Japan Signs Trade Framework with Indonesia

TOKYO ~ The government signed this week a framework for a free trade deal with Japan, which sought firm guarantees for the archipelago’s gas exports and took the rare step of agreeing to let in its workers.

While the deal remained largely vague in detail, President Susilo Bambang Yudhoyono said he hoped for a quick conclusion of working-level talks to thrash out the details.

“We have agreed in principle on its major elements and we are about to conclude negotiations,” Yudhoyono told business leaders in Tokyo on Tuesday.

“I hope that before the end of 2007 we will already be implementing that agreement,” he said.

Yudhoyono later signed the framework deal at a summit with Japanese Prime Minister Shinzo Abe.

Japan, the world’s second-largest economy, has increasingly sought bilateral free trade agreements, particularly in Southeast Asia, following the breakdown of global trade liberalization negotiations.

But in a first, the framework deal with Indonesia explicitly mentions energy security.

Indonesia is the biggest source of liquefied natural gas (LNG) to Japan, which lacks sufficient energy resources of its own and has been alarmed at reports that Jakarta will slash its exports to meet growing domestic demand.

Abe “expressed strong concern over the stable supply of LNG and President Yudhoyono showed substantial understanding,” a joint statement said.

Indonesia provided 24 percent of Japan’s total LNG imports in 2005, with neighboring Malaysia close behind at 23 percent.

Japan also said it would increase technical assistance to Indonesia in areas such as coal-to-liquid technology and energy-saving measures. It promised cooperation to help Jakarta safely introduce nuclear energy.

Six Japanese firms are negotiating the renewal of LNG trade contracts with state-run Pertamina, which had reportedly indicated it would reduce exports to Japan from 2010 to meet rising domestic demand.

In the framework deal, Japan also pledged to let in Indonesian workers, particularly nurses.

Although it did not specify numbers, Indonesia would be only the second nation to dispatch workers under a trade deal to Japan, which has tight controls on foreign labor.

The first country was the Philippines, which will be able to send a limited number of nurses to Japan under an agreement signed in September.

Japan also signed a deal on Tuesday to provide Indonesia with low-interest loans worth 1.87 billion yen (US$16.1 million) to support mass transit in heavily congested Jakarta.

The loan, which will cover construction of a 14.5-kilometer  stretch of on-ground and underground railway tracks, requires the participation of Japanese companies.

Separately, the joint statement called for the thorough implementation of UN resolutions imposing sanctions against North Korea for its October nuclear test.

Indonesia has longstanding ties with North Korea, unlike Japan, which has championed a hard line against the communist state.

By Harumi Ozawa

Agence France-Presse

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