JAKARTA - Indonesia and Japan are strengthening economic cooperation amid supply chain competition and global trade pressures. The focus includes electric vehicles, green industries, clean energy, shipping, and Japan's support for Indonesia's target to join the OECD, an organization of developed countries and a reference for various global economic standards.
The agreement was discussed in a meeting on the sidelines of a working visit to Paris, France, Wednesday, June 3. This meeting was a continuation of President Prabowo Subianto's visit to Japan which previously resulted in a number of cooperation commitments.
Coordinating Minister for the Economy Airlangga Hartarto said Japan remained an important partner for Indonesia's economic transformation, especially in the development of the green industry and strengthening Indonesia's position in the global supply chain.
"Indonesia is fully committed to accelerating national development priorities through the adoption of high technology and sustainable investment from Japan," said Airlangga in Paris, quoted in an official statement on Thursday, June 4.
Airlangga said energy cooperation was one of the main focuses. Indonesia aims to strengthen the ASEAN project as a driver for the development of renewable energy, especially geothermal energy.
The cooperation is also aimed at improving the quality of human resources. One of them is through internship and study programs at various Japanese companies.
Apart from energy, the two countries discussed global trade challenges. One of the issues of concern is the excess capacity of world steel production or overcapacity.
According to Airlangga, global protectionism needs to be faced through cooperation between countries that have similar interests and views. Indonesia and Japan agreed to support an international economic order based on rules to maintain the stability of economic growth.
"The current global protectionist challenge requires solid synergy between countries that have common views," said Airlangga.
In the automotive sector, Indonesia invites Japanese manufacturers to be more active in building an electric vehicle or electric vehicle (EV) ecosystem. Indonesia wants the electric vehicle industry chain not to stop at vehicle sales, but also include the battery industry, nickel processing, components, and job creation.
For Japan, this cooperation opens access to a more efficient and competitive supply chain. Meanwhile, for Indonesia, the benefits are increased industrial added value and strengthening downstream.
Cooperation also covers the maritime sector. Japan supports the competitiveness of the Southeast Asian shipping industry through the OECD peer review process. Peer review is a process of assessment by a country or other institution to measure the standards, governance, and competitiveness of a sector.
This support is in line with Indonesia's needs, which are estimated to require around 1,584 new vessels to support food security, especially in the agriculture and fisheries sectors.
In the energy sector, the two countries also finalized a roadmap for the development of civil nuclear power through the study of small modular reactors or small modular reactors (SMR). This technology is a nuclear reactor of a smaller size that is designed to be more flexible than conventional nuclear power plants.
Indonesia and Japan also encourage the completion of the Protocol on the Amendment to the Indonesia-Japan Economic Partnership Agreement or IJEPA. The completion of the protocol is expected to open wider trade access and provide benefits for business actors in both countries.
The government targets the ratification of the IJEPA amendment to be completed in the second semester of this year. Indonesia is also continuing to prepare technical steps to pursue the target of becoming a full member of the OECD by 2028 with Japanese support.
In addition, Indonesia hopes to obtain Japanese support for the CPTPP membership process in this month's meeting. CPTPP is a free trade agreement involving a number of countries in the Asia-Pacific region.
In the midst of the threat of global steel tariffs, Airlangga is also scheduled to depart for Brussels to conduct a strategic dialogue. Meanwhile, Japan will continue to voice its rejection of protectionist policies to the European Union and the United States.
This cooperation shows that the relationship between Indonesia and Japan is becoming wider. It is no longer only based on trade and investment, but also touches on clean energy issues, future industries, to integration into the global economic system.
Joining Airlangga in the meeting were the Indonesian Ambassador to France Mohamad Oemar, the Secretary of the Coordinating Ministry for Economic Affairs Susiwijono Moegiarso, and the Deputy for Economic and Investment Cooperation Edi Prio Pambudi.
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