China can make Jakarta railway model of win-win

China has won a bid to build a $5.5 billion dollar railway project in Indonesia.

Despite the project being part of President Joko Widodo’s plans to improve infrastructure in Indonesia, the Indonesian government repeatedly changed its mind over the project in a chaotic bidding process.

Three quarters of the funding will come from China Development Bank, and the project won’t carry an Indonesian state guarantee, he said.

The deal was signed by Chairman of PT Pillar Sinergi BUMN Indonesia Sahala Lumban Gaol and Yang Zhongmin, chairman of China Railway Co.

The US$5.5-billion project will be conducted on a business to business basis, in which the Indonesian side will control a 60% stake in the joint venture, while the Chinese partner will control the remaining 40%.

The project is expected to take three years with trains to run at 250 km/h.

Professor Ofyar Z. Tamin, a transportation expert from Bandung Institute of Technology, suggested the joint-venture reconsider building more than four stops between Jakarta and Bandung, because they could prohibit the trains from reaching speeds of 250kmh.

To support the programme, China has agreed to build an aluminium plant in Indonesia, which could provide raw material for the production of the train cars.

Indonesia’s presidential chief of staff Teten Masduki said that Japan lost out because its proposal was more about government-to-government cooperation.

Construction of the railway will largely be financed by China Development Bank with a 40-year loan and a grace period of 10 years.

The project may face resistance over the use of Chinese workers, however.

Construction of a new railway line between Jakarta and Bandung is set to begin early next month, an official said today (Oct 16).

The project will also help China accelerate construction plans of the railway network across Southeast Asia and boost connectivity between countries along the Belt and Road.