Japan investment in RI will continue as scheduled despite tragedy: Minister

The Jakarta Post, Jakarta | Tue, 03/15/2011

Japan’s investment plans in Indonesia will continue as scheduled despite the recent massive earthquake and tsunami, a senior minister says.

That investment includes the US$24 billion Metropolitan Priority Area (MPA) infrastructure project in Greater Jakarta.

After speaking with Japan’s ambassador to Indonesia, Coordinating Minister for the Economy Hatta Rajasa said the “kick-off meeting” for the MPA project will be held on March 17 as scheduled.

Hatta said the powerful quake that struck Japan would not impede the recent investment commitments of a number of the country’s major companies.

“All of the programs that have been committed to by Japan will still be realized. So far, everything is still on track, nothing has been delayed. Geothermal, MRT, transportation projects, JBIC [Japan Bank for International Cooperation], all are still ongoing,” he said Monday.

A significant growth in investment helped push Indonesia’s economy to grow above expectations last year at 6.1 percent. Japan was the fourth largest foreign investor in Indonesia in 2010, with total investments worth $712.6 million.

The Japanese Chamber of Commerce’s delegates visited Indonesia last month and pledged to invest up to $60 billion for the development of several economic corridors in Java and Sumatra.

The investments will be directed to five main sectors: transportation and infrastructure, electricity, industrial areas, clean water and oil and gas, Japan Business Federation (Nippon Keidanren) chair Hiromasa Yonekura said.

Included in Japan’s investment commitments are Japanese car maker Astra Daihatsu Motor’s Rp 2.1 trillion plan to build a new factory in East Karawang, West Java, this year; Mitsubishi Corporation’s $18 billion investment program for various projects over the next five years; and the ¥2 trillion ($24 billion) deal between the Japanese government and private firms to finance the construction of infrastructure in Greater Jakarta and surrounding areas scheduled to commence in 2013.

“The key is Japan’s rehabilitation and reconciliation. We have suffered the same thing so we understand. And we appreciate Japan’s commitment to continue the MPA project,” Hatta said, referencing the devastating 2004 tsunami that killed more than 130,000 people in Aceh.

Last Friday, Japan was struck by a powerful 8.9-magnitude earthquake off the country’s northeast coast, which triggered a tsunami that has been estimated to have killed at least 10,000 people.

Edy Putra Irawady, the deputy to the coordinating minister for the Economy, said Japan might move some of its production factories overseas to Indonesia to ease business activity in the country in the midst of its post-disaster recovery.

“The officials said that Japan’s program and projects in Indonesia are still ongoing, in fact they are offering cooperation in the construction of trade facilities,” he said after meeting with Japanese authorities in Tokyo.

“The tsunami only affected the Sendai port and Yokohama — I was worried that the electricity shortage would affect production but it turns out that Japanese firms can move their production activities overseas, including to Indonesia,” Edy said.

Government officials, businessmen and economists have been worried about Indonesia’s investment prospects with Japan, saying it may take time for Japan’s economy to recover from the disaster, which heavily damaged basic infrastructure such as seaports, power plants and roads.

— JP/ Esther Samboh