Posted on 28 Jan 2015
Japan agrees to RI proposal to review partnership deal
In a much anticipated move, Japan
has given a nod to Indonesia’s proposal to review an economic partnership
agreement to further step up bilateral economic relations.
Trade Minister Rachmat Gobel said Tuesday that his office would consult with
related ministries on the issue and set up a team to carry out the assessment.
The review was expected to take place this year although a specific time frame
had yet to be determined. “We must have a grand strategy with regard to what we
want to do [with Japan]. We need to coordinate with the Industry Ministry,” he
told reporters after opening the ministry’s annual work meeting.
Indonesia’s request to review the Indonesia-Japan Economic Partnership
Agreement (IJ-EPA), which has been implemented since 2008, was proposed last
week during the trade minister’s visit to Japan, where he met with Japanese
Prime Minister Shinzo Abe and his counterpart, Economic, Trade and Industry
(METI) Minister Yoichi Miyazawa.
Indonesia has demanded several times such a review as it claims it benefits
less than expected from the deal, but no follow up has been made up to present.
Indonesia has yet to reap maximum benefits from the IJ-EPA due to, among
others, lack of product diversification, according to research by the Centre
for Strategic and International Studies (CSIS) in 2013.
Goods that failed to obtain higher market access despite the partnership
agreement were textiles, footwear, processed food, pulp and paper as well as
fishery products, according to a survey conducted by CSIS in 2013. Import
duties have been cut but are still lower than other kinds of products such as
iron and steel, automotive items, electronics and chemicals enjoyed mostly by
Japanese companies.
Indonesia’s imports from Japan have also outperformed its exports, with imports
climbing 17.81 percent to US$19.28 billion in 2013 from 2009, in contrast with
exports, which rose only 9.3 percent to $27.09 billion, data from the Trade
Ministry shows.
Rachmat said sectors subject to review might include agriculture, fisheries and
manufacturing industry, while investment would also be among topics raised in
it.
Japan has been a long-time major foreign investor in Southeast Asia’s biggest
economy, with direct investment rising 30 percent on average within the past
five years. Realized investment in 2013 nearly doubled that of 2012, primarily
spurred by massive spending in the automotive sector, settled at $4.71 billion,
according to statistics from the Investment Coordinating Board (BKPM).
Economists have pointed out that in the past; Indonesia has failed to deliver
strong positions in free-trade agreement negotiations, resulting in it gaining
less from its trading partners, therefore reviews must be at the top of its
agenda.
Rachmat also said he had secured some commitments from some Japanese industrial
firms to either increase investment or boost exports. Japan’s automotive giant
Toyota, for instance, aimed to bring its component suppliers to Indonesia to
support local manufacturing, he further said. Other firms, automobile maker
Honda and printer maker Epson also expressed their commitments to boosting the
export of transmissions and printers, respectively.
In
a much anticipated move, Japan has given a nod to Indonesia’s proposal
to review an economic partnership agreement to further step up bilateral
economic relations.
Trade Minister Rachmat Gobel said Tuesday
that his office would consult with related ministries on the issue and
set up a team to carry out the assessment.
The review was
expected to take place this year although a specific time frame had yet
to be determined. “We must have a grand strategy with regard to what we
want to do [with Japan]. We need to coordinate with the Industry
Ministry,” he told reporters after opening the ministry’s annual work
meeting.
Indonesia’s request to review the Indonesia-Japan
Economic Partnership Agreement (IJ-EPA), which has been implemented
since 2008, was proposed last week during the trade minister’s visit to
Japan, where he met with Japanese Prime Minister Shinzo Abe and his
counterpart, Economic, Trade and Industry (METI) Minister Yoichi
Miyazawa.
Indonesia has demanded several times such a review as
it claims it benefits less than expected from the deal, but no follow up
has been made up to present.
Indonesia has yet to reap maximum
benefits from the IJ-EPA due to, among others, lack of product
diversification, according to research by the Centre for Strategic and
International Studies (CSIS) in 2013.
Goods that failed to obtain
higher market access despite the partnership agreement were textiles,
footwear, processed food, pulp and paper as well as fishery products,
according to a survey conducted by CSIS in 2013. Import duties have been
cut but are still lower than other kinds of products such as iron and
steel, automotive items, electronics and chemicals enjoyed mostly by
Japanese companies.
Indonesia’s imports from Japan have also
outperformed its exports, with imports climbing 17.81 percent to
US$19.28 billion in 2013 from 2009, in contrast with exports, which rose
only 9.3 percent to $27.09 billion, data from the Trade Ministry shows.
Rachmat
said sectors subject to review might include agriculture, fisheries and
manufacturing industry, while investment would also be among topics
raised in it.
Japan has been a long-time major foreign investor
in Southeast Asia’s biggest economy, with direct investment rising 30
percent on average within the past five years. Realized investment in
2013 nearly doubled that of 2012, primarily spurred by massive spending
in the automotive sector, settled at $4.71 billion, according to
statistics from the Investment Coordinating Board (BKPM).
Economists
have pointed out that in the past; Indonesia has failed to deliver
strong positions in free-trade agreement negotiations, resulting in it
gaining less from its trading partners, therefore reviews must be at the
top of its agenda.
Rachmat also said he had secured some
commitments from some Japanese industrial firms to either increase
investment or boost exports. Japan’s automotive giant Toyota, for
instance, aimed to bring its component suppliers to Indonesia to support
local manufacturing, he further said. Other firms, automobile maker
Honda and printer maker Epson also expressed their commitments to
boosting the export of transmissions and printers, respectively. - See
more at:
http://www.thejakartapost.com/news/2015/01/28/japan-agrees-ri-proposal-review-partnership-deal.html#sthash.8pXSKIWm.dpuf
