Indonesia and Japan’s partnership continues to evolve, expanding beyond trade and infrastructure into sustainability, digital transformation, and security cooperation. The two nations are strengthening their bilateral relations, as evidenced by planned amendments to the Indonesia-Japan Economic Partnership Agreement, set for 2025, building on the original agreement of 2008.
Economic Transformation and Key Sectors
“Indonesia is undergoing a significant economic transformation toward achieving high-income country status by 2045,” said Febrian Ruddyard, Vice Minister at BAPPENAS. “We are advancing energy transition, industrial down streaming, circular economy, and digital transformation to strengthen Indonesia’s competitiveness in the global economy.”
Japan remains a key partner in this transformation, contributing through investments in geothermal energy, smart cities, and carbon markets. “Japan’s support for Indonesia’s carbon market and energy transition is an essential step toward achieving a zero-emission future,” said Heri Akhmadi, Indonesian Ambassador to Japan. The collaboration extends to trade, with the Indonesia-Japan Economic Partnership Agreement facilitating the growth of key industries such as steel, automotive, and agriculture.
As Indonesia shifts its focus from primary industries to more value-added activities, there is significant potential in downstream mining and battery production. “If Indonesia can leverage its nickel ore reserves, the largest in the world, the country can generate significantly more value,” said Kunihiko Hirabayashi, Secretary General of the ASEAN-Japan Centre. Japan’s expertise in EV battery production positions it as a key player in Indonesia’s supply chain expansion.
Infrastructure and Real Estate Development
Infrastructure development remains a cornerstone of Indonesia-Japan cooperation. “Japan has long supported Indonesia’s infrastructure development, from the MRT system to industrial parks and manufacturing hubs,” said Masaki Yasushi, Japanese Ambassador to Indonesia. “Additionally, Japan is investing in transportation hubs such as Patimban Port, which will enhance Indonesia’s role as a regional export hub. We are working with Indonesia to develop Patimban Port into a major export center, particularly for the automotive industry”.
Additionally, Yasushi highlighted Indonesia’s real estate sector as one area with high potential for future collaboration. Japanese developers are actively shaping Indonesia’s urban landscape by introducing high-quality, mixed-use projects designed to seamlessly integrate labor, leisure, and life—key aspects of modern Indonesian demand.
Expanding Cooperation Beyond Trade
Beyond economics, the two nations are deepening collaboration in defense, technology transfer, and human capital development. “Our collaboration now extends beyond economic and trade sectors to include defense cooperation, technology transfer, and education,” said Heri Akhmadi.
Japan has also played a key role in supporting ASEAN initiatives, enhancing maritime security and connectivity. “Japan is a strong supporter of ASEAN initiatives, such as the ASEAN Outlook on the Indo-Pacific (AOIP), which focuses on maritime security, connectivity, and economic development,” said Kunihiko Hirabayashi. “Japan and Indonesia face similar maritime challenges, and we are strengthening cooperation in ensuring freedom of navigation and maritime security. Japan has already supported Indonesia’s coast guard capabilities by providing technical assistance and will provide a large patrol vessel after three years,” said Masaki Yasushi. This shared vision aligns with Japan’s Free and Open Indo-Pacific (FOIP) strategy, fostering stability and cooperation in the region.
As Japan grapples with an aging population, human capital development has become a vital area of focus. Indonesia, with its young, highly motivated workforce, is poised to help fill this labor gap. Additionally, Indonesia’s favorable demographics make it an increasingly attractive destination for investment, further solidifying its role as a key economic partner for Japan. ”Beyond trade, the Amendment Protocol of the IJEPA will have updated provisions on human capital exchange, expanding the stay period for Indonesian caregivers and skilled workers in Japan. We have increased the stay period for Indonesian caregivers from three to five years, improving their ability to contribute to Japan’s workforce,” said Masaki Yasushi.
Showcasing Indonesia’s Vision at Expo 2025 Osaka
With Expo 2025 Osaka approaching, Indonesia sees a strategic opportunity to highlight its leadership in sustainability, connectivity, and digital innovation. “Expo 2025 Osaka is not just about visibility but about creating long-term investment and diplomatic benefits,” said Febrian Ruddyard. The Indonesian Pavilion will showcase advancements in green energy, smart cities, and sustainable development, reinforcing the country’s role as a rising global economic force.
Indonesia’s leadership within ASEAN and the Global South also positions it as a key player in shaping regional stability and economic resilience. “Indonesia’s leadership experience in diplomacy includes mediating regional conflicts and acting as a diplomatic bridge between opposing parties,” said Hirabayashi. At Expo 2025, Indonesia will demonstrate how it is shaping the future of ASEAN integration and sustainable economic growth, further strengthening its partnership with Japan.
