China has emerged as the likely builder of Indonesia's first high-speed rail line after Indonesian officials rejected Japan's requirement for a government guarantee of loans, officials said today.
Regional rivals China and Japan were competing to construct the high-speed rail system, each offering low-interest loans and other perks as they vied to secure the estimated USD 5.3 billion high-profile railway contract.
The 150-kilometer (93-mile) Jakarta to Bandung high-speed line is part of 750-kilometers (466 miles) of new rail planned for Indonesia.
Indonesia's presidential chief of staff Teten Masduki said that Japan lost out because its proposal was more about government-to-government cooperation. Indonesia required business-to-business cooperation without Indonesian fiscal spending or debt guarantees.
"This time, Japan did not meet the requirement," Masduki said, "But there are a lot of other opportunities for Japan to invest more in Indonesia's infrastructure."
A spokesman for Japan's foreign ministry said the Japanese government had been informed of Jakarta's decision.
President Joko Widodo has ambitious plans to improve Indonesia's infrastructure, which could boost manufacturing and create hundreds of thousands of new jobs in Southeast Asia's largest economy.
The competition between China and Japan for the rail project has been accompanied by many twists and turns as Indonesia weighed proposals and counterproposals.
Last month, the government decided to downgrade the project to what it called medium-speed rail but the high-speed option now appears to be back on the table.
Coordinating economic minister Darmin Nasution told reporters on Tuesday that the rail line needed to be built without Indonesian funding.
He said China had not wavered in its proposal to build the high-speed railway without using the Indonesian government budget or requiring a government guarantee for loans.
