Relations between countries and cooperation in the international community are often shaped by similarities, such as language, geography, ideology, and political and economic interests. Economic dependence between countries is a basic thing in international relations. No country can stand alone economically in the long term. Each country needs to establish trade cooperation with other countries. International cooperation occurs due to internal and external factors. Internal factors include concerns about the survival of the state, such as the threat of a coup or intervention. External factors include the need for assistance and cooperation with other countries due to differences in resources, climate, labor, and culture.
Indonesia-Japan diplomatic relations officially began in January 1958 through the Peace Treaty signed in Jakarta. Japan, which was recovering its post-World War II economy at the time, saw Indonesia as a strategic partner in accessing natural resources such as petroleum. Each country has different advantages and limitations of resources, which often complement each other. Relations between countries are carried out in various forms to obtain benefits, one of which is through bilateral cooperation. Each country involved in this cooperation has its own goals and interests. An example is the bilateral relationship between Indonesia and Japan through IJEPA (Indonesia-Japan Economic Partnership Agreement) (Seniwati, 2021).
Japan is a developed country, but it has limited natural resources, especially after the earthquake and tsunami in 2011. Japan established a trade partnership with Indonesia through the IJEPA (Indonesia-Japan Economic Partnership Agreement), which was signed in 2007 by President Susilo Bambang Yudhoyono and Prime Minister Shinzo Abe. IJEPA covers cooperation in various sectors, including manufacturing, agriculture, fisheries, forestry, trade, human resources, tourism, and mineral resources. One of the objectives of this agreement is to strengthen economic relations by opening up Japanese market access for Indonesia. The agreement is designed to provide balanced benefits for both countries (Salsabil, 2017).
Cooperation can come from individual desires that aim to bring prosperity. To achieve this well-being, it is also necessary to involve other groups with similar goals and a desire for shared commitment. Cooperation can bring more opportunities. It is important for all countries to collaborate to realize economic improvement. Generally, bilateral cooperation in the economic sector has the goal of improving the trade sector between the two countries and creating a win-win. International cooperation is a process of interaction that occurs between countries to find solutions to the problems faced through cooperation (Wati, 2023).
IJEPA (Indonesia-Japan Economic Partnership Agreement) cooperation is similar to Indonesia’s economic cooperation with other countries. The advantage of this cooperation is seen in the policy that is not only about reducing and eliminating tariffs but also about the regulation of import duties on goods imported from Japan. In 2014, Indonesia established partnerships with Japan and established cooperation in the economic sector, which had a great impact on Indonesia. Japan, as Indonesia’s main trading partner, also has a great effect on the growth of Indonesia’s trade balance, although trade between the two countries does not always show an increase every year. Previously, Japan and Indonesia had established close economic relations in various fields. In the field of trade in goods, Japan was the largest trading partner in exports and imports for Indonesia before the economic crisis of 1998 (Kemendag RI, 2015).
Ratification of the Law in Indonesia
The IJEPA bilateral agreement has been ratified through Presidential Regulation No. 36 of 2008 concerning the “Ratification between the Republic of Indonesia and Japan Regarding an Economic Partnership.” IJEPA is Japan’s fourth economic agreement as a form of bilateral cooperation within the framework of CEPAs (Comprehensive Economic Partnership Agreements) with countries that are members of the Association of South East Asia Nations (ASEAN). The matters covered in IJEPA include trade in goods, trade in services, investment, intellectual property, competition policy, energy and mineral resources, government procurement, customs procedures, improvement of the business environment, rules of origin, and cooperation (Wati, 2023).
Influence on the Indonesian Economy
IJEPA is a bilateral cooperation agreement between Indonesia and Japan with a wide scope covering the trade and investment sectors, with the aim of increasing the movement of goods, investments, and services between Indonesia and Japan. The agreement was signed on August 20, 2007, by Shinzo Abe and President Susilo Bambang Yudhoyono, and it came into effect on July 1, 2008. It is hoped that through IJEPA, Indonesia can compete in international trade and expand its commodity sales in Japan. Cooperation is a joint effort between individuals or groups to achieve common goals.
The Indonesia-Japan Economic Partnership Agreement (IJEPA), which has been in effect since July 1, 2008, is an important milestone in bilateral economic relations between the two countries. Through the three main pillars of liberalization, facilitation, and cooperation, IJEPA aims to increase the flow of trade in goods and services and investment and strengthen economic capacity. The impact on Indonesia’s economic sector can be observed through several aspects, ranging from increasing trade volumes and expanding investment to structural transformation in the manufacturing industry. IJEPA significantly boosts bilateral trade growth. Ministry of Trade data shows that during the period 2009–2017, the value of Indonesia-Japan trade increased by 155%, with Indonesia’s exports growing 101.7% and imports jumping 322.1%. IJEPA significantly boosting bilateral trade growth (Perdagangan, Kementerian RI, 2020).
Tariff liberalization of up to 80% of 9,275 tariff posts makes it easier to access Indonesian products in the Japanese market, especially agricultural commodities, textiles, and marine products. Imports of machinery and technological equipment from Japan increased dramatically, supporting the modernization of domestic industry. However, faster growth in imports than exports has the potential to create a trade deficit if not offset by increased competitiveness. The investment sector has undergone a post-IJEPA structural transformation. Japan’s direct investment in Indonesia skyrocketed from an average of 2.6% (2000–2008) to 28.9% (2009–2017), mainly in the automotive, electronics, and energy sectors. Facilities such as the Japan Desk, a one-stop service for Japanese investors, and regulatory harmonization have boosted investor confidence. A real example is the expansion of the Toyota and Honda factories. IJEPA opens up opportunities for the expansion of the service sector and the movement of skilled labor. Japan opens 12 service subsectors, including tourism, transportation, and IT (Free Trade Agreement Center, n.d.).
The Indonesia-Japan Economic Partnership Agreement (IJEPA) is a bilateral agreement between Indonesia and Japan that aims to improve economic relations between the two countries through liberalization, facilitation, and cooperation in various sectors such as trade, investment, manufacturing, agriculture, and human resources. The agreement, which has been effective since July 1, 2008, has had a significant impact on Indonesia’s economic sector. The impact on Indonesia’s economic sector is quite significant, both in trade and investment, and industrial development has strengthened Indonesia-Japan bilateral economic relations by bringing significant benefits to the Indonesian economic sector. However, its long-term success depends on Indonesia’s ability to address existing challenges and make the most of opportunities.
