Indonesia defends bidding process for high-speed rail project after Japan angered at being rejected

A railway steward waiting for passengers to board before departing from Jakarta to Bandung, at Gambir train station in Jakarta, Indonesia, on Sept 30, 2015. Indonesia picked China over Japan to build the country's first fast-train rail link because B
A railway steward waiting for passengers to board before departing from Jakarta to Bandung, at Gambir train station in Jakarta, Indonesia, on Sept 30, 2015. Indonesia picked China over Japan to build the country's first fast-train rail link because Beijing had the courage to provide US$5 billion in loans without asking for guarantees, an Indonesian official said on Wednesday. The two Asian giants had been battling for months over the high-profile contract to build a railway linking the Indonesian capital, Jakarta, with the textile hub of Bandung.PHOTO: REUTERS

JAKARTA (AFP) - Indonesia defended on Thursday (Oct 1) the chaotic bidding process for its first high-speed railway after months of mixed messages ended with China being chosen over a furious Japan for the US$5 billion (S$7.12 billion) project.

Indonesia's State-Owned Enterprises Minister Rini Soemarno, who had championed the Chinese plan, came out to defend the bid process.

"It's very transparent, in my opinion," she told reporters in Jakarta, when asked about the mixed messages from the government.

"I don't know why it should upset foreign investors," she added.

She said the Chinese bid was picked due to its "financial structure" - because the Chinese had not required any Indonesian government financing or a government guarantee, unlike the Japanese plan.

Beijing and Tokyo had long been vying to build the line linking the capital Jakarta with the mountain-fringed city of Bandung, some 160km away.

The contest was one front on Asia's two-biggest economies escalating battle for influence across the region.

The winner was expected to be unveiled early last month, only for the authorities to turn around at the last minute and announce they were opting for a cheaper, medium-speed train and reopening the bid process.

But on Tuesday, Japan's chief government spokesman said that an Indonesian envoy had been sent to Tokyo to tell him Jakarta had changed its mind again - and China's original bid for a high-speed train had been accepted.

The spokesman, Mr Yoshihide Suga, called the news "extremely regrettable".

An Indonesian and Chinese consortium are now negotiating over the terms of the contract, but there are no other bidders left in the process.

The rail project is a key part of President Joko Widodo's drive to build more infrastructure and overhaul Indonesia's ageing roads, railways and ports.