Indonesia set to choose Japan over China to get second rail mega-project on track

As President Widodo looks to drive growth by plugging infrastructure gaps, Jakarta is tossing up investment from Beijing and Tokyo for a variety of projects across the country.

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Jakarta’s Mass Rapid Transit (MRT), which was built with financing from Japan, opens for the first time to the public in March 2019. Photo: AFP

Published: 9:30am, 13 Sep 2019Updated: 1:26pm, 12 Dec 2019

Indonesia is aiming to pick Japan as its partner in a multibillion-dollar rail link connecting Jakarta to Surabaya – crushing China’s bid to secure its second major infrastructure project on Java, the Southeast Asian nation’s most populous island.

Luhut Panjaitan – Indonesia’s coordinating minister for maritime affairs, whom President Joko Widodo has put in charge of the country’s ties with China – acknowledged Beijing had expressed interest in the project, with the chairman of state-owned China Railway Construction Corporation paying him a visit earlier this month.

It will be a little difficult [for China to get the project] because Japan really wants it

Luhut Panjaitan, coordinating minister for maritime affairs

Still, he said Indonesia still preferred Japan as its partner in the 720km semi-high-speed rail link between the nation’s current capital and the second-biggest city in east Java. Indonesia is planning to relocate its political and administrative centre from Jakarta to a region on Borneo Island, and expects to start moving some of its bureaucrats by 2024.

“It will be a little difficult [for China to get the project] because Japan really wants it, and we also see Japan as a [long-time] investor in Indonesia,” the 71 year-old former general told reporters this week. “I think we are progressing enough [with Japan].”

This isn’t the first time Indonesia has had to choose between Japan and China in major construction projects as Widodo seeks to drive economic growth by plugging infrastructure gaps across the archipelago of some 17,000 islands.