China, Japan Bid To Build High-Speed Rail In Indonesia

China, Japan Bid To Build High-Speed Rail In Indonesia
MaoNo / Pixabay

According to Indonesia’s top development official, the government is considering high-speed rail proposals from both China and Japan.

Andrinof Chaniago, the national development planning minister, told the press that a decision could be announced in around 2 weeks. The proposed line will connect the Indonesian capital, Jakarta, to Bandung, according to The Associated Press.

Marathon Partners: There Is A “Compelling Opportunity” In US Cannabis

investMarathon Partners Equity Management, the equity long/short hedge fund founded in 1997, added 8.03% in the second quarter of 2021. Q2 2021 hedge fund letters, conferences and more According to a copy of the hedge fund's second-quarter investor update, which ValueWalk has been able to review, the firm returned 3.24% net in April, 0.12% in Read More

High-speed rail part of Indonesia’s infrastructure plan

The line is part of a 750-kilometer high-speed train project which will eventually link 4 provinces on the main island of Java, ending in the second city of Surabaya. The project is one facet of President Joko Widodo’s infrastructure plans, which aim to boost manufacturing and provide hundreds of thousands of jobs.

Indonesia is Southeast Asia’s biggest economy, and both China and Japan are attempting to exert their influence. Indonesian officials have revealed that the final proposals were made following high-level lobbying efforts by both interested parties.

Although both countries have expertise in building high-speed railways, Japan’s own system was introduced far earlier than China’s.

“We will conduct a review not more than two weeks and will make a decision soon,” Chaniago said following a discussion with Chinese counterpart, Xu Shaoshi.

Competition hots up between China and Japan

Both China and Japan have sweetened the deal with the promise of low interest loans and other benefits. The Chinese embassy in Jakarta released a statement promising 40,000 new jobs in Indonesia for each year that the line is under construction.

According to Chaniago, China puts the cost of the line at $5.5 billion and has offered 50-year loans at an annual interest rate of 2%. Japan has offered loans of $4.4 billion over 40 years at an annual interest rate of less than 1%, according to Indonesia’s Presidential Chief of Staff Luhut Panjaitan.

On Tuesday, Xu Shaoshi announced that China is ready to begin work on the line in September, and it could be completed in 3 years. “Our high-speed train technology is quite developed and safe,” he said.

The contract to build the railway will be a huge coup for the eventual winner as both China and Japan jockey to exert political and commercial influence in Indonesia. China is pushing hard for greater regional authority, and contracts to build large infrastructure projects will certainly help to increase its prestige in the region.

No posts to display