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Joint Announcement of the Japan-Indonesia Strategic Investment Action Plan (SIAP)

June 2, 2005

  1. On June 2, 2005, H. E. Junichiro Koizumi, Prime Minister of Japan, and H. E. Dr. Susilo Bambang Yudhoyono, President of the Republic of Indonesia, announced the Japan-Indonesia Strategic Investment Action Plan (SIAP) as a new initiative for promoting foreign investment, especially from Japan, in Indonesia with the shared understanding that higher and sustainable economic growth through a substantial increase in investment is essential for Indonesia to alleviate poverty and generate jobs.

    The SIAP was prepared by the High Level Public/Private Sector Joint Forum on Investment launched on December 16, 2004, in Jakarta, following two leaders'agreement on the principle of its establishment in November 2004 in Santiago, Chile.

  2. The two leaders, acknowledging the Indonesian objective of doubling the volume of foreign investment to Indonesia from each investing country, including that from Japan, over the next five years, decided to cooperate under the SIAP to achieve its objective by improving investment climate in Indonesia with the President's strong leadership.

  3. The SIAP is composed of concrete actions, the list of which is attached. These actions are subdivided into the following four areas: tax/customs, labor, infrastructure and industrial competitiveness/small and medium-sized enterprises.

    The two leaders, recognising some of the progress achieved by the series of investment-related initiatives introduced by the President since last October, stressed the importance and urgency for Indonesia to take actions especially in these four areas.

    Although the majority of the actions in the SIAP are to be implemented by the Indonesian government, cooperation from the Japanese side could facilitate those actions. To this end, the government of Japan is ready to strengthen cooperation, if necessary, through Japan International Cooperation Agency (JICA), Japan Bank for International Cooperation (JBIC) and Japan External Trade Organization (JETRO). NIPPON KEIDANREN is encouraged to actively promote Japanese companies to substantially increase investment in Indonesia.

  4. President Yudhoyono explained the priorities for Indonesian sectoral developments and its investment targets including infrastructure in the next 5 years. President Yudhoyono therefore invited Japanese corporations to substantially increase their investment mainly in supporting industries. Prime Minister Koizumi proposed that the industrial strategy of Indonesia be further discussed under the framework of the SIAP and expressed his willingness to promote bilateral economic relations.

  5. As for the future work of the Joint Forum, the two leaders assigned the Planning and Coordination Committee of the Joint Forum the task of monitoring the implementation of the SIAP and discussing other important issues such as judicial reform and capacity building. To enrich the dialogue of the Joint Forum, an advisory team composed of experts from both countries will be established within the Planning and Coordination Committee to conduct policy dialogues.

  6. The two leaders stressed that the progress in the SIAP, together with a prospective bilateral Economic Partnership Agreement to be negotiated between the two countries, would further promote our bilateral relations which have been developed for many years as longstanding close partners in investment and trade.

The Strategic Investment Action Plan (SIAP)

  1. Tax/Customs

    -Establishing/Strengthening Self Assessment System(*)

    -Reforming VAT system for export promotion

    - Strengthening the protection of taxpayers' rights

    - Promoting transparency and disclosure for tax administration

    - Reforming tax system to reduce real business cost

    - Reforming tax system to promote human exchange

    - Continuing dialogue on tax

    - Reducing administrative obstacles to speed up custom clearance (*)

    - Improving work ethic

    - Socializing new regulation/law and its interpretation(*)

    - Improving EDI system and On-line DGCE official website (*)

    - Enhancing effectiveness of bonded warehouse

    - Enhancing transparency and fairness

    - Other issues indirectly related to custom activities

       (*) JICA cooperation is expected for some of the projects.

  2. Labor

    - Reviewing the Labor Law and regulations to ensure competitiveness of private companies (*)

    - Enforcing the Industrial Relations Dispute Settlement Law properly to solve the disputes quickly and fairly (*) 

    - Promoting social system(s) (vocational training, job placement and national certification system) to create fair, flexible and productive labor market (*)

    - Simplifying the procedure to obtain business visa for smooth business activities by expatriates - Establishing the practical social security program

       (*) JICA cooperation is expected for some of the projects.

  3. Infrastructure

    - Enacting a regulatory and policy reform to encourage private investment

    - Making a concrete national plan

    - Having a close communication with investors and other stakeholders

    - Improving the key infrastructure to promote investment (*)

    (*) JICA and JBIC cooperation is expected for some of the projects. In addition, there is a possibility that some of the respective infrastructure projects may be supported by the Japanese ODA according to the necessity and eligibility.

  4. Competitiveness/ Small and Medium Enterprises

    - Making an industrial strategy for enhancing competitiveness of Indonesia (*)

    - Promoting supporting industry (*)

    - Strengthening the investment agency's role of providing service to investors (*)

    - Protecting the intellectual property in the domestic market (*)

    - Introducing internationally adopted industrial standard

    - Deepening the understanding of EPA by the public (*)

       (*) JETRO, JICA or private sector cooperation is expected for some of the projects.