10/02/2015, 00.00
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Jakarta chooses Beijing for the country’s first high-speed train

by Mathias Hariyadi
After weeks of sometimes hard negotiations, Indonesia picks China to build its US$ 5.5 billion high-speed train. China’s offer without requiring funding from Indonesia was the tipping point. The rail link should be up and running in three years. The decision boosts Sino-Indonesian economic relations.

Jakarta (AsiaNews) – After weeks of uncertainty and wavering, the Indonesian government has chosen China over Japan to build a 150-km, high-speed rail line to connect Jakarta and Bandung, the capital of West Java province. It will be Indonesia’s first high-speed railway.

China beat Japan following protracted discussions inside the Indonesian government. Both China and Japan proposed to finance the construction; however, the Chinese proposal did not require a funding guarantee from Jakarta, and included a provision to start work a month after the ground-breaking ceremony.

The Chinese also promised to finish the project within three years, as opposed to Japan, whose proposal required five years. Conversely, the Japanese project was better in terms of security.

Indonesian Coordinating Minister for Economic Affairs Sofyan Djalil was in Tokyo a few days ago to inform the Japanese about Indonesia’s decision. “Japan’s business model and regulations have made it impossible [for Indonesia] to give a concession credit to Japanese companies,” Sofyan is quoted as saying in Indonesian media.

The Indonesian government went through major brainstorming over the project with ministers taking different views. One of the main points of divergence was the desirability of a high-speed train in a corridor already well served by medium-speed train service (two hours and half, down from five hours six years ago), as well as road transport (cars, bus and minivans) that take about the same time.

At an estimated US$ 5.5 billion, China’s proposal was significantly cheaper than Japan’s US$ 6.2 billion bid, but the clincher appears to be its purely business-to business level, without government funding.

China’s successful bid for the high-speed train confirms the growing economic and commercial ties between Beijing and Jakarta. In fact, the high-speed train project is not unique.

Recently, the China Development Bank (CDB) has agreed to a US$ 3 billion to three Indonesian state-owned lenders to finance infrastructure development in Indonesia. This comes after Chinese President Xi Jinping and his Indonesian counterpart Joko Widodo met in March to discuss trade and infrastructure.

For Indonesia, this is crucial, given the country’s economic woes. The rupiah has hit its lowest point in 17 years, and since August, 26,000 jobs have been lost. This explains Jakarta’s drive for closer ties with Beijing, and its recent wooing of Chinese businesses for investments.

However, not everyone is pleased. For some economic analysts, the devaluation of the national currency is an opportunity for foreign capital, but it could have a negative impact on the rights and working conditions of Indonesian workers.

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