Japanese Prime Minister Shinzo Abe has signed a key trade deal with Indonesian president Susilo Bambang Yudhyono in Jakarta at the start of his three-nation tour of Asia. VOA's Nancy-Amelia Collins in Jakarta has more.
The agreement, called the Economy Partnership Agreement, has been under negotiation since 2005. It aims to gradually make more than 90 percent of the trade between the two countries tax-free.
It will also give Japan much sought after access to Indonesia's natural gas resources and raw materials. Japan is the world's largest importer of Liquefied Natural Gas or LNG, and Indonesia is its leading supplier. But competition for this and other energy sources has intensified as China and India urgently seek fuel for their booming economies.
This agreement seeks to ensure a stable supply for Japan, and will promote further Japanese investment in Indonesia in return. It also cuts taxes and tariffs on agricultural goods such as bananas and pineapple, but not rice.
Indonesian president Susilo Bambang Yudhyono says he welcomes the economic partnership with Japan.
He says he is confident the economic relationship with Japan will be widened with the signing of the agreement.
Japanese Prime Minister Abe says he hopes the trade agreement will improve relations between the long-standing allies.
The Japanese prime minister says the agreement will enable the two countries to further strengthen ties, not only in economics but also in other areas such as mutual security.
The new partnership agreement strengthens cooperation in the protection of intellectual property rights, and in easing government procurement and customs procedures. It is to take effect early next year.
The Indonesian and Japanese leaders say they will take part in a new arrangement to work against global warming, to be formulated after the current Kyoto Protocol expires in 2012, during a key U.N. meeting in December in Bali.
Mr. Abe will travel to India and Malaysia next in an effort to boost trade ties.