The Ministry of industry considered that Indonesia did not get significant benefit from economic cooperation with Japan in the framework of IJEPA (Indonesia Japan Economic Partnership) implemented since 2008. Therefore, the Ministry of Industry has proposed IJEPA to be re-examined so that both countries get an equal benefit. According to the basic agreement, IJEPA can be reviewed after five years. The reason is that IJEPA not yet provides a satisfactory benefit for Indonesia as exports declined, while imports continue to rise.
Agus Tjahajana, Director General of International Industry Cooperation, Ministry of Industry, Friday (December 20), said that the implementation of IJEPA showed significant impact on Indonesian export to Japan. The proof is that the growth of Indonesian imports from Japan is much more rapid than export during five years of IJEPA implementation starting in 2008. Average growth of Japan’s imports to Indonesia reached 25% per year, while exports declined an average of 6.6% per year. “Essentially, we proposed that this cooperation can be reviewed so that Indonesia can get an advantage,” said Agus.
Agus said that of 13 industries that became the focus, only a few sectors whose implementation is pretty good, namely welding, printing and metal cutting, automotive, electronics, and energy conservation. In the field of trade, IJEPA also does not provide optimal benefits where Indonesian exports to Japan were still dominated by natural-resource based raw goods. This condition is no different from the preenactment of IJEPA. Export of high value-added industrial products from Indonesia so far has not grown significantly.
Based on data from the Ministry of Industry, the use of IJEPA preferential tariff schemes tend to fluctuate and is still fairly low. In 2008, total exports of Indonesian manufacturing products is only about 15.25% which uses tariff preference (import duty tariffs have been lowered/removed), while in 2009 at 28.16%, in 2010 at 21.30%, and in 2011 recorded at 27.63%. Agus said that economic cooperation was based on three essential pillars, namely markets liberalization, facilitation of certain sectors and cooperation for increase of capacity and competitiveness.
However, Agus considered that Japan is a country that is taken into account in the Asia-Pacific region and is a potential market for Indonesia, especially in the service sector. He considered that the greatest potential, especially for Indonesia, is the semi-skilled labor services. Along with the increasing scarcity of blue-collar workers in Japan, the need for workers such as in the fields of pharmacy, nursing, construction, automotive, and construction will continue to rise in the country. Even so, he admitted, there is still an obstacle, especially language proficiency.
The same thing is also expressed by entrepreneur of the Indonesian Chamber of Commerce and Industry (Kadin Indonesia). Natsir Mansyur, Vice Chairman of Kadin for Regional Empowerment agreed with the step to be taken by the government to review the plus and minus of this bilateral agreement, at least there is a balance of trade between Indonesia and Japan. “The essence of the cooperation is that it benefits both parties, we see that IJEPA is not beneficial for Indonesia,” Natsir said.
Natsir said that it is bilaterally beneficial for Japan, because it can get an ease of import duty up to 0%, but implementation in the country should also be a concern the of government, such as the automotive sector that needs equality between importer producer and general importer. Kadin regretted the government represented by the Ministry of Finance, which make domestic rules that only benefit certain parties, so that equality for utilizing IJEPA is as if it does not exist.
Business News - December 27, 2013