Japan and Indonesia to finally agree on economics and trade

The Jakarta Post ,  Jakarta   |  Fri, 06/08/2007 7:11 AM

Abdul Khalik, The Jakarta Post, Jakarta

Japan and Indonesia are set to finally sign a comprehensive economic agreement that should liberalize goods and services trade between the two countries and create greater cooperation in investment, competition and movement of people.

Japan's Prime Minister Shinzo Abe has plans to visit Indonesia in August when he and President Susilo Bambang Yudhoyono are expected to sign the long-awaited economic partnership agreement (EPA).

The EPA is a comprehensive bilateral agreement which should see Japan drop more than 90 percent of its tariffs on Indonesian products.

Conversely, the agreement would see Indonesia immediately remove around 35 percent of tariffs on goods imported from Japan, with the rest to be removed over a period of between three and 15 years.

Japan is Indonesia's largest trading partner.

Two-way trade amounted to US$27.2 billion, with an $16.2 billion surplus in Indonesia's favor in 2006.

Japan is also among Indonesia's largest investors, with approved investment plans amounting to $1.68 billion in 2005.

Both leaders would also discuss cooperation in global warming, counter-terrorism and regional problems including the North Korean nuclear row, the Japanese Embassy said Thursday.

Abe was expected to arrive in Indonesia some time in the third week of August.

Japan's deputy ambassador Satoru Satoh told a press briefing mutual cooperation was expected to improve after Yudhoyono and Vice President Jusuf Kalla's recent visits to Japan.

""After over two years of negotiations, we have arrived at the final stage of finalizing the economic agreement,"" Satoru said.

""There's a great hope that both leaders can sign the agreement when they meet in Jakarta.""

One of the few remaining issues was that Japan was still waiting for Indonesia's investment negative list, which specify in which sector Japan can and can not invest.

Indonesia's chief negotiator for EPA Soemadi Brotodiningrat said he was optimistic the economic partnership agreement (EPA) could be signed in August, provided no major obstacles remained.

""Hopefully, the negative list will be submitted before August,"" Soemadi said.

""Right now, working-level negotiators are meeting in Bali to finalize the draft of the agreement.

""After that, the full team will meet on June 21.""

Yudhoyono and Abe agreed on key elements of the EPA when they met last November.

Since then, nine chapters have been finalized, leaving chapters on energy and mineral resources, trade in goods, rule of origin and technical cooperation still on the negotiating table.

But Soemadi said more than 90 percent of the agreement had been finalized.

Abe would also raise his initiative on global warming called ""Cool Earth 50"", which calls on all major emitters to participate in cutting global emission by half from the current level by 2050, Satoh said.

""Japan will create a new financial mechanism for assistance to developing countries that respond to its proposal,"" Satoh said.

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