Indonesia-Japan Relations: From Complementarity to … · 21/03/2013 · Developing soft infrastructure such as trade facilitation, logistics facilitation and standards and conformance

Indonesia-Japan Relations: From Complementarity to

Leading Regional Economic Integration in Asia

March 4, 2013

Hiroyuki Ishige Chairman and CEO

Japan External Trade Organization (JETRO)

Copyright © 2013JETRO. All rights reserved.

Presentation points

1. Present status of the Japanese economy Abenomics and strengths of Japan 2. Indonesia-Japan relations: complementary relationship 3. Towards regional economic integration in Asia 4. Conclusion

Copyright © 2013JETRO. All rights reserved. 3

“Three arrows” of Japan’s economic policy Agile fiscal management

Bold monetary policy Growth strategy

Bundled together

Breaking away from deflation Revitalization of the Japanese economy

1


Japan’s strengths

Ideal location of R&D bases and regional head offices of foreign investors Competitive exports of parts and components Potential in overseas development of the service industries (e.g., food, contents) Exceptional power in the area of science and technology, esp. in physiology, chemistry, and physics Enormous sum of financial assets owned by the population (worth 1,500 trillion yen) Potential in the elderly market, including the medical care and nursing care industries

2


Presentation points

1. Present status of the Japanese economy 2. Indonesia-Japan relations: complementary relationship 3. Towards regional economic integration in Asia 4. Conclusion


Expanding Indonesia-Japan trade Japan’s trade with Indonesia by major items (on a customs clearance basis)

（Unit：1 million USD, %）

Exports （FOB）

Imports （CIF）

2007 2012* 2007 2012* Export value

Export value

Proportion in total

Growth rate

Import value

Import value

Proportion in total

Growth rate

Chemical products 943 1,459 7.2 54.7 Foodstuff 894 1,222 3.8 36.7

Organic compounds 271 320 1.6 18.1 Raw materials 6,067 4,727 14.6 - 22.1

Plastics 385 547 2.7 42.1 Non-ferrous metals 4,266 2,055 6.3 - 51.8

Products by raw materials 2,113 4,575 22.5 116.5 Mineral fuels 12,660 17,353 53.6 37.1

Iron and steel 1,017 2,290 11.2 125.2 Petroleum and crude oil 2,972 6,073 18.8 104.3

Non-ferrous metals 391 669 3.3 71.1 Liquefied natural gas 5,940 5,820 18.0 - 2.0

Metal products 264 653 3.2 147.3 Coal 2,022 4,408 13.6 118.0

General machinery 2,450 6,037 29.7 146.4 Chemical products 692 782 2.4 13.0

Engines and turbines 516 1,340 6.6 159.7 Products by raw materials 3,010 3,382 10.4 12.4 Metal processing machinery 218 625 3.1 186.7 Non-ferrous metals 830 631 1.9 - 24.0 Construction/mining equipment & machinery 251 659 3.2 162.5 Yarn & textiles 373 589 1.8 57.9 Cargo handling machinery 230 681 3.3 196.1

Wooden products (exc. furniture) 909 913 2.8 0.4

Electronic appliances 1,404 2,376 11.7 69.2 General machinery 656 890 2.7 35.7 Semiconductors & other electronic parts 402 436 2.1 8.5 Electronic appliances 1,352 1,535 4.7 13.5

Transportation equipment ( Automobiles, etc.) 1,295 4,461 21.9 244.5

Transportation equipment ( Automobiles, etc.) 234 509 1.6 117.5

Total including other items 9,047 20,359 100.0 125.0 Total including other items 26,445 32,364 100.0 22.4

* Data for 2012 was from quick estimation. Source: The list was made by JETRO based on the Trade Statistics of Japan’s Ministry of Finance

3


Continuously growing FDI in Indonesia 4

0

50

100

150

200

250

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

7.1 10.6 19.4

56.5 37.7

67.0 46.3 34.7

48.7

82.3 98.8

35.1 30.8 54.5 45.7

89.1 59.9

103.4

148.7

108.2

162.1

194.7

245.6 Investment value

FDI in Indonesia by country

2006 2007 2008 2009 2010 2011 2012

Investor country

Investment value

Investor country

Investment value

Investor country

Investment

value

Investor country

Investment

value

Investor country

Investment value

Investor country

Investment

value

Investor country

Investment

value

Japan 902.8 Singapore 3,748.0 Mauritiu

s 6,477.9 Singapore 4,341.0 Singapore 5,565.0 Singapore 5,123.0 Singapor

e 4,856.4

UK* 660.5 UK* 1,685.8 Singapore 1,487.3 Netherla

nds 1,198.7 UK* 1,892.1 Japan 1,516.1 Japan 2,456.9

Singapore 508.3 Korea 627.7 Japan 1,365.4 Japan 678.9 US 930.9 US 1,487.8 Korea 1,949.7

Korea 475.7 Japan 618.2 UK* 513.4 Korea 624.6 Japan 712.6 Netherlan

ds 1,354.4 UK* 1,790.3

Malaysia 407.6 Chinese Taipei 469.7 Malaysia 363.3 UK* 587.7 Netherlan

ds 608.3 Korea 1,218.7 US 1,238.3

Total 5,991.7 Total 10,341.4 Total 14,871.4 Total 10,815.2 Total 16,214.8 Total 19,474.5 Total 24,564.7

（Unit: 1 million USD）

*Data of British Virgin Islands was included. Source: Remarkable Indonesia, BKPM of Indonesia

Total FDI in Indonesia

（Unit: 100million USD）

57.4

29.1

25.8

32.4

22.9

26.8

35.4

29.0

5.6

8.3

11.5

8.8

5.9

10.7

11.7

14.9

4.1

17.2

11.8

9.5

4.1

7.9

3.8

5.4

0% 1-24% 25-49% 50-74% 75-99% 100%

Thailand

China

India

Trade status of Japanese companies abroad Proportion of exports in total sales

(%)

0 10 20 30 40 50 60 70 80 90 100

8 Copyright © 2013JETRO. All rights reserved.

Indonesia

Breakdown of export destination

40.7

37.3

61.8

36.7

34.7

31.6

10.2

14.4

3.5

5.2

3.6

2.4

3.4

0.7

4.0

4.7

5.9

7.6

4.1

4.0

4.8

8.6

10.7

13.4

16.3

28.2

Japan ASEAN China India US Europe Other

Indonesia

Thailand

China

India

(％)

5

Company location

Source: Survey of Japanese-Affiliated Companies in Asia and Oceania by JETRO


Expansion of FTAs/EPAs adds momentum to enhanced institutional stability in business

Progress of FTA/EPA utilization rates by Japanese companies in ASEAN markets

Survey period: Oct. - Nov. 2012

19.7 19.3

23.0

29.7

40.3

43.8

40.7

16.0 16.7

19.7

24.1

35.0

37.2 38.9

0

5

10

15

20

25

30

35

40

45

50

2006 2007 2008 2009 2010 2011 2012

Export Import


Utilization rate: the number of firms using FTAs or EPAs divided by the number of firms engaged in exports (imports)

（%）

6


Asia-based Japanese companies utilizing multiple FTAｓ 7

Utilization rates of effective FTAs/EPAs

8.3

11.5

26.7

27.3

28.8

29.6

33.5

34.1

39.5

41.3

42.0

48.2

50.0

50.1

54.5

58.5

58.7

0 10 20 30 40 50 60 70

Bangladesh (n=12)

HK & Macau (n=87)

Taiwan (n=60)

Cambodia (n=11)

China (n=288)

Philippines (n=81)

Vietnam (n=179)

Australia (n=88)

New Zealand (n=38)

India (n=184)

Malaysia (n=169)

Singapore (n=114)

Sri Lanka (n=10)

Thailand (n=491)

Lao (n=11)

Indonesia (n=123)

Korea (n=63) ASEAN, EU

Japan, ASEAN, China

Japan, ASEAN, China, Korea, India, Australia, NZ

Japan, ASEAN

Japan, ASEAN, China

ASEAN, HK, Taiwan

Japan, ASEAN, China, Korea, India, Australia


Major FTAs utilized



Local procurement rate of Thai-based Japanese Companies exceed more than 50%

47.8

60.8

52.9

43.0

42.4

27.9

26.2

31.8

31.4

30.7

29.4

29.0

37.9

50.9

7.2

2.4

5.0

14.3

10.9

13.2

8.0

5.3

0.0

3.7

8.1

11.3

5.7

8.0

5.6

7.1

9.8

9.6

9.8

9.2

Total(n=1,764)

China(n=474)

Thailand(n=417)

Indonesia(n=109)

Malaysia(n=147)

Vietnam(n=158)

Philippine(n=60)

Local Japan ASEAN China Other



8

Procurement sources for raw materials and parts


Presentation points



Formation of FTAs/EPAs in East Asia

ASEAN’s FTAs/EPAs

Australia & NZ: effective

India: effective

China: effective Korea: effective

Japan: effective

In 2012, five ASEAN Plus One FTAs (namely with China, Korea, Japan, India, and Australia and New Zealand) took effect. ASEAN and these signatory countries have been accelerating efforts towards further development of regional production networks.

→ Formation of the Regional Comprehensive Economic Partnership (RCEP)

FTAs Effective date

China-ASEAN Field in goods (Jul. 2005) Field in services (Jul. 2007) Field in investment (Jan. 2010)

Korea-ASEAN Field in goods (Jun. 2007) Field in service (May 2009) Field in investment (Sept. 2009)

Japan-ASEAN FTA in effect. (Dec. 2008)

India-ASEAN Field in goods (Jan. 2010)

Australia & NZ-ASEAN

FTA in effect (Jan. 2010)

Efforts towards region-wide economic integration

Papua New Guinea

US Canada Mexico

Russia

Hong Kong CH. Taipei

Peru Chile

APEC (FTAAP)

Among the 10 ASEAN member countries, Myanmar, Cambodia and Laos have not joined APEC.

TPP

Viet Nam

Singapore

Brunei

New Zealand

Chile

US

TPP Peru

Australia

Vietnam

Malaysia

RCEP* *RCEP=Regional Comprehensive Economic Partnership

(ASEAN・JP・CH・KR・IND・AUS・NZ)

Japan-China-Korea FTA

９

(source : METI )

http://www.ap-infra.org/cgi-local/inter/country_top.pl?fnm=chile-j.htm

http://www.ap-infra.org/cgi-local/inter/country_top.pl?fnm=brunei-j.htm

http://www.ap-infra.org/cgi-local/inter/country_top.pl?fnm=nzland-j.htm

http://www.ap-infra.org/cgi-local/inter/country_top.pl?fnm=singa-j.htm

http://www.ap-infra.org/cgi-local/inter/country_top.pl?fnm=usa-j.htm


Regional Trade Agreement: Liberalization of the Service Sectors

Service Sectors

D

A B

C

Logistics Finance Telecommunications

The development of service industries are indispensable to create efficient supply chain networks in the manufacturing industry

10


Concept of connectivity enhancement in East Asia ASEAN formulated the “ASEAN Connectivity Master Plan (MPAC)” in 2010 and promotes hard and soft infrastructure development inside ASEAN. Japan is supporting these efforts and compiled 33 priority projects in the “List of Flagship Projects” at the ASEAN-Japan Summit in 2011. Estimated cost of the flagship projects is about 2 trillion yen (equivalent to about 25 billion USD).

Developing soft infrastructure such as trade facilitation, logistics facilitation and standards and conformance is also necessary to enhance connectivity.

Toward ‘East Asia-wide’ connectivity

Implementation of MPAC

Establishment of AEC by 2015

Implementation framework

Trade facilitation

Logistics facilitation

Energy /power

Standards and conformance

Road

Ports

Integrated promotion

Soft infrastructure Hard infrastructure

11

(source : METI )


Indonesia Economic Development Corridors (IEDCs) 12

The promotion of the IEDC (Indonesia Economic Development Corridors) was agreed on at the 1st Japan-Indonesia Joint Economic Forum on January 10-11, 2010 in Jakarta. Two countries have cooperated in implementing the MPA (Metropolitan Priority Areas for Investment and Industry)

as a pilot program. Both countries discussed infrastructure development, business environment maintenance and industrial

cooperation at the 4th “Joint Economic Forum” on October 8, 2012 in Tokyo.

１

Northern Java

Surabaya

Denpasar

Mataram

Jakarta

Medan

Pakanbaru

Jambi

Palembang

Lampung

Bandung

Semarang

Banjarmasin

Samarinda Pontianak

Makassar

Manado

Mamuju

Palu

Gorontalo

Manokwari

1

2

5

3 4

6

Serang

Kalimantan Western Sulawesi

Papua

Eastern Sumatra-Northwestern Java

Eastern Java-Bali-Eastern Nusa Tenggara

Palangka Raya

Main Industry：palm oil, rubber, coal Necessary infrastructure: ports, railways and roads, power plants

Main industry: oil and natural gas, palm oil, coal Necessary infrastructure: river ports, railways, industrial roads

Main industry: agriculture, fishery, nickel Infrastructure: irrigation channels, ports, power sector

Industry: tourism, agriculture and livestock Infrastructure: airports, ports, roads, power plants

Main industry: food, textile, transport machinery Necessary infrastructure: ports, railways and roads, power plants

(source : METI )


Presentation points



Indonesia-Japan relations

Bilateral complementary relationship

Collaborations in： Leading regional economic integration

Making Indonesia an export hub of Asia

Thank you for your attention!

13

Documents

Indonesia-Japan Relations: From Complementarity to … · 21/03/2013 · Developing soft infrastructure such as trade facilitation, logistics facilitation and standards and conformance