China, Japan still keen on Indonesian rail bid

JAKARTA — Bids are expected from China and Japan for a medium-speed rail project in Indonesia that will be 40 per cent cheaper than the US$6 billion (S$8.55 billion) bullet train project that Jakarta scrapped last week, an Indonesian minister said yesterday.

China and Japan were disappointed by the cancellation of the high-speed rail project, announced by the Indonesian government on Friday, but could renew rivalries to build the medium-speed rail link between Jakarta and the country’s third-largest city, Bandung. “Both China and Japan are still interested in the medium-speed train,” Coordinating Minister for Maritime Affairs Rizal Ramli told Reuters. “Indonesia is just the first battlefield between China and Japan. There are other countries that would be interested in similar projects so the stakes are high.”

A Japanese embassy official in Jakarta said the Japanese government would not be bidding, but that Indonesia had invited private Japanese companies to participate.

Japan and China had been involved in a highly publicised contest to secure the cancelled rail project.

Japan was reportedly ready to begin construction next year and would take five years to build the system, including a one-year trial operation period. Tokyo had also offered a soft loan to cover 75 per cent of the funding needed for the project, estimating that it would cost a total of 45 trillion rupiah (S$4.5 billion).

China had said it could start construction a month after the groundbreaking and finish within three years. It had initially put the cost at S$5.5 billion, with a lending period of 25 years and an annual interest rate of 2 per cent. Beijing had also offered Jakarta a partnership to jointly develop high-speed train projects elsewhere in Asia. The Chinese proposal did not call for a government guarantee, but Japan’s did.

Indonesian State Enterprises Minister Rini Soemarno said on Friday Japanese requests for government guarantees and government loans for state-owned enterprises were too burdensome, and had not been sought by China. “If Japan wants to stay in the process they must get rid of the requirement for government guarantees and government loans to state-owned enterprises,” said Ms Soemarno, who will choose the winner.

Ms Soemarno said Indonesia hopes to start work on the 150km Jakarta-Bandung line by year’s end.

Mr Ramli said the government would consider proposals in the next one or two years for a bullet train on a 700km line crossing Java. AGENCIES