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Japanese, Indonesian Leaders Close to Finalizing Trade Pact


The leaders of Japan and Indonesia have announced they have made considerable progress on a wide-ranging economic pact, but they have not been able to finalize the agreement. VOA's Steve Herman reports from Tokyo.

Japanese Prime Minister Shinzo Abe and Indonesian President Susilo Bambang Yudhoyono on Tuesday affixed their signatures to a 1,000-page provisional trade pact. But some loose ends still need to be tied up before the sweeping economic partnership is finalized.

Negotiations have hit some rough spots despite a pledge by President Yudhoyono when he visited Tokyo in 2005 to conclude the agreement by the end of this year.

The agreement will eventually do away with import taxes on more than 90 percent of two-way trade and require Indonesia to make commitments to supply Japan with liquefied natural gas, or LNG.

After recent setbacks in securing additional energy supplies from Russia and Iran, analysts say resource-poor Japan had been desperate to reverse a reduction in Indonesian exports of LNG, which was to begin in 2010. Jakarta had planned to cut exports to meet its own rising energy demand.

Japan is the world's largest LNG importer, buying almost half of global exports.

Japanese foreign ministry spokesman Tomohiko Taniguchi says Indonesia's manufacturers will benefit from the agreement.

"The stress seems to be on what's called capacity building, namely that the initiative is to try to enhance the manufacturing capacity, competitiveness, of Indonesian industries," he said.

Japan, facing the burden of caring for an increasing elderly population, has agreed to allow some Indonesian nurses into the country.

Japan traditionally has kept tight controls on foreign labor. A similar agreement for a limited number of nurses was made with the Philippines in September, the first of its kind under a trade pact.

Japan pledges to cut tariffs on nearly all Indonesian industrial and forestry products, but tariffs on tropical fruits will be reduced only gradually.

The economic partnership will not include all products. Rice, a politically sensitive crop for both countries, was excluded from the pact.

During the Indonesian president's visit, Japan also announced it was extending a yen loan to the country to help build the Jakarta Mass Rapid Transit System. The low-interest loan, equivalent to about $16 million, brings the total of Japan's yen loans to Indonesia to more than $35 billion.

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