Joko Heads to Japan, China to Make Investment Push


MARCH 22, 2015

[Updated at 1:06 a.m. on Monday, March 23, 2015 to add details and comments]

Tokyo/Jakarta. President Joko Widodo kicked off a seven-day state visit to Japan and China on Sunday, a trip he hopes will drum up foreign investment and cement bilateral ties between Indonesia and the two Asian economic giants.

Indonesia and Japan are also expected to sign a defense pact during Joko's visit to Tokyo, as security issues concerning the South China Sea will be high on the agenda for the president's separate bilateral talks with leaders in the Japanese capital and in Beijing.

Joko, first lady Iriana Widodo, and senior government figures arrived in Tokyo on Sunday evening and will stay there until Wednesday, before moving on to Beijing and returning to Jakarta next Saturday.

At a press conference at Halim Perdanakusuma Airport in East Jakarta shortly before his departure, Joko said he hoped the trip would be of benefit to Indonesia, amid growing concerns over the impact of the slumping rupiah to the growth of Southeast Asia's largest economy.

The rupiah has further depreciated to 13,000 per US dollar over the past couple of weeks.

"The weakening rupiah is a signal that we must make improvements; must modernize [our economy]," the president said. "Indonesia's economy is currently in the process of a fundamental transition; from an economy relying too much on raw commodities to an economy that will create more added value."

He added, though, that "[the rupiah's] depreciation makes investing in Indonesia very attractive; and makes Indonesia a competitive production base."

It is in this spirit that Joko kicked off his visit to Japan, which will be his first since his inauguration as president in October last year, and to China, which he will visit for the second time since attending the APEC Summit in Beijing in November.

"Japan is the second-biggest investor in Indonesia. China also has large potential to invest more [in Indonesia]," Joko said. "Therefore during my visits to Japan and China, I hope to give more concrete, more detailed explanations [regarding investing in Indonesia]. We hope to further boost domestic and foreign investments."

Among points he is hoping to raise with Japanese and Chinese leaders are major infrastructure projects planned during his five-year term in office — including the expansion of the electricity grid to power the nation, as well as more toll roads and sea ports to boost connectivity among Indonesia's sprawling islands.

He said he would also promote the "one-stop service" offered by Indonesia's Investment Coordinating Board (BKPM) to help investment processing in the archipelago.

"We want to speed up infrastructure development, stimulate investment and boost the maritime industry. The government is committed to developing this country and to run a good, clean administration," Joko said.

Furthermore, the president added that many Japanese and Chinese companies had been moving their businesses to Southeast Asia over the past decade, and the trend was expected to continue and further expand in the future.

The president also said Indonesia "must work hard" to invite more foreign firms to move their factories to Indonesia, so that there would also be transfer of technology, among other benefits.

Indonesia's Foreign Affairs Ministry spokesman Arrmanatha Nasir said the main purpose of Joko's visits was to improve economic cooperation and trade with Japan and China.

He said the president was slated to have an audience with Japan's Emperor Akihito, before holding separate bilateral talks with Japanese Prime Minister Shinzo Abe.

In Beijing, Joko will meet with his Chinese counterpart, President Xi Jinping.

Joko is also scheduled to attend business forums in both countries where he will inform business leaders of investment opportunities in Indonesia, the Foreign Affairs Ministry said. He will stop by in Malaysia to attend the wedding reception of Malaysian Prime Minister Najib Razak's daughter before touching down at Halim on Saturday morning.

The president is accompanied by Foreign Affairs Minister Retno Marsudi; Coordinating Economic Minister Sofyan Djalil; Indonesian Armed Forces (TNI) chief Gen. Moeldoko; Cabinet Secretary Andi Widjajanto; and chief of the Indonesia Investment Coordinating Board (BKPM), Franky Sibarani.

Franky said on Sunday that Japanese carmaker Toyota Motor was planning to invest a total of $1 billion to expand its factories in Indonesia. He added that Joko was also slated to meet with Suzuki Motor chief executive Osamu Suzuki, among other Japanese top business players, in Tokyo.

Indonesia's imports from Japan rose 17.8 percent to $19.25 billion between 2009 and 2013, according to data from the Trade Ministry. Over the same period Indonesia's exports to Japan climbed 9.3 percent to $27.1 billion.

China, meanwhile, is Indonesia's largest trading and investment partners, with bilateral trade between the two countries amounting to $48 billion and China's investment in Indonesia reaching $400 million last year.

Aside from trade and investment talks, "with China, we'll also have new partnership agreements on the maritime sector, search and rescue activities, and transnational crimes," Arrmanatha said.

Reuters reported that Japan will sign a defense pact with Indonesia next week, officials in both governments said. This is the latest effort by Tokyo to forge closer security ties with Southeast Asian nations and build a counter-balance to China.

Japan has already bolstered partnerships with the Philippines and Vietnam, the two countries most at odds with China over a territorial row in the South China Sea. Japan itself is embroiled in a bitter dispute with China over uninhabited islands in the East China Sea, further to the north.

Indonesia and Japan will sign an agreement on increasing cooperation in military training and technology, the officials said. Currently, the two countries only have an agreement for the exchange of military students.

Although it will be a non-binding agreement, it is seen as the first step in bolstering defense ties.

The document that will be signed will be on "capacity building, cooperational defense and also peacekeeping operations," Arrmanatha said.

Other officials said the two countries could also discuss sharing of intelligence.

A Japanese Foreign Ministry official said Joko's trip sends a "big message" as this will be his first state visit outside Southeast Asia.

For Japan, closer ties with Indonesia could also give its defense firms a better chance to compete against South Korean military equipment makers, who are establishing themselves in the region, a Japanese Defense Ministry official said.

Additional reporting by Reuters