JAKARTA: China and Japan are locked in an increasingly heated contest to build Indonesia’s first high-speed railway, with the Asian giants sweetening deals and turning up the charm as time runs out to woo Jakarta.
The rivalry over this major project is just the latest to flare up as China challenges Japan’s long-standing dominance in Southeast Asia as a key source of infrastructure funding.
Japan, a top-three investor in Indonesia with huge stakes in the automotive and mining sectors, seemed destined to build the high-speed railway until China muscled in with a counter offer earlier this year.
President Joko Widodo stoked the competitive spirit of the two Asian powerhouses as he toured China and Japan in April trying to drum up much-needed investment for a multi-billion dollar overhaul of Indonesia’s ageing infrastructure.
In both Beijing and Tokyo, he boarded bullet trains and declared his vision for high-speed rail in Indonesia: a line connecting the sprawling capital Jakarta with Bandung, a mountain-fringed city famed for its universities and IT expertise about 160 kilometers away.
If it was a stunt to grab the attention of his hosts, it certainly worked. A steady stream of diplomats and envoys from Tokyo and Beijing has been pouring in since April to pitch the Widodo administration, and Jakarta is enjoying the limelight.
“Let them race to invest in Indonesia. It’s good for us,” Luhut Panjaitan, chief political minister and a close aide to Widodo, told AFP.
“It’s like a girl wanted by many guys, the girl then can pick whoever she likes.”
The line, if completed, will not only slash travel time between Jakarta and Bandung but also pave the way for an expanded network linking the capital with Indonesia’s second-largest city Surabaya in East Java.
Upping the ante
The schmoozing has been ratcheting up ahead of August 31, when Widodo is expected to announce the successful bidder.
China is not seeking any funding guarantees from the Indonesian government and has promised construction would begin this year, with the network up and running no later than 2019.
Beijing recently showcased its high-speed rail prowess in an exhibition at a plush Jakarta mall, where China’s ambassador to Indonesia likened the project to a child reared by Jakarta and Beijing.
“Our number one priority is to ensure the baby’s health and growth, rather than to rush him to make money to support the family,” Xie Feng said, playing down suggestions China’s main motive in this project was profit.
Japan’s proposal is slightly more expensive than its rival, and it is only promising trains will hit the tracks in 2021. On the plus side, it has offered a lower interest rate of 0.1 percent, a fraction of the 2.0 percent China has put forward.
A senior official described the matter as “sensitive,” acknowledging the importance of both China and Japan to Indonesia, while other voices are also urging the president to tread carefully.