Indonesia and Japan are two friendly countries with close economic ties. The two countries have been economic cooperation for a long time, marked by the signing of the Treaty of Friendship, Trade, and Navigation in 1958.
In recent years, economic cooperation between Indonesia and Japan has increased significantly. This is evident from the increasing volume of trade between the two countries, the increasing Japanese investment in Indonesia, and the increasing cooperation in other fields, such as infrastructure, technology, and education.
On December 16, 2023, President Joko Widodo held a bilateral meeting with Japanese Prime Minister Fumio Kishida in Tokyo. During the meeting, the two leaders discussed various frameworks for cooperation between the two countries, including cooperation in the field of free trade and downstream processing.
Free Trade
One of the important aspects of economic cooperation between Indonesia and Japan is free trade. The two countries have signed a free trade agreement, the Indonesia-Japan Economic Partnership Agreement (IJEPA), which came into effect in 2008.
At the bilateral meeting in Tokyo, President Jokowi and PM Kishida welcomed the completion of substantive negotiations on the IJEPA Amendment Protocol. The IJEPA Amendment Protocol is targeted to be implemented in the first quarter of 2024.
The IJEPA Amendment Protocol covers three main points, namely:
- Improvement of Indonesia’s market access in Japan.
- Expansion of banking market access.
- Cooperation on the Manufacturing Industrial Development Center (MIDEC).
Improvement of Indonesia’s market access in Japan will provide opportunities for Indonesian products to more easily enter the Japanese market. This can increase Indonesia’s exports to Japan and boost Indonesia’s economic growth.
Expansion of banking market access will provide opportunities for Indonesian banks to more easily access the Japanese market. This can encourage Japanese investment in Indonesia and boost Indonesia’s economic growth.
MIDEC cooperation will support Indonesia’s industry to become a regional production base. MIDEC will provide production facilities and training for Indonesian industries, thus increasing the competitiveness of Indonesian industries.
Downstream Processing
In addition to free trade, downstream processing cooperation is also one of the focuses of economic cooperation between Indonesia and Japan. Downstream processing is the process of converting raw materials into higher-value products.
Downstream processing has many benefits, including:
- Increasing the value added of products.
- Creating new jobs.
- Increasing the competitiveness of products.
Indonesia has great potential for downstream processing. This is supported by the availability of abundant raw materials, such as natural resources and cheap labor.
The governments of Indonesia and Japan have committed to increasing downstream processing cooperation. One form of cooperation is through the industrial development zone development program.
The governments of Indonesia and Japan have worked together to develop industrial zones, such as the Morowali industrial zone in Central Sulawesi and the Batang industrial zone in Central Java. These industrial zones are home to downstream industries.
It is hoped that cooperation between Indonesia and Japan in the field of free trade and downstream processing can benefit both countries. This cooperation can increase trade, investment, and economic growth in both countries.
Indonesia and Japan have close and growing economic ties. Economic cooperation between the two countries covers a wide range of areas, including free trade and downstream processing.
Free trade cooperation is expected to increase Indonesia’s exports to Japan and boost Indonesia’s economic growth. Downstream processing cooperation is expected to increase the value added of Indonesian products, create new jobs, and increase the competitiveness of Indonesian products.
