RI, Japan ready to implement EPA deals

Novia D. Rulistia ,  The Jakarta Post ,  Jakarta   |  Tue, 07/01/2008 10:25 AM  |  Headlines

Indonesia and Japan will commence their Economic Partnership Agreement (EPA) on July 1 by forming a joint committee, eliminating thousands of import duties and sending Indonesian nurses to Japan.

The signing of the agreement will take place in Tokyo between Indonesia Trade Minister Mari Elka Pangestu and the Japanese foreign minister and four other related ministers, said Japan Ambassador to Indonesia Kojiro Shiojiri on Monday.

Shiojiri said the two countries agreed to establish a joint committee on the first day and approve operational procedures on the trade of goods. "This committee will monitor the implementation of the EPA and provide evaluation and recommendations."

The EPA is designed to strengthen bilateral economic relations between the Asian nations, covering not only issues related to trade tariffs but also investment and migration.

The EPA is the first of its kind for Indonesia and the sixth for Japan. Japan previously signed EPA agreements with Singapore, Mexico, Malaysia, Chile and Thailand.

Indonesia and Japan also agreed to have some tariffs cut to zero percent.

Mari said 58 percent of the total 11,163 tariffs would go to zero percent on the first day of the EPA, including tariffs on spare parts, electronics, automotive products, construction and energy-related equipment.

"The remaining will gradually enjoy the zero percent duty within the next three to 10 years," she said.

In Japan, 80 percent of 9,275 import duties will directly enjoy the non-tariff duty starting July 1.

"With the agreement, we expect Japanese investment to rise to US$65 billion by 2010 and help maintain the existing investment in the country as we also provide certainty for them in the agreement," Mari said.

"We also expect to see 20 percent growth in our exports after the EPA is implemented."

According to the Investment Coordinating Board, in the first five months of this year the total investment from Japan reached US$827.9 million.

In 2007, Japanese investment was $618.2 million, down from $902.8 million in 2006. The investment mostly went to the automotive sector, trade, machinery and electronics.

Last year, Indonesia's exports to Japan reached $23.6 billion, while imports were only $6.5 billion.

With the EPA, Japan will allow Indonesians to provide their direct services in the country for the first time, with some 1,000 nurses and caretakers set to depart in the next two months.

"They all have been interviewed, and now it's only the matchmaking process left. We're hoping the Indonesian nurses can start working by the end of July and the end of August for caretakers," first secretary for the economy Satoshi Doi said.

The workers would be allowed to stay in Japan for the maximum of three years for nurses and four years for caretakers.

Mari has said the government also considered sending Indonesian manpower to work in Japan's tourism sector.

The EPA will also cover a capacity building program in Indonesia under the Manufacturing Industrial Development Center for the automotive, petrochemical, food and beverage, equipment and small and medium enterprise sectors.

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