China-Japan rivalry in Indonesian rail project heats up

A passenger train crosses the Chikubang bridge as it travels from Bandung to Jakarta on Tuesday. Japan and China are locked in a contest to build a high-speed railway connecting the two cities. (EPA photo)

JAKARTA — The tightening competition between Japan and China to build Indonesia's first high-speed railway system heated up further this week, with Beijing expressing disappointment over revised proposals offered by Tokyo.

On Friday afternoon, Chinese ambassador to Indonesia Xie Feng met Indonesian Coordinating Minister for the Economy Darmin Nasution to seek clarification over the new proposals, which were submitted by Japanese Prime Minister Shinzo Abe's special adviser Hiroto Izumi to President Joko "Jokowi" Widodo on Wednesday.

The new proposals, incorporated in Japan's feasibility study on the project, offer to increase the level of local content from the construction of the infrastructure until the development of the train system.

Japan, according to Nasution, has also agreed to lower its request for a government guarantee over the project to 50% from 100%.

Xie appeared upset when arriving at Nasution's office, saying, "We hope all sides will respect the rules set down by the Indonesian government. One feasibility study! No more!" and crossing his arms.

Speaking to reporters before midnight, Nasution revealed that Xie expressed disappointment over the new proposals, calling Indonesia's acceptance of them "unfair."

Nasution stressed, however, that to ensure fairness, he asked Xie if China also wanted to submit new proposals into its feasibility study, adding that the ambassador declined the offer.

"I am optimistic as ever," Xi told journalists after meeting Nasution. "China has offered the best plan for the project and I have full confidence in our proposal."

Also Friday, the Boston Consulting Group, an international consultant hired by the government to analyse the feasibility studies of China and Japan, presented its assessment to Nasution.

It will be followed by another presentation before an evaluation team, consisting of Nasution, Coordinating Minister for Maritime Affairs Rizal Ramli, Transport Minister Ignasius Jonan, Finance Minister Bambang Brodjonegoro, State Enterprises Minister Rini Suwandi and National Development Planning Minister Sofyan Djalil.

The evaluation team then will meet among themselves to decide on which feasibility to recommend to Jokowi. Once a solid decision is made among the ministers, they will submit their recommendation to Jokowi.

According to Nasution, Jokowi will make his own decision to decide the winner -- China or Japan -- that is expected to be announced Tuesday.

Indonesia organised open bidding to construct the high-speed railway system connecting Jakarta and the West Java provincial capital of Bandung. However, only Japan, with its shinkansen bullet train technology, and China, with its own high-speed railway system, have made detailed, comprehensive feasibility studies for building such a network.

Both countries have submitted proposals containing similar offers, and the two have offered loans to be paid back in 40 years with a 10-year grace period. The interest rate Japan has offered, however, will be 0.1%, while the Chinese one will be 2%.

According to its feasibility study, Japan is ready to begin construction in 2016 and would take five years to build the system, including a one-year trial operation period.

Meanwhile, China said it will start construction next month, if the groundbreaking can be done this month, and construction will be completed within three years.

The trains proposed by both countries would link the two cities, which are 145 kilometres apart, in 36 minutes, with a ticket price of 200,000 rupiah (500 baht) each way.