THE IMPACT OF ASEAN-JAPAN COMPREHENSIVE ECONOMIC

PARTNERSHIP AGREEMENT TOWARDS JAPANESE INVESTMENT

IN INDONESIA

INTRODUCTION

Background
Southeast Asia is a region that includes ten countries that majority has same
culture. This region has an area of about 4.500.000 km2. There are many resources in
this region and majority, every country except Singapore being a supplier for
developed countries. For example, Indonesia being a raw materials importer for
wheels industrial in Japan. Southeast Asia is great region with special position. This
region has strategic position that located so close with two big countries (China and
India) and then make this area being more important for international trade. China and
India are growing to be same with United State of America and Russia. They have
more increase of economic growth among other countries in Asia. Its mean that this
region has benefit for every framework with another country.
Indonesia, Malaysia, Thailand, Singapore, Myanmar, Laos, Vietnam, Brunei
Darussalam, Philippines and Cambodia have joined a regional association called
Association of Southeast Asia Nation (ASEAN). ASEAN has formed on August 8th,
1967 in Bangkok, Thailand with five funding countries (Indonesia, Malaysia,
Philippines, Singapore and Thailand). But, with time that always goes on, until now,
ASEAN has ten members. Thats mean that ASEAN is a benefit association for every
countries especially for countries in Southeast Asia.
Japan is one of other country that interested to have framework with ASEAN
itself. With economic growth and powerful technology, Japan is now a developed
country in Asia. However, like most of the other developed countries, Japan is not yet
able to meet the needs of domestic raw materials. With this problem, Japan is required
to have a partner in a trade of raw materials with developing countries that are wealth
in natural resources. One of the focuses of the Japanese partnership in this case is
ASEAN. Wealth of natural resources that has made ASEAN received many trade
frameworks with other developed countries. This was shown by the increasing
number of dialogue partners owned by ASEAN.
1

Cooperation is one way in fulfilling national goals in the country. Although

according to the realism in the cooperation doubting because according to the
understanding, there is no eternal other than the interests of Country. This shows if
each state will "fight to meet the interests of their respective countries. But different
from the realist, liberalism actually upholding the values of cooperation in fulfilling
the national interest. Because according to the understanding, the Country will not be
able to meet the needs of their own country. Required cooperation with other Country
to achieve national goals.
ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEP) is
collaboration between ASEAN with Japan in the field of trade in goods, services and
investment. Before the creation of the framework of the cooperation, ASEAN and
Japan economic cooperation has started since March 1977 Then on 5 November 2002
in Phnom Penh, Cambodia, cooperation is realized with the signing of the Joint
Declaration of the Leaders on the Comprehensive Economic Partnership. Then on
October 8, 2003 in Bali, re-formulated the framework between ASEAN and Japan in
the Framework Agreement on Comprehensive Economic Cooperative.
In the process, ASEAN and Japan then signed AJCEP in 2008 and has agreed
to cooperate in the field of trade in goods. However, agreement in the the field of
services and investment, both sides still find deadlock. Another meeting was held on
December 14, 2013 in Tokyo by the results of the discussion of the field of services
and investment already progressed on the substance of the discussion, but has not yet
completed the cooperation agreement.
ASEAN cooperation engendered by with Japan certainly had implications for
ASEAN member countries. Each member of ASEAN have diplomatic relations with
Japan and has conducted bilateral cooperation with Japan. The relationship between
ASEAN member countries and Japan can be seen as the relationship between
developed countries and developing countries that gave birth to the dependencies until
the interdependence between two sides. Developing countries act as producers of raw
materials for the industrial developed countries. However, other than trade relations,
one of the world's current focus concerns is on the investment benefit for the state
which spawned the giver and the recipient countries. There unresolved discussion on
the rule of investment between ASEAN and Japan necessarily impact on the member
Country of ASEAN members consisting of developing countries. Indonesia is
Southeast Asia's largest Country with the abundant natural resources and total
population which ranks 4th largest in the world. This makes Indonesia as one of the
goals of profitable investment for developed countries, especially Japan.
Within the framework of the Indonesia-Japan bilateral relations, economic
cooperation both of countries are strategic. Japan is a country trading partner and a
major investment for Indonesia. In terms of investments, the realization of Japanese
foreign direct investment in Indonesia was second top. Mutually beneficial
relationship seen between both of countries makes writers want to discuss the
2

influence of the framework of ASEAN cooperation realized by the AJCEPA to the

flow of investment in Indonesia.

ANALISYS

1. ASEAN-Japan Economic Integrated

Comprehensive Economic Partnership is a cooperation framework that can
create new and greater markets than just the usual bilateral economic cooperation.
Cooperation ideally describes a positive sum game in which both sides in such
cooperation benefit on its way though the gains are usually not the same. Through
cooperation, economic stability can be realized in the midst of a crisis that keeps
rolling.
Southeast Asia was the region with the sea lanes vital to the international
trade. This is realized by one of the developed countries in Asia is Japan. ASEAN is
second largest trading partner and second largest investment destination in Asia. It
makes Japanese feel the need for not only establish bilateral cooperation with ASEAN
countries, but also formed a partnership with the association of Southeast Asian
countries. On the other hand, in the midst of globalization and technology now,
ASEAN recognizes the importance of cooperation with other countries mainly
developed countries in order to maintain the value of the trade that can then help with
the volatility of global financial markets.
Japan sees ASEAN as a strategic partner so as to make "the sunrise country" is
participating in the ASEAN + 3 along with India and China. ASEAN economic
community is a big agenda set by ASEAN in order to eliminate all obstacles in
improving the economy, culture and social security in 2015 domestic Japanese
interests in ASEAN is to continue the program of structural reform in the economy at
the regional level. Japan also supports ASEAN in 2015 and the success of the AEC
ASEAN's efforts to improve relations between ASEAN countries through
infrastructure maintenance and standardized system that will strengthen the economic
integration of ASEAN.

2. Japanese Investment in Indonesia

Indonesia has the largest population and area in Southeast Asia. It became an
important factor in establishing cooperation with other countries, especially in terms
of investment and economic. Indonesia has the largest market in Southeast Asia with
a population of around 240 million people. The wealth of its natural resources is also
an attraction for investors. Japan has one of the largest investor in Indonesia in
addition to Singapore and the United States. Within the framework of the bilateral
relations, economic cooperation between the two countries is very strategic. Japan is
Indonesia's main partners in the sectors of trade, investment and development.
4

The relationship between Japan and Indonesia can be seen in the point of view
of the relationship between the "north-south countries". In this regard, Indonesia is
still in the category of developing countries that developed countries need assistance
in economic activity. To improve the economy, in addition to trade in goods, foreign
investment for the creation of economic activity is an important factor. FDI needed by
developing countries such as Indonesia to maintain the stability of economic growth.
Cooperation framework established between ASEAN and Japan in the
ASEAN-Japan Comprehensive Economic Partnership Agreement contains three
points, namely trade in goods, services and investment. In 2008, trade in goods has
reached the consent of both sides, but the field of investment and services still not
meet the common ground because both parties have not agreed with each other. There
deadlocked talks on the level of investment in the ASEAN-Japan cooperation is
certainly reflected on the impact on investment flows in the ASEAN countries.
However, because large of population and supported by a stable economy growth in
population compared to other countries, makes Japan kept increasing foreign direct
investment in Indonesia.
Chart 1

Japanese Investment in Indonesia

$4,500.00
$4,000.00
$3,500.00
$3,000.00
$2,500.00
Japanese Investment
(Unit: US$ Million)

$2,000.00
$1,500.00
$1,000.00
$500.00
$0.00
2008

2009

2010

2011

2012

2013

Source: JETRO (Japan External Organization)

Seeing this phenomenon, it can be said that the ASEAN-Japan agreement is

still a deadlock on the issue the investment, Indonesia has no influence on. It can be
seen in the level of investment Japanese in Indonesia from 2008 to 2013 continued to
increase (see chart 1). Even in 2013, Japan successfully ranked first as the largest
country investor in Indonesia shifts Singapore.

CHAPTER IV
CONCLUSION

Basically, regionalism appears in line with the complexity of human needs and
the state. When a country needs and the potential advantages of other countries, then
at the same time the country will see collaboration as a solution that has a bright
projection. Regionalism is simply a form of cooperation in the aspects of common
geographical, historical, cultural, and so on.
ASEAN-Japan Comprehensive Economic Partnership Agreement is expected
to provide a framework of cooperation prospects that is beneficial to both sides. The
discussion of agreement on investment have yet to find common ground does not
make Indonesia as one of the members of ASEAN have trouble in terms of foreign
investment to increase the economic growth. It can be viewed from the increasing of
foreign investment in Indonesia. For Indonesia, Japan is the developed countries that
are friends of Indonesia. Interdepensi relations between both countries make them
being mutual need to each other. Indonesia's natural wealth and owned by Japanese
technological advances provide its own charm.
Increased bilateral relations between Indonesia and Japan beyond the ASEAN
framework can be rated as Indonesia is a country with its own advantages in the eyes
of other countries. The increasing Japanese companies that investing in Indonesia
now made Indonesia on the top three with the largest FDI recipient in Southeast Asia,
thus making one of Japanese largest electronics companies, Toshiba plans to
centralize manufacturing products in Indonesia by closing its factory in China and
Poland.

REFERENCES

Books
Anonim. 2012. ASEAN Selayang Pandang (Ed. 20). Jakarta: Direktirat
Jenderal Kerjasama ASEAN.
Caporaso James A., Levine David P. 2008. Teori-Teori Ekonomi Politik.
Yogyakarta: Pustaka Pelajar.
Masoed Dr. Mohtar. 2003. Ekonomi-Politik Internasional Pembangunan.
Yogyakarta: Pustaka Pelajar.
Nayak Dinker and Choudhury Rahul N. 2014. A Selective Review of Foreign
Direct Investment Theories (pdf.). Bangkok. United Nation ESCAD.
Nuraeni, dkk. 2010. Regionalisme dalam Studi Hubungan Internasional.
Yogyakarta: Pustaka Pelajar.

Internet
JETRO. Japan Trade and Investment Statistic. September, 21st 2014.
https://www.jetro.go.jp/en/reports/statistics/