Japan has lost a key Indonesian high-speed railway contract to China, dealing a heavy blow to Prime Minister Shinzo Abe’s goal of pursuing overseas infrastructure projects for economic growth.
Sofyan Djalil, head of the Indonesian National Development Planning Agency, told Chief Cabinet Secretary Yoshihide Suga in Tokyo on Tuesday that Indonesia planned to welcome the Chinese proposal, Suga said at a news conference.
The Indonesian plan came after Jakarta dropped both Chinese and Japanese high-speed railway construction proposals early this month, citing high financial costs, and offered to consider a cheaper medium-speed railway.
But Sofyan told Suga that China recently made a new proposal to build the high-speed rail link between Jakarta and the West Java provincial capital of Bandung without Indonesian fiscal spending or debt guarantee. Sofyan was visiting Japan as a special envoy of Indonesian President Joko Widodo.
Suga termed the Indonesian about-face “difficult to understand” and “extremely regrettable.”
In Jakarta, Presidential Chief of Staff Teten Masduki told to reporters that Japan failed to win Indonesia’s heart because its proposal was more about government-to-government cooperation, while Jakarta preferred business-to-business cooperation.
Suga doubted the feasibility of the Chinese proposal to build the railway without Indonesian funding. The railway project is estimated to cost 78 trillion rupiah (US$5.3 billion).“It defies common wisdom. I doubt if it would be successful,” Suga said.
In an apparent effort to dampen the government’s disappointment, Teten said there were still a lot of opportunities for Japan to invest in Indonesia’s infrastructure sector.
“There are a lot of infrastructure projects that we have been offering, not only the Jakarta-Bandung high-speed railway project, but also the one connecting Jakarta and (the East Java provincial capital) Surabaya,” he said.
The rail project is a key part of Widodo’s drive to build more infrastructure. He pledged upon taking office in October to overhaul Indonesia’s aging roads, railways and ports but has struggled to get his agenda moving.
Japan seemed destined to build the high-speed rail line until Jakarta announced in April that China had entered the race with a counter-offer.
Japan’s loss came despite its reputation as a world-class train maker.
The country is famous for its legendary shinkansen bullet trains which for decades have whizzed between cities without a single fatal accident.
China has countered this by arguing it has built thousands of kilometers of high-speed railway in the 12 years since it began constructing bullet trains. But its safety standards have come under scrutiny — a 2011 crash killed at least 40 people and injured about 200.
Picture: Reuters/Rivan Awal Lingga/Antara Foto.