Indonesia has selected China over Japan to build its first high-speed rail link between Jakarta and the West Java provincial capital of Bandung.
China and Japan have been lobbying for the $5bn contract, the biggest infrastructure project started by Indonesian President Joko Widodo.
Earlier this month, Indonesia has dropped its plan to build a high-speed rail link and decided to go for a cheaper rail link with medium speeds of 200km/h.
After Indonesia changed its plan, China and Japan were asked to submit their new proposals for the slower line.
China has, thereafter, revised its proposal to finance the project through a Chinese loan, while Japan’s proposal were to be funded through the Indonesian budget and a low-interest loan from Japan. The Indonesian Government is reluctant to use the state budget for the train project.
Indonesia’s State-Owned Enterprises Minister Rini Soemarno said that the government stressed that the project should not include state funding or a guarantee.
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Japan’s chief cabinet secretary Yoshihide Suga said that Indonesian National Development Planning Agency head Sofyan Djalil has conveyed it to him that their bid for the high-speed rail project has been rejected.
The decision for a medium-speed rail link was previously taken as high-speeds of 350km would not suit a short distance of 150km. In addition, eight stations on the route were considered to be a hinderance to the performance of a high-speed train.
A train ride from Jakarta to Bandung currently takes approximately three hours and the high-speed rail would have cut the journey time to 35min.
Compared with the high-speed rail project, a medium-speed train would cost between 30% and 40% less, but be slower by about 10min.