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round 20 Japanese companies are planning to invest in Indonesia, mostly in the food and beverage industry, with an initial investment value ranging from US$10 million to $100 million.

At least one of the companies will realize their investment this year, while the remaining 19 firms will do so next year.

The government has offered the Japanese companies a set of incentives, including tax holidays.

Industry Ministry director general for agriculture and chemical industries Panggah Susanto confirmed on Monday the investment plan, saying the Japanese companies will invest, particularly in Java, as part of their expansion plans.

'€œThe expansion plans are probably spurred by the Japanese government'€™s policies, which encourage Japanese companies to expand their businesses outside their country,'€ he said on the sidelines of a hearing between the ministry and the House of Representatives'€™ Commission VI on investment.

According to Panggah, the Japanese companies will rely on local raw materials for their production because raw material supplies from Japan are not deemed to be competitive enough.

The Japanese investors view that, in terms of food and beverage manufacturing, Indonesia has plenty of room for exploration. They plan to export their products to Japan.

Panggah added that the government would give several incentives to ease investment in Indonesia, such as tax allowances and tax holidays.

'€œSuch incentives are one thing, but actually, what [the companies] really want is a smooth investment process,'€ he said.

Indonesian Food and Beverages Association (GAPMMI) chairman Adhi Lukman told The Jakarta Post that out of 20 companies, there were around six companies that were serious about investing in Indonesia.

'€œThe companies vary. There are companies who produce spice, bread and cake, beverages, snacks and products derived from rice,'€ he said, adding that he could not disclose the companies'€™ names.

The investment value of medium-sized companies ranges from $10 million to $20 million, while for large size companies, the investment value can reach $100 million, he said.

'€œThe bakery company, for example, is the third largest bakery in Japan and wants to operate five to six factories [in Indonesia]. For one factory, the investment value can reach $20 million,'€ he said, adding that a company would cooperate with local companies in the form of toll manufacturing so they could start their investment this year.

Adhi said the companies were trying to expand their business to Indonesia because their government had encouraged them to invest outside Japan.

'€œJapan'€™s market is stagnant,'€ he said, adding that the Japanese government had also increased its sales tax to 8 percent from 5 percent previously. (ask)