The Indonesia-Japan Economic Partnership Agreement (IJEPA), which had come into effect on 1 July 2008, was Indonesia’s first bilateral free-trade agreement. The agreement was made in an effort to enhance the cross-border flow of goods and people as well as investment between both countries. Such trade liberalization, including the scrapping of import duties for most export products, was designed to benefit both countries (Indonesia and Japan being important trading partners). The agreement also provided room to smoothen Japan’s foreign direct investment (FDI) in Indonesia (Japan has been one of the largest investors in Indonesia). Lastly, the IJEPA was also intended as the stepping stone to broader regional cooperation with ASEAN+ agreements, APEC, and the WTO Doha Agenda.

Trade Minister Gobel stated that the review may be conducted this year and hopes that the partnership can contribute to the Indonesian government’s ambitious target to raise economic expansion to 7 percent (y/y) by the end of President Joko Widodo’s first term in 2019 as the IJEPA was designed to boost Indonesian exports to Japan and to facilitate Japanese FDI into Southeast Asia’s largest economy.

Further Reading:

Government Presentation Indonesia-Japan Economic Partnership Agreement (30 November 2007)