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Jakarta Post

The impending task of '€˜made in China'€™ infrastructure

  • Lupita Wijaya

    The Jakarta Post

Jakarta   /   Wed, February 3, 2016   /  04:48 pm

The official announcement of the lucrative Jakarta-Bandung high-speed railway project recently has turned a new page in Indonesia'€™s economic development that supports President Joko '€œJokowi'€ Widodo'€™s grand plan to make Indonesia a maritime axis. The high-speed train project will indeed drastically increase the amount of Chinese investment in Indonesia.

Although Indonesia was one of the first Asian countries to recognize the People'€™s Republic of China and president Sukarno moved the countries closer together in the first half of the 1960s, the relationship has not always been smooth. Diplomatic relations were suspended in 1967 and remained frozen for 23 years. However, after reformation in 1998, the Indonesia government moved to establish better relations with China.

Since reformation, and particularly since former president Susilo Bambang Yudhoyono, the Indonesia-China relationship has been close in economic terms. The Export-Import Bank of China, for instance, is involved in financing power-station projects in Meulaboh, Pacitan and Pelabuhan Ratu. The bank has lent US$899 million in total for these three projects.

Most of China'€™s power projects in Indonesia are actually handled by its state-owned power generation company, China Huadian Corporation.

This corporation started the construction of a coal-fired power-plant in West Java in 2004. The next year, Huadian developed a mine-mouth coal-fired station in South Sumatra.

There were six projects funded by Huadian alone: four of them still under construction, one completed and another project in Balikpapan still in the contract bidding process.

Since the commemorative celebration of the Asian African Conference (KAA) in April 2015, China has made a clean sweep of big infrastructure projects in Indonesia. In May, 2015 Jokowi attended the Asia-Pacific Economic Cooperation (APEC) in Beijing. That moment was symptomatic of the closer relationship between the two countries. During the official dinner, Jokowi sat right beside Chinese President Xi Jinping. Jokowi and Xi'€™s discussions continued on in bilateral talks afterward.

China was also the first overseas state visit by Jokowi. During his nine-day first official overseas visit in October 2014, Jokowi sent out pivotal signals concerning many issues, particularly his maritime axis vision, a key element of Indonesia'€™s new foreign policy.

Concomitantly, in this early period of Jokowi'€™s presidency, he announced a new breakthrough '€œworld maritime axis'€ policy that aimed to see Indonesia realize its potential as an international, regional and national connectivity hub. This policy has diligently been promoted by various experts since the end of 2014.

On the theme of policy concerns, President Jokowi'€™s vision to make Indonesia the '€œworld'€™s maritime fulcrum'€ is congruent with President Xi Jinping'€™s plan to build a new maritime Silk Road.

In his presidency, Jokowi has affirmed that the state budget must be allocated to basic infrastructure such as hospitals and schools. However, this does not necessarily suggest that salient infrastructure such as a sea highway, bridges, harbors and airports are not a priority.

The sea highway, transportation, harbors and airports will all encounter budget restrictions. Indonesia may rely on support from the World Bank and the Asian Development Bank (ADB), but unfortunately the focus of the World Bank and the ADB is on poverty alleviation and the improvement of standards in health, education and research.

To ensure infrastructure development in the Asia-Pacific region, 22 Asian countries, including Indonesia, joined the China-led Asian Infrastructure Investment Bank (AIIB) in October 2014.

With the dynamic backdrop of the Asia-Pacific region that is currently teeming with economic and political interests, plus an unresolved border conflict in the South China Sea, Indonesia'€™s position as a world maritime axis needs to play a more cautious role as a non-aligned mediator while maximizing infrastructure investment from overseas.

The government needs to tread carefully in dealing with foreign investment and financing, including that from China, and should make the interests of the people its top priority.

In the case of the coal-fired power plant in Buleleng, for instance, legislators found many types of heavy equipment from China were used in the project without proper safety certificates. Subsidized fuel was even used. The project, carried out by Huadian and General Energy Bali (GEB), also faced immigration problems with their overseas workers '€” accounting for 90 percent of laborers '€” being caught with incomplete immigration documentation.

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The writer is a lecturer in the communications department at Multimedia Nusantara University and holds a master'€™s degree from Chinese Culture University, Taiwan.

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