Indonesia said Tuesday it will keep up vital gas exports to Japan but needed more investment as it signed the framework for a free trade deal that will also let in more Indonesian workers.
Indonesia is the biggest supplier of liquefied natural gas (LNG) to Japan, which lacks sufficient energy resources of its own and has been alarmed at reports that Jakarta will slash its exports to meet growing domestic demand.
"Japan and Indonesia agreed on the framework of the co-operation pact," Japanese Prime Minister Shinzo Abe said at a joint press conference with visiting Indonesian President Susilo Bambang Yudhoyono. While the deal remained largely vague in detail, Yudhoyono said he hoped for a quick conclusion of working-level talks.
"I hope that before the end of 2007 we will already be implementing that agreement," Yudhoyono earlier told business leaders in Tokyo.
Japan, the world's second-largest economy, has increasingly sought bilateral free trade agreements, particularly in Southeast Asia, following the breakdown of global trade liberalisation negotiations. In a first, the framework deal with Indonesia explicitly mentions energy security.
Abe "expressed strong concern over the stable supply of LNG and President Yudhoyono showed substantial understanding," a joint statement said. "Regarding the sales of LNG, I want to stress that I respect contracts with Japan," Yudhoyono said in the press conference. "I want to continue bilateral co-operation in this area after contracts with Japan expire."
"I want to continue co-operating to increase the production of petroleum gas, which of course includes LNG, to satisfy domestic demands while supplying resources overseas," he said. Indonesia provided 24 percent of Japan's total LNG imports in 2005, with neighbouring Malaysia close behind at 23 percent.
Six Japanese firms are negotiating the renewal of LNG trade contracts with Indonesia's state-run Pertamina, which had indicated it would reduce exports to Japan from 2010 to meet rising domestic demand.
Japan also said it will increase technical assistance to Indonesia in areas such as coal-to-liquid technology and energy-saving measures. It promised co-operation to help Jakarta safely introduce nuclear energy. In the framework deal, Japan also pledged to let in Indonesian workers, particularly nurses.
Although it did not specify numbers, Indonesia would be only the second nation to dispatch workers under a trade deal to Japan, which has tight controls on foreign labour.
The first country was the Philippines, which will be able to send a limited number of nurses to Japan under an agreement signed in September. Separately, the joint statement called for the thorough implementation of UN resolutions imposing sanctions against North Korea for its October nuclear test. Abe is known for his hard line on North Korea, while Indonesia has long maintained friendly relations with the communist state.
"Japan wants to continue co-operating with Indonesia, which has diplomatic ties with North Korea," Abe told the joint press conference. "The president showed understanding on that co-operation." Japan also signed a deal Tuesday to provide Indonesia with low-interest loans worth 1.87 billion yen (16.1 million dollars) to support mass transit in heavily congested Jakarta.
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