Japan Promises to Increase Investments in Indonesia: Minister

Japanese Prime Minister Shinzo Abe and President Joko 'Jokowi' Widodo at a bilateral meeting in Manila, the Philippines, on Sunday (12/11). (Photo courtesy of the Cabinet Secretary)

By : Tabita Diela | on 6:28 PM November 13, 2017
Category : Business, Economy

Jakarta. Japanese Prime Minister Shinzo Abe has promised to increase investment in Indonesia in the coming years on the back of the Southeast Asian nation's strong pace of reforms to improve its business climate, Foreign Minister Retno Marsudi said on Sunday (13/11).

Japanese companies invested $2.9 billion into various ventures in Indonesia in 2015, more than any other Southeast Asian country. In 2016, Japanese companies invested a total $5.4 billion.

"Prime Minister Abe promises to keep increasing Japanese investments," Retno said in a statement.

Japanese companies invested nearly $4 billion in the country in the first nine months of 2017, an 11 percent decline compared to $4.5 billion in investments during the same period last year.

Retno's comments come following a bilateral meeting between Abe and President Joko "Jokowi" Widodo in Manila, the Philippines, on the sidelines of the Asean Summit.

The meeting also discussed the upcoming celebration of the 60th anniversary of diplomatic relations between Indonesia and Japan, which will occur next year. Both leaders launched the anniversary's official logo.

Reform and Growth

Retno said the prime minister appreciated structural reforms that Indonesia has pursued recently to ease investment in the country.

Indonesia's ease of doing business jumped 19 positions to 72nd out of 190 countries in 2017, according to the World Bank's "Doing Business 2018: Reforming to Create Jobs" report published in October.

Indonesia has also received a long-awaited investment grade for its sovereign bonds from global credit rating agency Standard & Poor's (S&P) in May. The country now has an investment grade rating from all major global debt rating agencies.

A 2016 DBS Group Research study reported that Japanese companies have been increasing their investments in Southeast Asia since 2011 to diversify their business base, particularly after the 2011 earthquake disaster and a deterioration in Japan-China political relations from 2012.

Future growth of Southeast Asian markets also persuaded companies seeking to compensate for lackluster growth in Japan, the study found.

Mitsubishi UFJ Financial Group (MUFG), one of the country's largest lenders, will look to buy a 40 percent stake in Bank Danamon Indonesia for around $1.75 billion after acquiring stakes in banks in Thailand, Vietnam and the Philippines.


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