China Says Its High-Speed Railway Package for Indonesia Is ‘More Competitive’ Than Japan’s

Jakarta Globe, Ezra Sihite & Novy Lumanauw, Aug 10, 2015

A high-speed train passes through Shenyang in northeast China in this March 2013
 file photo. China has offered to get Indonesia’s first high-speed rail service up and
running by 2018 if picked over a rival bid by Japan. (EPA Photo)

Jakarta. China says it is offering more “competitive” benefits for the construction of Indonesia’s first high-speed railway – compared to a rival Japanese offer – as the country completes a feasibility study on the project.

Xu Shaoshi, the chairman of China’s National Development and Reform Commission, was in Jakarta on Monday to hand over the results of the study to President Joko Widodo.

“The financial plan that we’re offering is very competitive,” Xu told reporters at the State Palace in Jakarta after his meeting with Joko.

Xu did not disclose China’s final estimated cost for the construction of the railway line, which will connect Jakarta to Bandung.

Earlier reports put China’s offer at a cost of $4 billion, with a lending period of 25 years and an annual interest rate of 2 percent.

Japan, which is competing head-on with China for the same project, has submitted a lower offer. In a meeting with Indonesian Trade Minister Rachmat Gobel in Tokyo last week, Japanese officials said that under their proposal, the project would cost a total of Rp 45 trillion ($3.3 billion).

The Japanese government is also offering a soft loan to cover 75 percent of the funding, with interest of as little as 0.1 percent and a repayment period of 40 years. Under the terms of the soft loan, the Indonesian government will only have to start repaying the debt 11 years after the project has started operation.

Xu said on Monday that China was proposing a joint venture with the Indonesian government, in which Indonesia will hold a 60 percent stake in the project and China the remainder.

Addressing concerns about the safety of a Chinese-built high-speed train, Xu promised that China would do its best work in the construction and management of the project.

He also noted that the majority of high-speed train networks in the world were built by China.

Both China and Japan lay claim to having the most developed high-speed train networks in the world.

Japan, which rolled out its first Shinkasen bullet train in 1964, has a decades-long head start on its regional rival. But, China, which launched its first high-speed train service in 2007, now claims more than half of the world’s 23,000 kilometers of high-speed railway tracks.

“Our high-speed train technology is quite developed,” Xu said.

He added that China projected the opening of 40,000 new jobs with the development of the Jakarta-Bandung line, with economic activity in the areas lying along the proposed line expected to get a boost from new hotels, apartment blocks and residential estates.

Xu said China would help Indonesia form its own expert team to support the construction, management and maintenance of the line.

China is also offering to build a factory in Indonesia that will produce train components – the same offer made by Japan last week.

China is also offering Indonesia a partnership to jointly develop high-speed train projects elsewhere in Asia.

Under the Chinese proposal, there will be eight railway stations along the  150-kilometer Jakarta-Bandung tracks, with each train capable of speeds of 350 kilometers per hour – cutting travel time to as little as 26 minutes.

The Japanese proposal calls for a longer line, at 180 kilometers, and trains with a top speed of 300 kilometers per hour, for a commute of as little as 36 minutes.

China claims its project can be completed by 2018 if it is permitted to start as early as next month.

Japan, meanwhile, has offered to kick off construction early next year. After that, Indonesia’s first bullet train is forecast to have a test run in 2019, with full operation only expected in 2021.

Independent consultant

Sofyan Djalil, Indonesia’s chief economics minister, who was present at the meeting between Xu and Joko, said the government would this week appoint an independent consultant to help it decide which offer to take.

He said 11 consultancies had applied for the job, but the government was planning to hire only one.

“Let’s see which one is more competitive,” Sofyan said, adding that the chosen candidate would be given two to three weeks to study both the Japanese and the Chinese proposals.

In the mean time, the government will study the results of the Chinese feasibility study.

“The Indonesian government has received the results of the feasibility study by the Chinese and will study it and will make a decision as soon as possible,” Sofyan said.