A bid to draw more Japanese investment into Indonesia


With its big scale of industry, Aichi is also a place of many R&D centers for the manufacturing industry established, either managed by public organizations or private firms

In the last week of May 2022, Transportation Minister Budi Karya Sumadi and Industry Minister Agus Gumiwang Kartasasmita separately paid a working visit to Japan.

Both ministers conducted different agendas though aimed at achieving the same goal of gaining traction among Japanese investors to increase their investment in Indonesia.

Japanese investment in Indonesia plunged by 65 percent since 2017, according to Minister Kartasasmita.

“Cumulatively, 65 percent from 2017 until present,” he stated.

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Hence, attracting Japanese investors to again invest in Indonesia is indubitably a big homework.

“We are trying to find solutions in order that the Japanese companies can build trust and invest again in Indonesia,” he stated.

In comparison with all sectors, investment in the automotive industry continued to perform well, he noted. However, such an investment should be boosted due to the Indonesian government’s policies pertaining to electric vehicles (EV).

During the meeting with Mitsubishi Motors Corporation (MMC) in Okazaki Plant, Kartasasmita urged the company to expedite the production of its low-emission cars with hybrid and battery electric vehicle (BEV) or Electric Vehicle (EV) type key car in line with Industry Ministry’s Regulation No. 36 of 2021 on Low Carbon Emission Cars.

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“We also urged Mitsubishi to be able to produce battery-based electric vehicles with key car type using 20-kWH battery and a driving range of 170 kilometers,” he highlighted.

He also tested the drive system of Mitsubishi’s electric vehicles with battery electric vehicle and plug-in hybrid electric vehicle technology, such as Minicab MiEV 2WD, Mitsubishi eK X (cross) EV with 20-kWh battery and 180-kilometer mileage in one charge with the WLTC5 method, and Mitsubishi Outlander 4WD.

Hence, the minister urged Mitsubishi to affirm its commitment to producing its electric vehicles in Indonesia in early 2023.

During the meeting, the company also committed to make Indonesia a hub for the production and export of electric vehicles.

Mitsubishi has this year set its export target of 72 thousand units, rising by 30 thousand, as compared to around 40 thousand last year, and it will contribute to the trade balance surplus of Rp7 trillion.

Expand the Market

The company has added nine more export target countries, including Australia, and issued permits to brand holder agents.

Australia is a very important market for Indonesia, Kartasasmita remarked, adding that Indonesia and Australia had inked the Comprehensive Economic Partnership Agreement (IA-CEPA).

“The Australian market is very big. Moreover, we have already signed the trade agreement. We will lose the opportunity if we do not take advantage of it,” he stressed.

The meeting with Mitsubishi was a follow-up to the previous one in March 2021 regarding a plan to increase investment as much as Rp11.2 trillion by 2025.

In pursuit of attracting more investors into Indonesia, Kartasasmita also met Hideaki Omura, Governor of Aichi Prefecture, known as the world’s largest automotive industry hub.

Some 255 industrial companies in the prefecture invest in Indonesia, especially in the automotive sector. The number constitutes 40 percent of all Japanese companies investing in Indonesia.

“With its big scale of industry, Aichi is also a place of many R&D centers for the manufacturing industry established, either managed by public organizations or private firms. We encourage the R&D companies to expand their operations in Indonesia, thereby enabling technology transfer that supports the development of Japanese industrial companies in Indonesia,” Kartasasmita stated.

Kartasasmita explained to Governor Omura that Indonesia has qualified human resources that are capable of handling R&D projects and sufficient raw materials to support supply chains for new investment.

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Transportation Investment

 
 

Transportation Minister Budi Karya Sumadi (middle) with Indonesian Ambassador to Japan Heri Akhmadi (left) and MRT Jakarta President Director William Sabandar speak at the press conference during the visit to Japan, Tokyo (June 22, 2022). (ANTARA/ Juwita Trisna Rahayu)



Earlier, Transportation Minister Budi Karya Sumadi along with his entourage paid G-to-G and G-to-B visits to the Japanese government and private stakeholders respectively to discuss infrastructure cooperation.

Some strategic projects that became the main topics of discussion comprised Phase 2 of North-South and East West of MRT Jakarta, Phase 1 and 2 (package 5 and 6) of Patimban Port, proving ground and Jakarta-Surabaya semi high speed railway.

“President Joko Widodo has asked us to monitor these (projects). Hence, I precede him to come to Japan to ensure the continuity of transportation infrastructure development ahead of the president’s visit scheduled at the end of July,” he stated.

About the MRT construction, the Indonesian government is pushing the acceleration of contract negotiation closing, financial commitment, and feasibility study of MR’s East West project.

Alhamdulillah (Thank God), in the near future, Japan will sign the financial commitment. This is good news to ensure the MRT construction continues,” he noted.

Meanwhile, MRT Jakarta President Director William Sabandar affirmed Japan’s commitment to financing the Phase 2 of MRT Jakarta’s construction.

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“They have committed to financing (it). We discussed the requirements that should be fulfilled in July, then the Japanese government will convey its pledge. We hope the loan agreement will be signed in November,” Sabandar said.

Indonesia is also pushing the acceleration of construction of Patimban Port, particularly its Phase 1 and 2 (Package 5 and 6), for which the financing is planned to be signed this year.

Regarding the proving ground or motor vehicle testing venues, the Indonesian government is seeking the support of the Japanese government to offer the Indonesia-Japan consortium a very competitive financing.

The support of Japanese investors and financial institutions is required to offer low-interest rates below the commercial interest rates, Sumadi stressed.

Indonesia is also encouraging Japan to quickly conduct its feasibility study for the Jakarta-Surabaya semi high-speed railway project.

Indonesian Ambassador to Japan Heri Akhmadi stated that such a series of meetings was aimed at being a follow-up to the bilateral meeting between Japan’s Prime Minister Kishida and President Joko Widodo on April 29-30 in Indonesia.

The two leaders had agreed to continually increase the cooperation between both nations, including in transportation and infrastructure.

“Development cooperation that Indonesia and Japan carried out has run smoothly so far and always in line with the agreement of both countries,” he remarked.

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