TANGIBLE RESULTS FROM THE JUNE VISIT OF PRESIDENT YUDHOYONO

Since President Susilo Bambang Yudhoyono’s visit to Japan at the beginning of June, economic and political relations between the two countries appear to have accelerated considerably. In fact, the Japanese ambassador in Indonesia, Yutaka Iimura, reckoned that Yudhoyono’s visit led to an increase of US$1.3 billion in Japanese investment. If true, that is a remarkable figure.

Certainly, stories of Japanese companies expanding their business in Indonesia are following one after another. For example, in mid-June it was announced that Toshiba and Sanyo would partner with a Korean company to build thin-screen plasma televisions in West Java—most intended for export to Asia and the Persian Gulf region. Also, Kashima has announced that they will re-enter the real estate and urban development market in Indonesia, having earlier fled the country in 1998 with the fall of Suharto. Most prominent, however, are Japanese automakers, which have a major stake in Indonesia already. An article on motorbikes said that in 2004, Honda had 52.2% of the market share, followed by Yamaha (22.7%) and Suzuki (21.6%). These Japanese companies are competing strongly against one another to increase their sales in Indonesia.

Meanwhile, coming the other way, a prominent batik designer named Iwan Tirta has visited Tokyo to try to promote Indonesian batik sales in Japan. He hopes that Indonesian fashions might catch the public eye in Japan and lead to a dramatic expansion of batik sales.

Furthermore, an Indonesian who lives in Japan, Richard Susilo, has announced that he will begin publishing the first Japanese-Indonesian business magazine on August 1st. The magazine will be in both Japanese and Indonesian languages. It is planned to be a monthly with more than than 40 pages in each issue. It is called JIEF, that is, Japan-Indonesia Economic Forum. Those who are interested can contact Susilo at the following e-mail address:

promosijapan@yahoo.co.jp

As noted in Shingetsu Newsletter No. 4, Japan and Indonesia agreed to begin FTA negotiations during President Yudhoyono’s visit. These negotiations in fact began on July 14th in Jakarta. Japan hopes to secure easier access to Indonesia’s automobile and steel industries, while Indonesia wants to expand its exports of agriculture and labor to Japan. It is hoped that the negotiations will be finished within a year.

Several years ago, with the political instability in Indonesia and the Asian financial crisis, Japanese investment in Indonesia had fallen dramatically. In fact, it fell from a peak of US$1.8 billion in 2000 to only US$520 million in 2002. However, it appears that many Japanese political and business leaders are calculating that President Yudhoyono will bring peace and prosperity back to Indonesia. They are thus eager to return to the Indonesian market.

On a political level, the Japan has of course welcomed the recent Aceh peace agreement. The Asahi Shinbun ran an editorial that noted the positive influence on negotiations provided by the efforts to alleviate the December 2004 tsunami disaster. The Asahi hoped that Aceh’s rich deposits of natural gas would allow the region to quickly rebuild from the long-running war.

Additionally, on July 15th, MOFA announced a package of emergency aid for the drought-ravaged Nusa Tenggara region of Indonesia. The package was relatively modest at US$1.5 million, but it is aimed at providing food for undernourished children in the region.

All told, there has clearly been an expansion of Japan-Indonesia ties in the past two months, and it looks set to continue.

Sources:

Yuse, Risa, “Indoneshia to Watashi—Kiseichu Gakusha Fujita Koichiro-san—‘Oraka-na Kyosei Taisetsu’ (Indonesia and Me: Parasitologist Koichiro Fujita: Big-Hearted Coexistence is Important),” Asahi Shinbun, June 7, 2005.

Daikei, Tatsuya, “Hakkai Terebi—Indoneshia de Seisan—Toshiba, Sanyo ya Kankoku LG Denko Shinkokoku-muke Kyoten ni (Thin Televisions: Production in Indonesia: Toshiba, Sanyo, and Korea’s LG Denko Will Make a Base for Rising Countries),” Nihon Keizai Shinbun, June 18, 2005.

Fujitani, Takeshi, “Ache Tsunami Iji Nihon Homon e (Aceh Tsunami Orphans to Visit Japan),” Asahi Shinbun, June 20, 2005.

Fujiya, Takeshi, “Ootobai Hanbai Kasoku—Indoneshia—Teimei Dasshi Nen 40% Seicho—Nihon Meekaa, Shea Kakudai Kiso (Increacing Sales of Mortorbikes: Indonesia: 40% Annual Growth, Getting Out of Stagnation: Japanese Companies Compete over Share),” Asahi Shinbun, July 13, 2005.

Daikei, Tatsuya, “Indoneshia to FTA Kosho Kaishi (FTA Negotiations with Indonesia Begin),” Nihon Keizai Shinbun, July 15, 2005.

AFP-Jiji, “First Japanese-Indonesian Business Magazine Set to Debut,” Japan Times, July 20, 2005.

Asahi Shinbun, “Ache Wahei—Tsunami ga Motarashita Kibo (Peace in Aceh: The Hope that the Tsunami Brought),” Asahi Shinbun, July 20, 2005.