Indonesia gets $74-B business commitments from Japan, China

By Christine T. Tjandraningsih, Kyodo

Posted at Mar 30 2015 09:43 AM | Updated as of Mar 30 2015 05:49 PM

JAKARTA - Indonesian President Joko "Jokowi" Widodo has brought back business commitments worth a total of $74.34 billion in various planned projects and investments from his weeklong state visits to Japan and China through Saturday, a senior government official said.

Upon arrival in Jakarta after accompanying the president, Franky Sibarani, head of the Investment Coordinating Board, said late Saturday that business-to-business commitments from Japan alone reached $5.9 billion combined.

According to Sibarani, during a visit to Toyota Motor Corp.'s Motomachi plant in Aichi Prefecture, Toyota President Akio Toyoda voiced the automaker's commitment to add its investment in Indonesia by 20 trillion rupiah (about $1.6 billion) to develop and expand its existing factory in Indonesia.

The investment, according to him, will be focused on producing export-oriented vehicles to "increase their exports by three times, from 200,000 to 600,000 units a year."

Toyota's Indonesian plant makes models including the Etios compact sedan forming the backbone of the market strategy of Japan's largest car manufacturer in developing nations.

Toyota has not been available to comment over the planned investment.

Japan's fourth-biggest automaker Suzuki Motor Corp. has also pledged to invest $1 billion this year and another $300 million in 2017 in Indonesia to expand its energy-saving two-wheeled and four-wheeled vehicle businesses.

Soebronto Laras, commissioner of PT Indomobil Sukses International, an Indonesian partner of Suzuki, said the commitment was expressed by Osamu Suzuki, the Japanese carmaker's chief executive officer, during a meeting with Jokowi last Tuesday in Tokyo.

"Every one liter of fuel (in the energy-saving vehicles) can be used to run for 34 kilometers," said Soebronto, who had also joined the meeting.

For the commitment expressed by Suzuki, he added, Jokowi promised to provide some tax incentives to the firm.

"We positively appreciate the decision by Mr. President to provide the tax incentives," he said.

In the meeting, according to Soebronto, Jokowi also asked Suzuki what kind of incentives the Indonesian government can provide to the company if it can increase its exports.

Soebronto said Suzuki responded that the incentives can be provided in stages.

"Now, the export still stands at 20 percent of the total production, but we are committed to increase it to 30 percent in the near future," he said. Currently, the annual Suzuki shipment is between 28,000 to 30,000 units.

In a press statement, the investment board said some nonautomotive Japanese investors have also expressed their commitment to invest in the country for a total value of about $3 billion in various areas, including seafood processing, metal and construction industries.

Some, comprising a combined investment commitment of $1.58 billion, have submitted requests to get permits to do business in Indonesia, while the rest, with an investment commitment totaling $1.45 billion, will file their requests in the near future.

"I'm optimistic that the commitment they have expressed can be finally materialized because Japanese investors are characterized with seriousness to materialize their plans once they are committed to do so," Sibarani said.

Jokowi told executives of the Japanese companies that his government will pay more attention to several problems faced by investors to Indonesia by, among others, improving services at ports and easing delivery flow from ports to factories.

In Jokowi's visit to China that followed after Japan, Indonesia also received a total investment commitment of $68.44 billion, mostly in infrastructure and fisheries, according to Sibarani.