China, Japan compete to build bullet train

AFP, 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.

A visitor looks at scale model of Chinese-made bullet trains on exhibition at a shopping mall in Jakarta, Indonesia, on Aug.13. Photo: AFP

Indonesian 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 aging 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 160km 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 have 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,” chief political minister, and a close aide to Widodo, Luhut Panjaitan said.

“It’s like a girl wanted by many guys, the girl then can pick whoever she likes, “ he said.

The line, if completed, would not only slash travel time between Jakarta and Bandung, but pave the way for an expanded network linking the capital with Indonesia’s second-largest city, Surabaya, in East Java.

The schmoozing has been ratcheting up ahead of Monday, 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 Chinese Ambassador to Indonesia Xie Feng (謝鋒) 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 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.

Japan also has history on its side. The country is famous for its legendary Shinkansen, its impressive high-speed network that for decades has whizzed commuters between cities at great speed without a single fatal accident on the rails.

China has countered this by arguing it has built 17,000 km of high-speed railway — or 55 percent of the world total — in the 12 years since it began constructing bullet trains.

However, a 2011 crash that killed at least 40 people and injured 200 more highlighted what critics say is a tendency to overlook safety in the rush to lay track.

Indonesian officials are aware of Japan’s glowing record in this space and are wary of elements of Beijing’s pitch.

A government source tasked with assessing the two proposals said China’s slowing economy had fostered doubt about whether Beijing could deliver on its ambitious promises.

Indonesia had also “learned the lessons” of dealing with China, the source said, with past investment pledges failing to materialize and newly constructed power plants lacking the capacity promised on paper.

Indonesia has hired the Boston Consulting Group as a third party to assess the bids but in the end the decision falls to Widodo.

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.