JAKARTA • Indonesia is preparing to spend about US$40 billion (S$55 billion) to extend Jakarta's metro network, a bigger-than-expected outlay that is poised to boost the country's construction companies and reignite a rivalry between China and Japan for the project's contract.
The spending plan, detailed in an interview with the head of the operator of the capital's subway, is part of President Joko Widodo's ambitious road map to create a US$7 trillion economy by 2045. While his administration has outlined a requirement to spend about US$455 billion on infrastructure over the next five years, policymakers have until now revealed few specifics.
MRT Jakarta is selecting financiers to help fund the expansion, said Mr William Sabandar, its president director.
It is seeking to add six lines to the one that partially opened earlier this year, he said, which could allow the system to rival those in Hong Kong and Singapore in terms of length.
The decision to broadly extend the network may surprise some analysts, who were expecting the operator to work only on completing the first line.
Mr William said: "We have a target of building 230km by 2030 - that's the masterplan.
"We only have 16km right now, so the key is how we can do this in an accelerated way. We can no longer just build them one by one."
Improving the rail network is a crucial next step in Mr Joko's ambition to develop the country's infrastructure, expediting the flow of goods and people and alleviating congestion, after he spent aggressively to build a toll road network in his first term.
But his efforts to date, which include the construction of ports, dams and power plants, have put a strain on the banking system and the balance sheets of state-owned construction companies.
Indonesia will need assistance and funding from abroad, according to Trisakti University transport analyst Yayat Supriatna.
That opens the door for China and Japan to renew their rivalry in the country, something that Indonesia will have to navigate, he said.
"We have to acknowledge that Indonesia doesn't have the technical capabilities and the financial resources for this," Mr Yayat said.
By making Japan and China compete against each other, "we can make sure that we can pick the offer that gives us the best benefit".
Japan was awarded the first subway line in the capital, while China got the first high-speed train deal connecting Jakarta and Bandung.
"The Asian Development Bank and Asian Infrastructure Investment Bank are among those that are serious and have submitted financing commitments," said Mr William, adding that the Japan International Cooperation Agency has also expressed interest in the new lines.