RI, Japan eye economic corridor development

The Jakarta Post, Jakarta | Tue, 01/12/2010 8:42 AM

Indonesia is ready to offer two economic corridors to Japan, which will connect hubs and industries between regions to accelerate infrastructure development, foster foreign investment and spur Indonesia’s economic growth.

Indonesia has identified six economic corridors — Eastern Sumatra-North West Java, Northern Java, Kalimantan, Western Sulawesi, East Java-Bali-East Nusa Tenggara and Papua — which will be prioritized for economic development, Deddy S. Priyatna, deputy to the state minister for national development planning, in charge of infrastructure, said Monday after a meeting with Japanese officials.

“North Java and Sumatra are our priorities,” he said, although he did indicate that priorities could shift following a planned meeting in Japan between Indonesian and Japanese businesses in March.

Each of these corridors has their own focus industries.

The Eastern Sumatra-North West Java corridor, for example, has palm oil, rubber and coal as its focus industries.

The North Java corridor will focus on textiles, food products and transport equipment industries.

“The investment mechanism will be in the form of public-private partnerships,” said Deddy.

Deputy Transportation Minister Bambang Susantono said areas in the economic corridors might eventually be similar to special economic zones, offering incentives for businesses operating there.

Coordinating Economic Minister Hatta Rajasa told a press conference the planned development of the six economic corridors throughout the country would go ahead under the Indonesian Economic Development Corridor (IEDC) project through public-private partnerships.

“Both the Indonesian and Japanese governments have recognized the importance of the IEDC project, which aims for the comprehensive development of industries and infrastructure,” Hatta said.

Indonesia needs almost Rp 2,000 trillion (US$220 billion) in investment between 2010 and 2014 for infrastructure development, with most of those funds expected to come from private investment, according to the National Development Planning Agency.

In 2008, Japan was the third-largest foreign investor in Indonesia, investing $1.37 billion in total for 130 projects, according to the Investment Coordinating Board.

After meeting President Susilo Bambang Yudhoyono at the State Palace Masayuki Naoshima, Japan’s Minister for Economy, Trade and Industry, said Japan would continue to invest in Indonesia.

He said the talks did not discuss specific investment figures.

Businessman Rachmat Gobel said Japan’s support would help bolster Indonesia’s competitiveness amid the current tight competition.

“Now we’re facing the ASEAN-China free trade deal we should map our industries.

“Japan has technology and human resources to strengthen our industries so we can compete with China,” he said.

Potential industries to be improved include the technology, automotive, manufacture and energy industries.