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An image of an inter-city train in Indonesia. Photo courtesy: WMC
The proposed high-speed line will connect the country’s capitol, Jakarta, with Bandung, in a 140 kilometers stretch.
China was selected over Japan because it provided $5 billion in loans without requiring a guarantee as well as offering a larger share of technology transfer, according to ABC.
A guarantee is often provided by governments in loans as large as these wherein the guarantor, in this case the Government of Indonesia, will assume the debt if the borrower defaults.
“The government of China has courage not to ask for guarantees from Indonesia,” Gatot Trihargo, deputy assistant for the state-owned enterprises ministry, said.
“While other countries like Japan and Germany request government guarantees, we cannot afford this because our budget is limited.”
“It’s a pity about the Indonesian government’s decision,” Yoshihide Suga, the Chief Cabinet Secretary of Japan, said.
“Without a loan guarantee this would be impossible for the Japanese government. It was incomprehensible,” he criticized.
The high-speed rail project has the possibility to increase in scale as other countries within Indonesia’s vicinity begin to see its value.
The use of high-speed rail outside of Japan is also one of the growth strategies of the Abe Administration that has put emphasis on exporting infrastructure.
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