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Jakarta Post

Commentary: We'€™ve humiliated Japan on train project: What'€™s next?

Kornelius Purba
Jakarta   ●   Tue, November 24, 2015

It was unusual that, for a gathering hosted by the Japanese Embassy, the Sunday Yokoso Nippon'€™s (Welcome to Japan) reception looked overcrowded. Japanese Ambassador to Indonesia Yasuaki Tanizaki hosted the reception in honor of Toshihiro Nikai the president of the Japan-Indonesia Parliamentary League.

The Japanese guests and hosts looked serious while making the effort to charm their Indonesian guests. Many looked both disappointed and betrayed by Indonesia, whom they had always regarded as a loyal and trusted friend. But it was apparent that they were determined to fix the problem; to restore their dignity after taking a blow in the form of the recent high-speed train project bid failure in Indonesia.

In September, Coordinating Minister Economic Darmin Nasution, told the Chinese envoy to Jakarta, Xie Feng, and Ambassador Tanizaki of the government'€™s decision to drop the train project due to high costs. However, news later emerged that the government awarded the project to China, after China submitted a new proposal.

A large delegation of investors are scheduled to meet with Indonesian officials this week, including President Joko '€œJokowi'€ Widodo who received the business people at the State Palace on Monday.

The Sunday reception was also an opportunity to showcase an exhibition of Japanese products and services, including probiotic dairy products and the promotion of tourist destinations in Japan.

Indonesian guests, such as the chairman of the Vice President'€™s advisory team, Sofjan Wanandi, and the Industry Minister Saleh Husin, looked more relaxed than the Japanese invitees. Many of the Indonesian guests just nodded and smiled when their Japanese hosts raised concerns over the Jakarta-Bandung train plan; a perfect expression to illustrate Indonesia'€™s lack of understanding with regard to Japan'€™s frustration over the embarrassing defeat.

'€œIt is not an exageration to say that our defeat, to China, in securing the high-speed train project has become public knowledge for all housewives in Japan,'€ a senior Japanese businessman told his Indonesian friends.

'€œWe are shocked and hurt, not just because we lost, but because your government failed to provide a transparent and honest explanation,'€ a retired member of Japanese government added.

A close economic advisor to former president Megawati Soekarnoputri, the chairperson of the Indonesian Democratic Party of Struggle (PDI-P), acknowledged that China'€™s offer for the train project had not been better than that proposed by Japan because, in the end, both of them required a government blanket guarantee. In China'€™s case, it is through Indonesia'€™s state-owned banks.

'€œThe banks will have to bear the burden,'€ the advisor said on Sunday.

By coincidence, earlier in the morning, President Jokowi met with Japanese Prime Minister Shinzo Abe on the sidelines of the East Asia Summit in Kuala Lumpur. The President indicated that Abe did not raise the Jakarta-Bandung train project during their bilateral summit.

However, a Japanese media reported that the Japanese leader had bluntly expressed his concern over the case, although he assured the President that Japan would continue to offer infrastructure projects to Indonesia in the future.

'€œFrankly speaking, I am disappointed with the outcome, as Japan presented the best proposal on the high-speed railway, a feasible proposal,'€ Japan Today quoted Deputy Chief Cabinet Secretary Hiroshige Seko, repeating Abe'€™s remark to Jokowi.

The prime minister also emphasized the importance of having a '€œrelationship of trust and transparency in procedures'€ and called for a '€œshared understanding'€ on these matters for future cooperation.

It seems that, until now, the Cabinet ministers and even the President himself may not have not fully understood the Japanese position. For them, this is merely a consequence of business competition. China and Japan are the world'€™s second and third largest economies respectively and their rivalry continues to rise. Indonesia could benefit from this geopolitical development, but it could also fall victim if remains incapable of playing a game of balance.

Just look at the government'€™s intention in seeking to join the US-led Trans-Pacific Partnership (TPP). In a clear attempt to attract the favor of his host, US President Barack Obama, Jokowi announced to Obama, at the White House last month, that Indonesia planned to join the TPP, a trade tool by the US to counter China'€™s economic power. Japan is a strong supporter of the TPP and has long expressed interest to invite Indonesia to join.

The TPP plan provoked controversy here, but my point is not about whether we should join the new trade bloc or not; I am afraid the President'€™s judgement arises from an interest in short-term business profits. It might also be aimed at countering Indonesia'€™s rising dependence on China. Conversations with Foreign Ministry officials indicate that Foreign Minister Retno LP Marsudi was not fully consulted in the decision-making process while Trade Minister Thomas Lembong played a major role in convincing the President.

So did the government conduct a thorough study before announcing its decision? The decision on the high-speed train project showed that the government did not realize, or may have belittled, the long-term implications of its decision.

It would be too damaging for Indonesia if the government were to renege, later telling the US and its trade allies that it had canceled its plan to join the TPP because Indonesia has been provided with a better offer from China, for instance.

The erratic decision on the train project is not just a matter of short-term profit. The TPP case may follow a similar path if the government has not learned from its blunders.