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Jakarta Post

RI mulls setting up trading house to boost exports to Japan

  • Linda Yulisman

    The Jakarta Post

Jakarta   /   Tue, December 2, 2014   /  10:07 am

Indonesia is considering establishing a trading house to help boost its exports to Japan, an Indonesian ambassador says.

Indonesian Ambassador to Japan Yusron Ihza Mahendra said on Monday that following Japan'€™s success in selling its products in overseas markets through a trading house, Indonesia may require a similar body to promote its exports to penetrate the Japanese market.

'€œThe President said recently that ambassadors should also be salesmen [for the country] and I believe trade should be carried out both ways. So it'€™s not only us requesting Japan to come here, but also strongly marketing our products to Japan,'€ Yusron said, referring to President Joko '€œJokowi'€ Widodo.

Indonesia and Japan have implemented an economic partnership agreement (IJ-EPA), which has helped cut the tariffs of traded products since 2008.

However, Indonesia'€™s exports to Japan have been outpaced by imports, with exports only increasing by 9.53 percent to US$27.09 billion from 2009 to 2013, while imports expanded by 17.81 percent to $19.28 billion, according to the Trade Ministry.

In terms of industrial goods, the situation is even worse on the Indonesian side, as exports rose by only 3.5 percent to $11.11 billion in 2013 from 2009, while imports climbed by 8.1 percent to $19 billion over the period, causing a significant deficit of $7.88 billion.

Indonesia has repeatedly raised its concerns on this issue, requesting to review the implemented trade pact since the past year to allow it to enjoy more balanced trade, but up to present, there has been no follow up.

Foreign direct investment (FDI) from Japan into Indonesia has expanded significantly, with an average 30 percent growth recorded in the past five years.

Realized investment last year nearly doubled from the 2012 figure, largely driven by an expansion in the automotive sector, settling at $4.71 billion, according to data from the Investment Coordinating Board (BKPM).

The investment, however, slowed this year amid the global economic downturn, settling at $2.04 billion in the January-September this year.

Yusron added that the government was not trying to court more sizeable investment from Japanese firms to Indonesia in line with its priority sectors, including the maritime industry and power generation.

'€œWe'€™re trying to attract Japanese investors to Indonesia, but of course we must also improve our domestic business climate so that when they come here, they can realize their investment smoothly,'€ he said.

Meanwhile, Japanese engineering giant IHI Corporation expressed its interest in taking part in a power generation project planned by the Indonesian government and it also planned to expand its business in Indonesia.

IHI vice president for global marketing headquarters Hironobu Shikama said his firm was looking into engineering, procurement and construction (EPC) work in power plant projects in Indonesia.

The Indonesian government has plans to build electricity generation projects to produce up to 35,000 megawatts in the coming years.

Through its local subsidiary, PT Cilegon Fabricators, IHI at present makes boilers that are exported to several destinations, including Australia, Malaysia, Thailand, Japan, Chile and the US. It has yet to supply its products to the Indonesian market.

'€œWe hope we can get some EPC projects in Indonesia and at the same time supply our boilers there. With that, we may then increase our investment here for a capacity upgrade,'€ Shikama told The Jakarta Post on the sidelines of the seminar.

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