JAKARTA: Hundreds of Japanese small and medium industries which are generally engaged in the craft and garment sector will relocate their production centers to Indonesia as a result of high production costs in Japan.Chairman of Indonesian Employers Association Sofjan Wanandi said the relocation of the production centers of Japanese SMEs to Indonesia will be realized in the near future.He said the relocation of production centers that will focus on the small and medium industries which are affected by the earthquake and tsunami disasters.Sofyan said there were hundreds of Japanese SMEs that will be relocated focus on handicrafts and garment sector.Apart from the disaster reason, as he said, the relocation is also based on consideration of production costs in Japan which are higher than Indonesia."This is quite beneficial to both parties. The Japanese judged the relocation will save their production costs. On the other hand, the products will also be exported to Japan, while also targeting the domestic consumers. In addition to absorbing the local labor, the entry of Japanese SMEs also allows the transfer of technology, "he said.Chairman of SMEJ Yasunobu Shiraishi said it wants to combine technological progress in Japan and market growth in Indonesia. Currently, as he said, Japanese SMEs are discussing about how much the needed investment to relocate the production centers.Minister of Industry M.S. Hidayat said the presence of Japanese SMEs in Indonesia was not a new issue, particularly in the automotive sector.He gave an example when there are automotive companies have an intention to expand, it will usually be accompanied by the entry of supporting automotive industry, particularly small and medium industries.That is part of the linkage program between big industry and SMEs which are a supporter for the existence of such large industry.Under existing regulations, as he said, the entry of foreign SMEs in Indonesia are allowed with certain conditions."They may come to Indonesia, but they have to cooperate with local partners. The cooperation should have a commitment to increase the capacity of local SMEs. Honda is planning to expand its business in Indonesia by building two factories. Local supporting industries are a must in this case, "he explained.Hidayat said the linkage program between large and small industries, which will be promoted until 2015, is expected to be one of the solutions to overcome the problems faced by SMEs, especially financing problem. Currently, as he said, the problem is low upper limit of loan with high interest rate. SMEs are also constrained by the guarantee provision which is requested by banks. (t03/msw)

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