Japan and China compete for Indonesia Bullet Train contract

jakarta-bundungChina and Japan are competing for a contract to build a bullet train system in Indonesia. According to Indonesian officials, the two are bidding for a project which entails the construction of a 150-kilometer high-speed railway between Jakarta and Indonesia’s fourth-largest city of Bandung.

Japan submitted a feasibility study on the railway to Indonesia in 2011, while China delivered a similar report in July.

Citing sources familiar with the project, Japanese media have reported that the two proposals contain similar terms that center on a 40-year credit loan, but Japan’s offer of a 0.1% interest rate is slightly lower than China’s.

Some Indonesian media have said this gives Japan an advantage but Wang Liping, a Chinese diplomat based in Indonesia, told the China Business News that a comprehensive assessment rather a single condition is needed for the country to make a decision on the project.

The size of the loan, the interest rate, total spending, after-sales services, technical schemes and projected construction time are all variables that could influence the decision regarding the project, he said.

According to a source close to Chinese rail contractor China Railway Group, the Chinese side has promised to complete the railway in three years, while Japan has projected a construction start date in three years’ time and completion of the project in eight years. “Therefore, China’s proposal is more efficient than Japan’s,” Wang said.

While the Indonesian media has dubbed the China-Japan rivalry a “beauty pageant,” the Indonesian government has commissioned an independent third party to conduct an overall assessment before making a final decision.