IJEPA dann Efeknya untuk Indonesia 7 Jepang

8/10/2019 IJEPA dann Efeknya untuk Indonesia 7 Jepang

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Tokyo, 30 November 2007

MINISTRY OF TRADETHE REPUBLIK OF INDONESIA

Indonesia-Japan EconomicPartnership Agreement (IJEPA)

and

Its Effects on Indonesian andJapanese Economy


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WHY an Economic Partnership

Agreement (EPA) Between Indonesia& Japan?

Indonesia & Japan are strategic partners;

Japan & Indonesia have established a closeeconomic relationship in a wide range of areas:

both sides have considerable mutual commercial interest;theres complementary nature of trade & investmentstructure of Japan & Indonesia.

IJEPA will:strengthen and promote mutually beneficial economic tiesbetween the two countries, and contribute to realizingmulti-layered cooperation for capacity building in variousways;


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WHY an Economic Partnership

Agreement (EPA) Between Indonesiaand Japan? (Cont.)

For Indonesia :Japan is the largest trading partner and is the number 1destination for Indonesias exports (appx. 20%) and thelargest source of Indonesias imports (appx. 14%) ofgoods;Japan is a major source of investment and developmentloans and assistance for Indonesia ;

For Japan :Indonesia is one of the largest source of imports ofJapan (ranks the 5 th largest) and is also a significantexport market for Japanese goods;


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IJEPA: Interests of Indonesia

IJEPA covers over 90% of goods (agriculture &industrial products) that Indonesia exports toJapan;

IJEPA provides greater certainty of market accessfor Indonesian products and puts Indonesia onequal footing with competing countries that haveconcluded agreements with Japan;Indonesia stands to attract more business andinfrastructure investment from Japan with IJEPA;


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IJEPA: Interests of Indonesia (Cont.)

IJEPA will provide an improved capacitybuilding for Indonesian producers,particularly will help improve the quality ofIndonesian products in the domesticmarket and in international markets, in theareas such as:

product standards and testing;sanitary and health standards of food and beveragestraining in manufacturing technology;Etc.

IJEPA will help Indonesia to move aheadwith necessary reforms to improve customs,tax administration and to provide forgreater legal certainty, thus enhancing thebusiness climate within Indonesia.


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IJEPA: Interests of Japan

IJEPA covers over 90% of goods (agriculture &industrial products) that Japan exports toIndonesia;

Under IJEPA the business environment forJapanese firms investing in Indonesia will beimproved, including those already present in theIndonesian domestic market;

Japan has an interest in improved transparencyof the implementation of IPR, customsprocedures, competition policy, etc. in Indonesia.


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Three Pillars of the IJEPA

Liberalization : reduction or removal of border andbehind the border obstacles to trade (simplifiedlicensing and business regulations);Facilitation : improved cooperation & transparency

in various areas: customs procedures, competitionpolicy, IPR, etc.;Cooperation : a distinctive feature of the EPA is thatJapan and Indonesia have agreed to cooperate inmany areas beyond just trade and that Japan willcommit substantial resources to capacity-buildingactivities for Indonesia.


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IJEPA is Comprehensive and WTOplus

Trade in GoodsRules of OriginInvestmentImprovement of Business Confidence

Trade is ServicesMovement of Natural PersonsEnergy and Mineral ResourcesCustoms ProceduresIPR Competition PolicyCooperation and Capacity Building

Government Procurement


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IJEPAs Benefits Expected ByIndonesia

Tariffs of products that are included in IJEPAwill be eliminated: fast track or gradual within10-15 years;Improved market access for goods exported byIndonesia into Japan;Promote Indonesian supporting industries &strengthen their business partnership withJapanese enterprises operating in Indonesia;IJEPA provides equal footing with Indonesiascompetitors that already have preferentialaccess to the Japanese market;


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Agricultural Products: IJEPAExpected Benefits to Indonesia

Fresh Bananas will be provided with free entry up to1,000 metric tons of bananas per year for five yearsunder the EPA tariff rate quota (TRQ);Fresh Pineapples will be provided with progressivelyincreasing access to the Japanese market risingfrom 1,100 metric tons in year 1 to 2,150 metrictons in year 2, 3,200 metric tons in year 3 and 4,250metric tons in year 4;The TRQ for these exports will be renegotiated in

the 5th

year of the EPA;Fresh mangos are granted duty free entry to theJapanese market with no limit in the first year of theagreement.


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Agricultural Products: IJEPAExpected Benefits to Indonesia(Cont.)

Agriculture products: palm oil, fish, shrimps,food & beverages, wood-based products;For certain agricultural & industrialproducts Japan will provide technicalassistance in complying with non-tariffmeasures such as standard & sanitary andphyto-sanitary;Elimination of tariffs for wood products willencourage downstream development ofwood-based industries in Indonesia.


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Agricultural Products: New ExportProducts Resulting from IJEPA

Prior to IJEPA, Indonesian certain agriculturalproducts could not penetrate Japans marketbecause products were unable to meetrequirements of Japanese product standardsincluding health, sanitary, and phyto-sanitarystandards;IJEPA Cooperation component will provideIndonesian farmers with technical assistanceincluding thermal treatment techniques for

eradication of fruit flies;Bananas, Pineapples and Mangos are examples ofproducts that will benefit from the improved marketaccess provided by the EPA.


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Manufactured Products: IJEPAExpected Benefits to Indonesia

Textiles and ClothingIndonesias market share in Japan clothing markethas steadily eroded from 3% in 1995 to 0.5% in2005 in value and from 2.8% to 1.1% in volume;Indonesia may regain some market share as textilesand clothing tariffs are eliminated on a fast-trackbasis in IJEPA.Rules of origin for textiles and clothing are animportant feature of the FTA;Japanese technical assistance and investment in

yarn and fabric finishing will make a big differencein market access for Indonesian textile products.


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Manufactured Products: Other

Products Expected to Benefit fromIJEPA

Chemical products, including paints and dyes, aregiven fast-track liberalization and zero tariffs;Metal products such as processed aluminum, zincand copper manufactures benefit with fast-track and

zero tariffs (down from tariffs as high as 7% withmany around 4-5% prior to IJEPA); A number of footwear products will benefit fromtariff reductions from present high tariffs (averageover 20%) over a period of 8-11 years and willbecome zero in the ninth year of IJEPA;


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Products Expected to Benefit fromIJEPA (cont.)

Over time, IJEPA will provide processed agriculturalgoods with improved access: tariffs on fruit juiceswill be cut to zero over a 15 year period (from 23%to zero);Fruit juice shipments to Japan were $1.43 million in2005 and expected to increase with IJEPAliberalization;

Sorbitol shipments to Japan will benefit from thefuther tariff reduction under IJEPA.


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Products Expected Benefit fromIJEPA (Cont.)

Bedding and bed mattresses will also benefit alongsimilar lines with MFN tariffs reduced to zero on thefast-track;This creates more certainty and invites furtherdownstream investment in these sectors.


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Services: Expected Benefits of IJEPA

Services are an integral part of the IJEPA and freeingup importing and investing in services in theIndonesian market will provide substantial benefitsto Japan;

Manufacturing-related services will allow Japaneseservice providers to establish service centers forJapanese manufactured goods such as electronic andinformation technology equipment and will lead to

technology transfer and training of Indonesiantechnicians;


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Services: Expected Benefits of IJEPA(cont.)

Financial, telecommunication and maritime transportservices will attract Japanese service investment and willprovide jobs for Indonesian workers. On the export side,Indonesian tourism services can benefit from Japaneseconsumption;

Japans commitments on labor services can benefitIndonesian service providers, such as care-givers and spaworkers;Service regulations will become more transparent and fair

under IJEPA and will benefit all entrants into the serviceindustries in Indonesiaanother WTO Plus Benefit of IJEPA.


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Investment: Expected Benefits ofIJEPA

Indonesia is among the Asian destinations forJapanese foreign direct investment (FDI);IJEPA will boost business confidence & providesgreater legal certainty for Japanese investors;

The new investment law will provide the new legalframework & transparency in Indonesia;Tax and Amended Customs Laws will be importantin boosting confidence and providing foreignbusinesses a clearer & more certain treatment,including more in rights & obligations.


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Investment: Expected Benefits ofIJEPA (cont.)

In manufacturing the largest flows are to electricalmachinery and office equipment; transportationequipment (automotive); and chemicals;In services the largest inflows are to finance andinsurance, trade, transportation and real estate.


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Trade Facilitation: Expected Benefitsof IJEPA

Improved cooperation & transparency invarious fields: customs procedures, IPR,competition policy, etc. will further

facilitate trade & investment flowsbetween the two countries;


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Cooperation: Expected Benefits ofIJEPA

Cooperation is a strong feature of IJEPA and amajor reason why it is WTO Plus : SMEdevelopment, human recources development,tourism promotion, science & technology, etc

Industrial sector: strengthening ofManufacturing Industrial Development Center(MIDEC): automotive, electronics, textiles,

energy conservation, export promotion and SMEsupport, etc;


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Cooperation: Expected Benefits ofIJEPA (Cont.)

Fisheries sustainability will also be a majorfeature of cooperation and will helpIndonesia preserve its marine resourcesover the long-run;

Agribusiness will benefit from severalprojects, including Distribution Mechanismand Food and Beverages and from programsaimed to benefit small farmers andfisherman.


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Conclusion: Key Effects of IJEPA

Market access liberalization of trade in goods ofIJEPA will bring immediate benefits to mostexports of Indonesia and Japan on the date ofentry into force of the Agreement;

Freer market access in services into Indonesianmarket will provide substantial benefits to Japanin importing & investing;Improved cooperation & transparency in various

fields: customs procedures, IPR, competitionpolicy, etc. will further facilitate trade &investment flows between the two countries;


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Conclusion: Key Effects of IJEPA(Cont.)

Japans commitments on labor services can benefitIndonesian service providers, such as care-giversand spa workers;Technical Support and Capacity Building underIJEPA will provide concrete assistance to improvethe quality of Indonesias products;The EPA will be a stepping stone to broader

regional cooperation with ASEAN plus agreements, APEC and the WTO Doha Agenda.


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MINISTRY OF TRADE

THE REPUBLIK OF INDONESIA

IJEPA dann Efeknya untuk Indonesia 7 Jepang

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