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Tokyo reassures Jakarta of infrastructure pledge

A special delegation from Japan including Prime Minister Shinzo Abe met President Joko “Jokowi” Widodo on Friday to reaffirm Japan’s commitment to infrastructure projects in Indonesia, amid China’s recent signals of interest to bankroll Jokowi’s ambitions to expand ports, roads, railways and power plants

Ina Parlina (The Jakarta Post)
Jakarta
Sat, July 11, 2015

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Tokyo reassures Jakarta of infrastructure pledge

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special delegation from Japan including Prime Minister Shinzo Abe met President Joko '€œJokowi'€ Widodo on Friday to reaffirm Japan'€™s commitment to infrastructure projects in Indonesia, amid China'€™s recent signals of interest to bankroll Jokowi'€™s ambitions to expand ports, roads, railways and power plants.

Hiroto Izumi, a special advisor to Abe, said that Japan would be particularly interested in participating in the development of a high-speed railway and the construction of new power plants, according to Coordinating Economic Minister Sofyan Djalil who accompanied Jokowi during the meeting.

'€œJapan is very serious and has expressed a desire to participate in the construction of high-speed rail connecting Jakarta with Bandung [West Java'€™s capital],'€ Sofyan said.

The Japan International Cooperation Agency (JICA) has completed an initial phase of study for the project and has estimated that around US$6 billion in investment will be needed to construct the railway.

Despite having a head start in the project, Japan was recently outmaneuvered by China after Jokowi indicated that he would grant the project to China as a result of meetings with China'€™s President Xi Jinping during Jokowi'€™s second visit to Beijing in March.

Sofyan said the government would evaluate equally the proposals lodged by both Japan and China before taking a decision.

'€œThe government, of course, will make a fair evaluation based on merit,'€ he said.

Jokowi may form a team to evaluate the two proposals in order to provide equal opportunity for both countries, according to Presidential Chief of Staff Luhut Panjaitan.

Luhut argued the country was in dire need of high-speed rail, saying that the government hoped that the plan would be realized in the near future.

'€œIt will have a good impact on the economy [...] It will create jobs,'€ he said.

During the meeting, Japan also expressed willingness to construct around 12,500 MW worth of new power plants, which are aimed to deliver 35,000 MW of electricity in the next five years, to help avert a looming power crisis as demand soars at a rate of 7 percent a year, while supply rises at less than 4 percent.

On top of that, Sofyan also explained Japan'€™s other contribution in the form of loans '€œthat could be used immediately if Indonesia needs them'€.

'€œThe point is that the Japanese government is very committed to participate in developing infrastructure in Indonesia,'€ Sofyan said.

Japan'€™s reaffirming of its commitments came after Indonesia become the eighth-biggest donor to the Asian Infrastructure Investment Bank (AIIB) last month. Local officials have expressed hopes that the China-led bank will be the solution for large infrastructure financing gaps in Southeast Asia'€™s largest economy.

The Finance Ministry has said Indonesia will utilize AIIB loans particularly for power plant projects.

Both China and Japan have been competing to assert their influence in Indonesia'€™s economy since Jokowi came to power in October last year.

Business leaders from the two countries have also met Jokowi several times to reinstate their investment pledges.

According to Sofyan, Izumi told Jokowi that Japanese delegations of around 1,000 personnel, including government officials and businesspeople, would visit Indonesia this year to show support for Indonesia'€™s recent policy of visa-exemptions for Japanese travelers.

'€œThe President has expressed his gratitude for the support, and hopes that the Japanese government can help promote Indonesia in a bid to increase the number of Japanese tourists,'€ he said.

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