duty scrapped in the next three to ten years. In the meantime, another 10 percent of the status of Indonesian export products will remain unchanged as they are not in the exclusion list of the IJ-EPA cooperation," she said
However, Halida further stressed that hence there was no reason for the national businessmen not to make use of the facility as Indonesian export partners in Japan should already be familiar with the agreement, so that it would no longer pose a big problem in the trade cooperation between the two countries.

"Especially that the requirements the Indonesian businessmen have to meet in their exports are not difficult to meet. They are only required to have a certificate of origin of goods including from the Indonesia-Japan Economic Partnership Cooperation (IJ-EPA)," Halida said.

"The IJ-EPA cooperation should be used immediately before it is reviewed in the next five years," Halida said.

However, the standard operating procedures of the IJ-EPA cooperation cover the flow of goods and services, the origin of goods, and other procedures on bilateral cooperation in the industrial, fisheries, forestry, and agricultural fields.

"These are of course based on the principle of mutual benefit," Indonesian Trade Minister Marie Elka Pangestu said recently.

The standard operating procedures should be implemented by both countries, Pangestu said, additing that the Indonesia-Japan EPA is aimed at strengthening bilateral and regional economic relations not only as contained in the Free Trade Agreement (FTA) but also a comprehensive cooperation in investment and movements of people.

Indonesia and Japan are important economic partners in East Asia. As to Indonesia, Japan is a important trade partner receiving more than 20 percent of Indonesia's exports, and it is also the biggest foreign investor in the country. As to Japan, Indonesia is a major energy supplier and a basis for its manufacturing sector.

As a major trade partner, the value of Indonesian exports to Japan reached 23.6 billion US dollars, while Japanese imports from Indonesia were estimated at 6.5 billion US dollars.

Within the sphere of international trade, non-tariff barriers such as quality standards, including safety and hygienic requirements, could become major hurdles to Indonesian exports if companies are not capable of meeting the quality standards imposed by the importing countries.

Also greatly beneficial is the technical cooperation in developing Indonesian training systems for healthcare workers, sailors and workers in tourism-related businesses such as hotels and restaurants.

Technical assistance for Indonesian certification of vocational skills and greater opportunities for internships at Japanese companies will help Indonesian workers gain access to the Japanese market.

Obviously, the EPA also includes measures to improve the investment climate and to expedite business licensing procedures, even though these programs are already in various stages of implementation as part of the overall economic reform to woo foreign investment, the minister said.

The right focus of the EPA will make it effective in deepening and expanding bilateral economic cooperation. Japan has always been important for Indonesia as the source of investment, capital goods, basic industrial inputs and official aid.

Japan absorbs more than 20 percent of Indonesian exports and supplies 13 percent of Indonesian imports, and has been the single largest foreign investor and provider of development aid to Indonesia.

However, the bulk of Indonesian exports to Japan have always been low value added commodities such as oil and gas and other resource-based commodities such as forestry products, minerals and coal.

The institutional capacity building program under the EPA will help Indonesia upgrade its manufacturing industries to produce higher value added goods for export to Japan and other countries.

Indonesia has also always been important for Japan as a major supplier of natural resources such as oil, natural gas and wood, and as the largest country in ASEAN and given its strategic position on the Malacca Strait, Indonesia also is vital to Japan's geopolitical interests.

The total value of the two countries' bilateral trade in 2007 was recorded at 30.1 billion US dollars and the trade value was reported to have increased in the past four years.

More than 1,000 Japanese companies are operating in Indonesia absorbing 400,000 workers. EPA, Indonesia's first bilateral free-trade deal, will exempt Indonesian products from 90 percent of Japan's 9,275 import duties, amounting to 99 percent of its export value.

Signed by President Susilo Bambang Yudhoyono and Japan's former Prime Minister Shinzo Abe in Jakarta on Aug. 20, 2007 the EPA was a comprehensive economic agreement involving cooperation in several economic sectors.

The EPA also includes capacity-building programs for Indonesian industries and manpower, Minister Pangestu said.

According to her, the EPA would sustain Japan's existing investment in the country and attract new investment in the future, with an estimated 65 billion dollars in new ventures being offered up until 2010.

Indonesia is Japan's sixth partner under the EPA after Singapore, Mexico, Malaysia, Chile and Thailand, which have earlier inked similar deals.