Indonesia-Japan relations: Reinforcing bilateral cooperation

A Closer Look at Indonesia-Japan Relations

  • InCorp Editorial Team
  • 10 January 2025
  • 5 minutes reading time

In the complex tapestry of international diplomacy, few partnerships stand as enduring and meaningful as Indonesia-Japan relations. These two nations have forged a strong and mutually beneficial alliance for over six decades, marked by shared values, economic collaboration, and strategic cooperation.

As 2023 unfolds, Indonesia-Japan relations continue to be on an upward trajectory, supported by a dedicated commitment to reinforcing bilateral cooperation. This article will delve into the key drivers and pivotal developments shaping the present and future of Indonesia-Japan relations.

Overview of Indonesia and Japan’s bilateral relationship

Japan is Indonesia’s third biggest trading partner, and the two countries have been in bilateral relations for over 60 years. According to the Indonesian Foreign Ministry data, the trade between Japan and Indonesia reached USD 42 billion in 2022.

Read more: Indonesia-Japan Relations to Drive Electric Vehicle Market

The current efforts to strengthen Indonesia-Japan relations

Indonesia-Japan relations: Reinforcing bilateral cooperation

The close bilateral relations between Indonesia and Japan are reflected in their technical cooperation in the infrastructure sector, which began in 1958. This bilateral cooperation has produced some outcomes, especially in technology development.

Japan shares its knowledge on constructing check dams as eruption disaster countermeasures and developing water resources management, flood mitigation, beach conservation, sanitation facilities, and toll roads. Moreover, both countries continue to enhance their bilateral relationships in diverse areas:

The Indonesian government acknowledges and values the Japanese government’s efforts in their Global South cooperation project, which aims to address various water-related issues such as disasters caused by water, the water cycle, and water quality.

To align with this initiative, Minister of Public Works and Public Housing Basuki Hadimuljono mentioned that Indonesia intends to suggest adding two items to United Nations resolutions: the Bandung Spirit Summit Session and World Lake Day.

These matters will be discussed with Japan at the 2nd Stakeholders Consultation Meeting (SCM) scheduled for October 12–13, 2023, in Bali.

Infrastructure development

Other than that, the development of the new capital city, Nusantara (IKN), expected to cost around IDR 466 trillion (USD 32.6 billion), has led the government to seek more involvement from foreign investors like Japan. Furthermore, Japan contributes funds, expertise, and technology to develop IKN. 

Apart from IKN, the Indonesian government has strengthened its partnership with Japan. In March 2023, Foreign Minister Retno Marsudi mentioned that she discussed with Japanese officials about enhancing the capacity of Patimban Port in West Java and participating in various MRT projects.

Security

Regarding security, Indonesia and Japan have a common stance in working closely to address issues like Ukraine, the South China Sea, North Korea, the United Nations Security Council reform, and nonproliferation.

Japan also showed its commitment to increasing cooperation for achieving a free and open Indo-Pacific and supporting the ASEAN Outlook on the Indo-Pacific (AOIP).

Economic partnership

In July 2023, Indonesia and Japan agreed to accelerate talks for revising the protocols of the Indonesia-Japan Economic Partnership Agreement (IJEPA). Both countries aim to finalize the negotiation during the September 43rd ASEAN Summit in Jakarta.

This agreement was established in 2007, focusing on making trade and investment easier between the two countries. However, Indonesia has been working on adjusting some parts of the agreement since 2020, like reducing tariffs on fishery products.

Challenges and prospects in Indonesia-Japan relations

Indonesia and Japan believe the world will deal with complex global issues in 2023. A positive outlook, cooperation, and optimism are crucial to tackle these challenges.

This year holds special significance for Japan and Indonesia, as it marks the 65th anniversary of their diplomatic relations and the 50th anniversary of ASEAN-Japan Friendship and Cooperation.

As Japan holds the G7 presidency and Indonesia chairs ASEAN this year, they will continue collaborating closely to address global and regional challenges.

President Joko Widodo’s participation in the G7 Summit in Hiroshima in May, upon Prime Minister Kishida’s invitation and bilateral talks with Prime Minister Kishida, highlighted their joint efforts in addressing various issues.

Free and Open Indo-Pacific for enhancing Indonesia-Japan cooperation

In March 2023, Prime Minister Kishida unveiled a fresh strategy called the “Free and Open Indo-Pacific” (FOIP). This plan aims to improve connections in the Indo-Pacific area, turn it into a region that upholds freedom, respects the rule of law, is free from pressure or force, and promotes prosperity.

The four pillars of FOIP

  • Continue to promote principles for peace and rules for prosperity.
  • Address the challenges of “global commons” in an Indo-Pacific way.
  • Enhancing “multi-layered connectivity” is a core element of the cooperation for FOIP.
  • Expand the commitment to security and safe utilization from the sea to the skies, as FOIP has traditionally centered on maritime concerns.

These points are important for Indonesia because Japan and Indonesia are in a similar situation. Both countries are among the biggest maritime democracies globally and are situated where the Indo-Pacific region comes together.

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Conclusion

The long-standing bilateral relationship between Indonesia and Japan lasted 65 years, showing a continuous positive trend in 2023. 

The stable bilateral relationship between the two biggest maritime democracies can positively impact business by opening more economic opportunities in different sectors.

Businesses can collaborate with InCorp Indonesia to leverage the benefits of Indonesia-Japan bilateral cooperation, ensuring the operations and products comply with relevant laws and regulations through company registration and business licensing.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

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