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Government eyes Japanese companies to relocate to Indonesia amid slowing investment

Jakarta Post - October 15, 2020

Adrian Wail Akhlas, Jakarta – The government aims to lure Japanese companies into relocating to Indonesia, as it launched on Wednesday an integrated data platform to spur investment and economic relations between the two countries as the health crisis impacts the economy.

The integrated data platform, dubbed Japan-Indonesia Partnership Lounge (JAIPONG), is set to provide information on economic cooperation opportunities between Japan and Indonesia, as well as promote investment climate in the country as part of the country's efforts to revive an economy battered by the pandemic.

As more companies plan relocations to Indonesia, only a few hail from Japan, Deputy Foreign Minister Mahendra Siregar said on Wednesday, calling for the two countries to enhance cooperation in a bid to advance economic relations.

"It is not enough as we have 60-year strong [diplomatic] relations," he told an Indonesia-Japan business forum.

Earlier in June, President Joko "Jokowi" Widodo announced seven foreign companies had confirmed plans to relocate production facilities to Indonesia, mostly from China, including South Korean industrial conglomerate LG and Japanese electronics giant Panasonic. The relocations are estimated to bring investment of US$850 million to the country and potential employment for 30,000 workers.

Indonesia's foreign direct investment (FDI) fell 8.1 percent year-on-year (yoy) between January and June to Rp 195.6 trillion ($13.2 billion), from the same period last year, as the COVID-19 pandemic hit the global economy, according to Investment Coordinating Board (BKPM) data.

Meanwhile, FDI originating from Japan also dipped 48.5 percent to $1.21 billion as of June this year, from $2.35 billion in the same period last year, BKPM data also showed.

Meanwhile, Mahendra said the recently passed Job Creation Law would also make the investment climate more business friendly and should satisfy Japanese businesses.

The House of Representatives passed last week the jobs law to improve investment and economic growth. It has since sparked widespread protests, with critics of the law saying it undermines labor rights and weakens environmental protections.

"The main goal of the Job Creation Law is to cut bureaucratic red tape to address inefficiency and corruption that often hinders investment," he went on to say. "We hope Japanese investors and businesspeople take advantage of this positive development."

Meanwhile, Trade Minister Agus Suparmanto said the ministry would continue to support trade activity through digital platforms such as JAIPONG.

"We are optimistic that creative measures through digital technology could contribute to boosting Indonesian exports," Minister Agus said in a video message.

Japan is Indonesia's fourth-main export destination with $8.32 billion worth of non-oil and gas goods shipped from January to August this year, according to Statistics Indonesia, a decrease of 9.06 percent yoy from the same period last year.

Meanwhile, Indonesia imported $7.31 billion worth of non-oil and gas goods from Japan in the same period.

Source: https://www.thejakartapost.com/news/2020/10/15/govt-eyes-japanese-companies-to-relocate-to-indonesia-amid-slowing-investment.html