Indonesia is leaning toward China over Japan in an aggressive bidding battle to build the Southeast Asian nation’s first high-speed railway, two government sources involved in making the decision said.
The two Asian giants have both sent envoys to lobby Indonesian officials over the past two weeks, each sweetening the terms of their bid for the contract worth about US$5 billion.
Analysts believe that whoever wins is likely to become the front runner for other high-speed rail projects in Asia over the coming years, including one linking Kuala Lumpur and Singapore.
A Cabinet-level committee led Indonesian Coordinating Minister for Economic Affairs Darmin Nasution was to meet yesterday to make its recommendation on which nation should build the rail line between the capital, Jakarta, and textile hub of Bandung.
“Indonesia is leaning toward China because their proposal is less financially burdensome on the Indonesian government and because the issue of safety has been adequately addressed,” a government source said.
A second government source said Indonesia wanted to strike a balance between the two powers in handing out high-profile infrastructure projects. Japan already holds contracts to build Jakarta’s mass rapid transit system and the biggest coal-fired power plant in the region.
“We have two partners and it will be good if we can maintain both of them. We have to be smart when taking this decision,” Indonesian Deputy Minister of Infrastructure and Regional Development Luky Eko Wuryanto said on Friday last week after meeting China’s ambassador to Indonesia.
The 50km rail line should cut the journey between Jakarta and Bandung to 35 minutes, from about three hours, with trains expected to reach speeds of more than 300kph.
Indonesia hopes to extend the line later to connect Jakarta with the city of Surabaya.
Japanese Prime Minister Shinzo Abe last week sent an envoy to offer a more attractive deal ahead of yesterday’s deadline, which was Japan’s second revision in two weeks.
Japan’s late manoeuvring brought protests from China, which said it was unfair Japan had been allowed to submit a new offer so close to the deadline, a minister said.
China adjusted its offer earlier this month.
Japan initially believed it had won the contract after completing a more than US$3 million feasibility study, but, in March, Widodo invited other offers in order to get the best deal.
China is offering a 73.92 trillion rupiah (US$5.27 billion) loan with a 50-year tenure and an interest rate of 2 percent in US dollars.
Japan is offering 60.14 trillion rupiah repayable over 40 years at an interest rate of 0.1 percent in yen, with a 10-year grace period.
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