Japanese investment in Indonesia is currently no longer from sogososha community or multi national corporation (MNC) investors. Many small and medium businesses spreading in Indonesian archipelago has been run by investors from Sunrise country with capital that is relatively small.

Some of them are establishing their businesses to be the suppliers of automotive and electronic component, as sub contractors of sogososha like Toyota, Honda, Epson, and Panasonic. However, some of them are self-business, running a small and medium company in consultant sectors, restaurants, karaoke, hotel, furniture, and industrial estates.

The presence of Japanese investors, is no longer viewed as "economy colonized" as worried in 1970's which is culminated by Malari tragedy (January, 15, 1974) in the form of anti Japanese investment demo in Indonesia. Indonesian people nowadays has taken foreign investment as a part of national economy.

Now foreign investment is really needed in Indonesia because firstly, they come with capital, which in macro scope strengthens foreign exchange reserves and state finance. Secondly, their businesses here less or more have participated in creating job opportunities for Indonesian people. There are still many positive aspects of foreign investment -- among others are technology transfer, import substitution supply, etc. -- so that all countries are now competing to promote themselves to invite foreign investors. Not surprisingly if prospective investors are now welcomed with friendly attitude.

The competition of attracting foreign investment has been a cut-throat, even with China," said Chairman of the Investment Coordinating Board (BKPM), Theo F Toemion, when receiving a delegation of about 20 investors from Japan in his office, Monday 11 February 2002. This delegation, according to Takashi Onda, Secretary General of ASEAN-Japan Centre from Tokyo, who led this delegation -- comprising representatives of Japanese companies who want to invest in Indonesia in the near future, some of them intent to invest in 2-3 years upcoming.

"The arrival of this delegation is really precise," said Director General of Overseas Economy Relation of foreign Affairs Department (HELN), Dr. Makarim Wibisono who participated in welcoming Takashi Onda's delegation arrival in BKPM. "Indonesia and Japan have a high value relation," said Director General of HELN further.

Because, historically, Indonesia and Japan relationship is too close. Many admiration on Indonesia in economy development from 1969 - 1997, because Indonesia could decrease poverty, and unemployment. "At that time I said that it was mainly because of foreign direct investment, especially from our friends from Japan," said Director General of HELN.

When Indonesia is facing monetary crisis, since 1988 many investors have run away overseas from Indonesia, but according to Makarim, many Japanese investors still stay. Even last month, Japan's Prime Minister, Kouizumi who visited Jakarta said to President Megawati :"Japan pays big attention to development of Indonesia. Indonesian side itself is not only waiting. Many efforts have been and are still being prepared by government institution especially under BKPM's coordination to attract more foreign investment.

BKPM itself, according to Toemion, has decided three activities; first is to maintain the available investors. To assist them in overcoming the existing problems, BKPM has established task force whose members are from tax, duties, labour force, police, army, and National Intelligence Agency.

The second activity is to accelerate the finalization of investment law draft (RUU-PM). This RUU, said Chairman of the Investment Coordinating Board, brings about changes, namely equal treatment for foreign and domestic, more open of liberalism spirit, market mechanism, and BKPM as a one stop service.

"In this RUU we also suggest that foreigners may have land, and they who bring US$ 100.000 above, can get a permit license," said Toemion, which is welcomed by some of Japanese members delegation with smiling and nodding. However, this matter is, of course, still being struggled by BKPM in government and parliament society.

Meanwhile, BKPM is also preparing Indonesia First Centre (IFC) as a BKPM's supporting institution. "This IFC has been supported by the House of Representative," said Chairman of BKPM. IFC tasks among others are, to match Indonesian companies and foreign investors. According to Toemion, Minister of State-Owned Enterprises has asked BKPM to assist around 140.000 companies facing problems in BPPN (Indonesia Banking Restructuring Agency) to be bankable.

In the mean time, Department of Manpower and Transmigration (Depnakertrans) has facing reformation. Tjetje Al Ansory, Director of Availability and Using of Manpower Depnakertrans, explained that in order to push investment efforts, the government has given a simplification to investors who are using foreign manpower. Permit license issued yearly, now can be given for five years overall. Also exit-permit which was usually for three years, has been extended to five years.

"Investors can also hold the position of some functions and are free from the obligation to pay US$ 100 monthly," said Tjetje further. He added that now foreign investor can open a service of Indonesia's manpower training. Although now labour demo becomes luster, causing the disturbance of production process, to demand the increase of labour salary, Department of Workforce and Transmigration (Depnakertrans) judged this not too dangerous. According to Depnakertrans analysis, from 14 countries in South and South East Asia, wage rate of labor force in Indonesia is still the second lowest after Pakistan. ﾒWhile from 16 problems being faced by investors, contribution of labor action problems is just settle down in rankﾐ9, so it is not a problem,ﾓ said Mardjono, Director of Industrial Relation Development and Manpower Monitoring Depnakertrans.

In police institution, a policy is also being prepared to support investment. Director Sabhara (Bayangkara Unit) Police Headquarters of the Republic of Indonesia (Mabes POLRI), Brigjen Bambang Susetyo, explained that today police has been apart from ABRI (the Indonesia Army).

”Formerly, all lines of police and 4 armed forces were responsible for the Indonesia security, so that police tasks on defense aspect have distorted from police aspects universally, ” said Bambang.

Now, investors have to secure their business themselves using surrounding security unit system (Satpam). To coordinate with police, the police will appoint a Liaison Officer to factory and housing surrounding. ﾒIf there is a higher disturbance, it will be assisted by police with Dalmas system (mass commanded), and if more than that, we mobilize POLRI detective force,ﾓ it is the security system explained by Director of Sabhara some time ago.

According to Bambang Susetyo, this system imitated the Koban-Koban system in Japan. This system has been applied by PT. Freeport Indonesia (Papua), Exxon Mobile (Aceh), and Cengkareng Airport. ”We are optimistic that the system applied in South Korea, Japan, Malaysia, which can recover from the sunk away and free from corruption, collusion and nepotism (KKN), will be successful. Meeting in Coordinating Minister of Politic and Security last Friday has decided that we will avoid technique of matters regarding big financiers, or funding backing, ” said Director of Sabhara a while ago.

Meanwhile, Indonesian overseas policy is still committed to the establishment of AFTA (ASEAN Free Trade Area). ﾒTherefore, if investors want to invest in Indonesia, they have not only market opportunity of the Indonesia citizens which is around 210 millions, but market of AFTA supporting countries, which have around 500 millions citizens,ﾓ said Directorate General of Foreign Economic Relation (HELN), Makarim Wibisono.

Although Japanese investors in Indonesia have deal starting from high-tech industry until medium and small businesses, but KADIN side (Indonesia Chamber of Commerce) feels that there are many Japan investment opportunities in Indonesia. “ Automotive sector still needs 18.000 sub contractors. Electronic sector also needs thousands contractors,” said AM Kusumo, Chairman of KADIN Indonesia-Japan Committee.

Kusumo has also complained to the Secretary General of ASEAN-Japan Centre, Takashi Onda, because Japan seems to treat Indonesia like a stepchild compared with other ASEAN countries. According to Kusumo's notes, Japan allows to transfer its technology of automotive industry to Thailand and Malaysia, but not to Indonesia. The two countries are allowed to make automotive sub contractors so that Malaysia can create Proton car (from Mitsubishi) and Kancil (from Daihatsu), and Thailand can also produce its car from the principal of Toyota and Nissan." But Indonesia, production of Kijang car is still under the license of Toyota," Chief of Indonesia-Japan Chamber of Commerce and Industry complained.

So does in the field of electronic industry. At present, Japanese electronics made in Indonesia contributes approximately US $ 50 billion per year, but a large amount of its components are still imported, so that it does not give value added and greater job opportunities enough in Indonesia. The Indonesian Chamber of Commerce and Industry hopes, Takashi Onda will try to persuade the Japanese suppliers of electronic and automotive components to move to Indonesia and cooperate with small and medium enterprises here.

According to Kusumo, Japanese investors do not have to worry about that. Factories can be built in industrial estate managed by Japan such as Marubeni, Ito-chu or Sumitomo. Regarding energy supplies, they do not have to worry about the voltage stability (as from State Electricity Enterprises), because the utilities are supplied by Chubu and Sumitomo Japan companies. Thus, in practice they will produce in Indonesia, but their milieu is as if it is in Japan.

If these expectancies are really improved by Japan, the Japan-Indonesia Incorporated can be formed. "If Indonesia economy is strong, Japan economy is also strong, Asia will be highly regarded in the world," said Makarim Wibisono.

In fact, to invite Japanese small and medium investors, Indonesia has to be brave to give incentives. Because the capabilities of Japanese small and medium enterprises can not be equalized with the sogososha that have longer invested their capital in a large scale.

A consultant of Japan Small and Medium Enterprise Corporations (JASMEC), Shuichiro Tsuchiyama said that he conducted thousands of clients. " There are many gaps among us, so that if a residential permit and a working permit can be given to those who bring capital of US$ 50.000, half of our clients would come here." Said Tsuchiyama. Head of BKPM explained that the amount of US$ 100,000 is low enough compared with the tariff applied by Canada and Singapore, that is US$ 250,000. However, this figure is not final yet, because the Draft of the Investment Law did not include minimum amount of investment to obtain facilities of working permit and permanent resident. It will be regulated separately by a government regulation.