Indonesia-Japan Economic Partnership Agreement

November 28, 2006

On November 28, 2006, the Prime Minister of Japan, Mr. Shinzo Abe, and the President of the Republic of Indonesia, Mr. Susilo Bambang Yudhoyono met in Tokyo to jointly announce that agreement in principle has been reached between Indonesia and Japan on major elements of the Indonesia-Japan Economic Partnership Agreement (hereinafter referred to as the "IJEPA").

The IJEPA will mark a new era for Japan-Indonesia partnership, by forging closer economic relations through cooperation for capacity building, liberalization, promotion and facilitation of trade and investment between the two countries.

The IJEPA will also cover a wide range of economic activities including energy and mineral resources, movement of natural persons, government procurement, intellectual property, competition policy, improvement of business environment and promotion of business confidence.

The IJEPA will also cover a comprehensive capacity building cooperation project focusing on activities that will enhance competitiveness of Indonesia's industrial, agricultural, fishery and forestry products including joint initiatives to further promote competitiveness of Indonesian manufacturing industry through Initiative for Manufacturing Industry Development Center.

The two leaders welcome the agreement in principle on major elements of various issues of the negotiations. They instruct their respective delegation, building upon this agreement in principle, to expeditiously finalize the IJEPA.

The major elements of the agreement in principle of the IJEPA are as follows:

1. Trade in Goods

Recognizing the desirability of increasing freedom of trade between the two countries, both sides will eliminate or reduce tariffs comprehensively. Major commitments by both sides cover agriculture, forestry, and fishery sector and industrial sector, which would contribute to the expansion of trade and other trade-related activities between the two countries.

Both sides will also cooperate on comprehensive capacity building focusing on enhancing competitiveness of Indonesia in the abovementioned sectors.

2. Trade in Services

Both sides will make commitments in various sectors which include professional/business, communication, construction, distribution, educational, financial, health related and social, tourism and travel related, transport services.

3. Customs Procedures

Both sides will promote information exchange and cooperation for the purpose of facilitating trade through simplification and harmonization of customs procedures, and ensuring effective enforcement.

4. Investment

The IJEPA will provide a framework for further expansion and facilitation of cross-border investment between the two countries through commitments on national treatment, most-favored-nation treatment, prohibition of performance requirements, dispute settlement between state and investor, and enhanced protection of investors and investment.

5. Movement of Natural Persons and Related Cooperation

Both sides will provide a framework for facilitating movement of natural persons in various categories including short-term business visitors, intra-corporate transferees, investors and professional services. In the same context, both sides will also establish a scheme of acceptance for nurses and careworkers. Both sides will promote related cooperation and will favorably consider to widen the scope of "the Industrial Training and Technical Internship Program" covering hotel related services.

6. Energy and Mineral Resources

Given the strategic significance of energy and mineral resources for sustainable economic growth in this region, both sides will ensure close coordination to promote and facilitate investments in this sector, and to contribute to enhancing security of supply of energy and mineral resources. To this end, both sides will strengthen a policy dialogue and cooperation.

7. Intellectual Property

Both sides will ensure adequate and effective protection of intellectual property, promote efficiency and transparency in administration of intellectual property protection system, and provide for measures for enforcement of intellectual property rights against infringement, counterfeiting and piracy. The IJEPA will provide the basis for both sides to cooperate in the field of intellectual property.

8. Government Procurement

The IJEPA will provide a framework for the exchange of information through the contact points and a mechanism for the dialogue with the participation of the two Governments, the respective private sector and other relevant organizations. Both Parties will promote technical cooperation in this area with a view to enhancing transparency.

9. Competition

Both sides will promote competition by addressing anti-competitive activities in their respective territories and cooperate in strengthening competition policy and implementation of competition laws, in accordance with their respective laws and regulations.

10. Improvement of Business Environment and Promotion of Business Confidence

The IJEPA will provide a mechanism for the improvement of business environment and promotion of business confidence, with the participation of the two Governments, the respective private sectors and other relevant organizations.

11. Cooperation

Both sides will promote bilateral cooperation for capacity building in various fields, namely manufacturing industries, agriculture, forestry and fisheries, trade and investment promotion, human resource development, tourism, information and communications technology, financial services, government procurement, environment, with a view to strengthening the economic partnership between them. They may also consider other fields of cooperation to be mutually agreed in the future.

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