But China was not the only country to offer financing for this project. Funding for the Jakarta-Bandung high-speed railway was originally a competition between China and Japan. After Japan’s success in meeting Jakarta’s population density challenge by building the Jakarta Mass Rail Transit System in the 2000s, an opportunity to improve inter-city connectivity was proposed in the form of the Bandung-Jakarta high-speed railway.
In 2015, both China and Japan submitted a bid. While there were added advantages to the Chinese bid, such as an offer of technology transfer, the key reason cited for Japan losing the bid was its insistence on a guarantee of loan from the Indonesian government. This highlights how Indonesia sought to maintain its sovereignty.
Given that Indonesia rejected Japan’s bid on these grounds, Indonesia insisted it would require the same of China. However, Beijing played hardball when asked by Jakarta to pay the budget excess, an encounter that put a strain on the once strong Indonesia-China economic relationship.
Similar large infrastructure projects, such as Nusantara – Indonesian President Joko Widodo’s ambitious project to move the country’s capital to East Kalimantan – initially attracted Chinese funding interest from companies such as Alibaba Cloud but ultimately failed to come to fruition.
SOUTHEAST ASIAN COUNTRIES HAVE AGENCY
What the high-speed rail project has illustrated, however, is that Indonesia is intent on maintaining its agency over such initiatives, evident in its decision to pay out of its own budget for the overrun costs. And there is a growing trend in Southeast Asia of countries following suit despite the promise of large infrastructure investments from China.
The East Coast Rail Link in Malaysia, financed by the Export-Import Bank of China, has faced similar issues. Stalled since 2016, with an initial projected cost of US$16 billion, the project was renegotiated by Prime Minister Mahathir Mohamad in 2019 to US$11 billion and a favourable contract for Malaysian workers to make the investment a more equitable deal between Malaysia and China.
Source: CNA
