Japan’s quake may affect Indonesian exports, investments

Esther Samboh

Japan’s worst ever earthquake will not only affect Indonesia’s exports, but also the country’s direct investments at least for the next few months, government officials say. Industry minister MS Hidayat said Sunday (March 13) Japan may re-schedule its new investments in infrastructure projects in Indonesia, including the development of the Metropolitan Priority Area (MPA). Last year, Indonesia and Japan signed a memorandum of cooperation on the development of the MPA worth 2 trillion yen (US$24.42 billion). Under the deal, the Japanese government and private firms would finance the construction of infrastructure in Greater Jakarta and surrounding areas scheduled to commence in 2013. On Friday (March 11), an 8.9-magnitude offshore earthquake - Japan’s most powerful since records began - hit the country’s northeast coast, triggering a 10m high tsunami that killed hundreds of people. “After the tsunami, Japan will focus on economic recovery after its industrial centres were paralysed by the disaster. Decision makers may want to change their priorities, including their investments in Indonesia,” Hidayat told The Jakarta Post. He added that, so far, several investors planning to invest in other sectors, such as in the automotive sector, including Daihatsu, had not announced plans to delay their investments. Last month, carmaker PT Astra Daihatsu Motor (ADM), a joint venture between Daihatsu Motor Co. Ltd., PT Astra Internasional and Toyota Susho Corporation, said it would invest 2.1 trillion rupiah ($239.5 million) this year to build a new factory in East Karawang, West Java. The new factory is expected to produce 100,000 vehicles per year to meet rising domestic demand for cars. Earlier this month, the Mitsubishi Corporation expressed its interest in investing $18 billion in Indonesia over the next five years for various projects, including vehicle production and the development of infrastructure in the MPA project, and a liquefied natural gas (LNG) plant in Central Sulawesi in a joint deal with state-owned oil and gas firm PT Pertamina and private firm PT Medco Energi Internasional. Investment Coordinating Board chairman Gita Wirjawan, however, voiced a different view, saying it was uncertain whether Japanese investors would delay their investments in Indonesia following the disaster. “They have a strategic and long-term commitment in Indonesia. I’m sure the realisation (of the new investments) will not be delayed,” Gita told the Post. Apart from being one of the largest foreign investors in Indonesia, Japan is the country’s number one export destination for non-oil and gas products, accounting for nearly 13 percent of overall exports, or $16.5 billion last year. Japan is also Indonesia’s second-largest supplier of non-oil and gas goods after China, with nearly $17 billion in total imported products last year, or 15 per cent of Indonesia’s overall imports. Chris Kanter, the president director of shipping and forwarding company KN Sigma Trans, told the Post on Sunday that there will be delays in shipping schedules for Japanese exports and imports. “There was infrastructure damage in Japan, especially in ports used for shipping exported and imported goods. Delivery, both for exports and imports, are impeded,” he said. The deputy secretary-general of the Indonesian Employers Association (Apindo), Franky Sibarani, said Sunday that textile, shoes, food and beverages and fishery exports may suffer losses because the Japanese may refrain from buying unnecessary goods. “Infrastructure-related exports, however, such as cement, steel and construction needs, might see a boost,” he told the Post, citing Japan’s needs for the products to speed up recovery in the world’s third-biggest economy. Members of Apindo, Franky said, had not reported any negative impacts from Japan’s quake and tsunami on their businesses, but “we will keep monitoring”.  source: asianewsnet

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