Interview: Hiroshige Seko
How can Japan and Indonesia strengthen their bilateral trade in the future?
HIROSHIGE SEKO: To develop bilateral trade between Japan and Indonesia, it is important for Indonesia to both enhance the competitiveness of its export industries and promote industries equipped to meet domestic demand. I believe that strengthening the value chain will be key to enhancing the competitiveness of Indonesia’s export industries. I see great growth opportunities for these industries, as long as the Indonesian government refrains from protectionist policies and focuses on strengthening the competitiveness of finished products within a free trade system. Indonesia has the potential to become competitive in the export markets of household electric appliances and light industries.
Challenges are reducing the cost of importing raw materials, strengthening component processing capabilities and cultivating local enterprises. Solutions to these challenges include promoting greater international economic partnerships, attracting and growing support industries, and creating business matching opportunities. To address these remaining issues, I would like to hold active discussions about the various sectors in which Japan can cooperate with Indonesia through bilateral dialogue.
What policy changes can make Indonesia more attractive for Japanese investment?
SEKO: According to a survey conducted by JETRO (Japan External Trade Organisation), Japanese companies operating in Indonesia highlighted challenges such as underdeveloped physical infrastructure, legal uncertainty and lack of transparency. Japan will cooperate with the Indonesian government and other key stakeholders to develop quality infrastructure, leveraging Japanese technology and expertise. The survey also identified legal and transparency challenges including abrupt changes in legislation, legal inconsistencies, ambiguous legal clauses and inconsistent enforcement. To resolve these challenges, it is essential to implement measures that address companies’ needs and concerns, such as a public hearing and grace periods before introducing new laws. The Task Force for the Acceleration and Effective Implementation of Economic Policy, established in June 2016, is a wonderful forum for discussions between the Indonesian government and private sector companies on resolving challenges to doing business in Indonesia. If the government listens carefully to companies and enhances administrative transparency, Japanese companies will find it more attractive to invest in Indonesia.
In what ways is Japan helping to further develop infrastructure in Indonesia?
SEKO: There are several ongoing infrastructure projects that Japan is involved in including the Patimban port development project and a 35-GW power generation programme. At the G7 Ise-Shima Summit in 2016, Japan announced the Expanded Partnership for Quality Infrastructure initiative to provide $200bn for infrastructure projects over the five years from 2016 to 2020. Japanese agencies will provide robust assistance, with the government acting in cooperation with organisations including JICA (Japan International Cooperation Agency), JBIC (Japan Bank for International Cooperation) and NEXI (Nippon Export and Investment Insurance). Japanese infrastructure is renowned for superior cost-benefit performance, environmental friendliness, energy efficiency and durability. I am confident Japanese infrastructure technology and expertise can make a major contribution to Indonesia’s development. In response to calls from Indonesia for Japan to take quick action to help build infrastructure, we are improving our Official Development Assistance Loans scheme by streamlining the process of extending these loans.
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