On July 1, Indonesia and Japan are set to sign their Economic Partnership Agreement (EPA), which deals with trade, investment and immigration issues, The Jakarta Post reported. The deal is expected to boost Japanese investment in Indonesia to $65 billion by 2010. It also will allow Indonesia to augment Japan’s dwindling workforce by paving the way for hundreds of Indonesian nurses, teachers and other service providers to emigrate there. The EPA is the first such agreement for Indonesia and the sixth for Japan, which has cut similar deals with Singapore, Mexico, Malaysia, Chile and Thailand. But it marks the first significant diplomatic step by Japan to address a growing demographic issue: the need to source workers externally for a country where it is estimated that a quarter of the population will be over 65 by the end of the century. Japan traditionally has been resistant to foreign immigration, but this looming demographic crisis is forcing the government to open its doors to foreign workers, both to make up for a dwindling supply of workers in general and to satisfy a growing demand for service workers — the focus now is on nurses and teachers — to meet the needs of Japan’s growing population of dependents (children and elderly persons who are not earning an income). Nursing is the first service sector that needs to be filled, given the rapid jump in Japan's elderly health care requirements in recent years. Japan’s population of dependents is currently outnumbered by its working population. But Japan’s birth rate has been declining for years, while its average life expectancy has been rising. Its baby boom peaked in 2000, which explains why the country's total population started shrinking in 2005. Within 50 years, Japan’s population, now 127 million, will fall by one-third, the government projects. Within a century, two-thirds of the population will be gone. That would leave Japan, now the world's second-largest economy, with about 42 million people. Without sufficient replenishment of its workforce, Japan will be hard-pressed to maintain its current rate of economic growth, let alone boost it. This growing demographic imbalance is only compounding the country's deepening financial difficulties. If the EPA works out, workers in other service sectors will eventually be brought in from Indonesia. The deal also will open up the possibility of bringing in workers from other countries as well. But these early waves of foreign workers are not likely to be warmly received by the Japanese people. For the last 100 years, Japanese leaders have sought to strengthen Japan economically and militarily in order to keep it from falling into the hands of foreign colonial powers. This strengthening has required the cultivation of a strong sense of ethnocentrism among the Japanese people to motivate them to sacrifice for the common good. Now, Japanese policymakers are faced with the painful imperative of diluting Japan’s nationalistic and cultural “purity” for the sake of national survival. Japan has been suffering through a worker shortage for two decades, yet it is only now taking formal steps to lift foreign employment barriers. If Japanese society fails to loosen its embrace of tan-itsu minzoku (people from a single stock), the economic consequences will be profound.