Fast Train Project, When China Overtake Japan

08 April 2019

Japan's record in the fast railroad industry can be called smooth. While China, although it can be called a new player, is very aggressive in working on fast railroad projects both in its own country and in other countries. Indonesia finally chose China after considering a number of things, mainly related to funding guarantees.

China and Japan competed hard to work on the Jakarta-Bandung fast train project. The Indonesian government finally chose China to work on the Jakarta-Bandung high-speed train project. Indonesia apparently was not interested in Japan's smooth record in the fast train project. Indonesia is more interested in Chinese offers which are considered more profitable, even though the record is not as good as Japan.


China does not work on the project itself. There is a consortium of BUMNs that will accompany China. With this cooperation, it is expected that this fast train project can be realized even though it is actually not in the National Railway (RIPNas).


Initiated by President SBY The fast train project in Indonesia was initiated during the era of President Susilo Bambang Yudhoyono. In 2008, the National Development Planning Agency (Bappenas) and the Ministry of Transportation (Kemenhub) designed the Jakarta-Surabaya fast train project. The Japan International Corporation Agency (JICA) was appointed to conduct a 700 km rapid train study. The funds needed are estimated at 2.1 trillion yen, or around Rp 245 trillion.


The results of the JICA study gave rise to the alternative priority routes of the Jakarta-Surabaya fast train, namely the northern coast route through Jakarta-Cirebon along the 207.3 km or Jakarta-Bandung-Cirebon along 256 km. For Jakarta-Bandung-Gedebage the length is 144.6 km, if it is continued to Cirebon it reaches 256 km.


The idea of ​​a fast train project continued to resonate in the era of Jokowi's leadership. It's just that the map of the project changes with the entry of China. The Bamboo Curtain country tried to attract Indonesian attention when Jokowi was present at the 22nd meeting of the APEC Summit in Beijing 10-11 November 2014. During the visit, Jokowi had a chance to experience the 120 km Beijing-Tianjin fast train which was only 33 minutes away.


On that occasion, there was the signing of the Jakarta-Surabaya fast train memorandum of understanding 800 km between China Railway Construction Corporation Limited and PT Resteel Industry Indonesia. The signing of the cooperation was held at the Indonesia-China Trade Investment and Economic Forum event in Beijing. "China is very enthusiastic about the many contested projects in this country," said Chairman of the Indonesia-China Trade Investment and Economic Forum Organizing Committee Didi Suwondo quoted from Antara.


Two weeks later, Chinese fast train investors immediately came to Indonesia to follow up on the memorandum of understanding. In March 2015, President Jokowi made a state visit to Chinese President XI Jinping in China. Coincided with the visit, Minister of State-Owned Enterprises (BUMN) Rini Soemarno signed a memorandum of understanding on the construction of the Jakarta-Bandung fast train with the National Development and Reform Commission of China. Since then, China has officially become a Japanese challenger to the fast train project in Indonesia.


Japan's Seamless Record and Bad Record of China Even though it was not in the RIPNas, the government decided to continue working on the Jakarta-Bandung fast train project. Indonesia does not seem to want to miss the trend because the use of fast trains is global. Until now, there have been at least 20 countries that operate fast train services including Britain, France, Germany, Belgium, Spain, Italy, Turkey, Japan, China, Korea, Taiwan and others. Some countries are still carrying out construction processes including in Saudi Arabia. The remaining development planning stages include Qatar, Morocco, Russia, Poland, Portugal, South Africa, India, Argentina, Mexico, Singapore, Malaysia, Indonesia and Brazil.


International Union of Railways (IUC) noted that until April 2015 there were 29,792 km of the world's fast train network, which included 3,603 fast train circuits that were already operating. Every year there are 1.6 billion passengers transported by fast trains, including 800 million passengers in China, 355 million passengers in Japan, 130 million in France, and 315 million in various other countries. Japan and China become true rivals in terms of competition for the development of fast trains in the world. Both countries are competing to offer their "bullet train" technology to various continents. Japan and China compete in the US fast train project for the Los Angeles-San Francisco route along 559 km with an investment of USD 68 billion. The two countries also compete on similar projects in many countries. Japan has conducted several rapid train studies in India, Thailand, Vietnam and Indonesia. While China, recently inaugurated its fast train project outside its country, Turkey, which is 530 km long, which connects Istanbul and Ankara.


Japan first operated the Shinkansen high-speed train on October 1, 1964. The shinkansen project began groundbreaking on April 20, 1959 to support the holding of the 1964 Tokyo Olympics. The Shinkansen project began with a feasibility study in 1956. The Shinkansen fast train project was initially funded by the World Bank. World Bank loans for the construction of the New Tokaido Line for 500 km. This financial donor agency lends to Japan up to $ 80 million of the total $ 548 million project. As the first country fast train user, until now there has been no incident of a fatal accident that befell the Shinkansen fast train. To commemorate this, in 2014 there was a 50-year ceremonial event at the Shinkansen fast train service.


While China is classified as a newcomer to the world's fast train industry. However, the development of China's fast train industry is very rapid. China has a fast train network of more than 13,000 km or at least 50 percent of the fast train network in the world. China has one of the longest fast train routes in the world, 2,298 km. This line connects Beijing and Guangzhou City which opened since December 2012. Conventional train trips are cut from 22 hours to just 8 hours.


However, the rapid development of China's fast train industry was marred by a number of accidents that killed dozens of people. The death toll in a train accident in China on Saturday July 23, 2011 reached 32 people. The D3115 express train from Hangzhou to Wenzhou in Zhejiang province, East China lost power due to lightning. The incident occurred when another D301 train from Shuangyu City, Wenzhou, crashed into the D3115 train.


Battle of China Versus Japan

The Jakarta Bandung fast train project is only "an inch" from the big scenario of China to massively build a fast train network throughout the world. China has the ambition of connecting the mainland of England with China between Beijing-London, through fast rail transport networks between continents, for the sake of its economic interests including to obtain natural resources.


In Indonesia, China is also eyeing the development of the fast train project to Surabaya. While in Asia, China is also targeting similar projects in Malaysia-Singapore, Myanmar, Vietnam, and India. China and Japan both expressed the seriousness of working on the fast train project. The two powerful countries in Asia both sent their delegation to meet Indonesian officials.


Beginning in August 2015, the Japanese delegation directly expressed interest in working on the fast train project. This interest was conveyed when the minister of commerce who was then held by Rachmat Gobel visited Japan. During the visit to Japan, Rachmat Gobel was given the opportunity to visit the Japan Transport Engineering Company to see first hand the process of making Shinkasen. The factory apparently employs 17 young Indonesian workers to build the latest Shinkasen series. It seems to confirm Japan's intention to build human resources and also technology transfer, not just to build projects.


A week later, precisely on August 10, 2015, the Chinese delegation met with President Jokowi. Clearly, the delegation led by the Minister of National Development and Reform Commission of China, Xu Shaoshi explained the results of a feasibility study on the Jakarta - Bandung fast train project. The proposals submitted by Japan and China were very balanced.


To get the best, President Jokowi complained about Chinese and Japanese proposals. To be fair, Indonesia collaborates with an independent consultant from the Boston Consulting Group as an appraiser. Coordinating Minister for Economic Affairs Darmin Nasution was elected as chairman of the consultant report assessment team, which was stated in Presidential Regulation (Perpres) No. 93 of 2015 concerning the Jakarta-Bandung Rapid Train Project Assessment Team. August 31, 2015.


The Indonesian government also stipulates the absolute conditions for this project: not to use state budget funds. The Indonesian government also does not want to issue guarantees related to project funding. The business to business scheme (b to b) must be applied in the project.


Towards the deadline, Japan suddenly made a proposal revision. Japan, through Prime Minister Shinzo Abe, sent special envoys to submit proposals for additional Japanese proposals to the assessment team. The move had disappointed Chinese representatives because the act of adding proposals was considered unfair to them.


President Jokowi finally issued Presidential Regulation 102 of 2015 concerning Amendments to Presidential Regulation Number 93 of 2015 concerning the Jakarta-Bandung Rapid Railroad Project Assessment Team. The Perpres changed the deadline for the assessment team report until September 7, 2015.


Before the deadline ended, the assessment team had quietly reported to President Jokowi about recommendations regarding the two Japanese and Chinese offers. The result was enough to shock China and Japan. President Jokowi rejected both proposals because Japan and China offered to use the state budget in the project.


President Jokowi finally handed over the fast train project to BUMN with a business to business scheme. "I ordered the SOE Minister to follow up on the construction of the Jakarta-Bandung fast train project," Jokowi said. Since then, BUMN Minister Rini Soermarno has a full mandate to determine the fate of this fast train project.


One month later, a state-owned fast train consortium was formed which cooperated with the Chinese side. The Jakarta-Bandung fast train is carried out by PT Indonesia Fast Train (KCIC), which is a consortium of Indonesian and Chinese companies. Indonesia is represented by PT Pilar Sinergi BUMN Indonesia (PSBI). PSBI includes 4 BUMNs namely PT Wijaya Karya Tbk, PT Jasa Marga Tbk, PT Kereta Api Indonesia Tbk, and PTPN VIII.


Even though the government did not want to intervene about funding and hand over the fast train business to BUMN, President Jokowi issued Presidential Regulation Number 107 of 2015 concerning the Acceleration of the Implementation of Fast Train Infrastructure and Facilities between Jakarta and Bandung, which was signed on 6 October 2015.


Since then, various pros and cons have sprung up in the general public, observers, politicians, and the internal government about fast trains. The government continues. However, to start the project quickly, President Jokowi was cautious enough, especially in maintaining the impression related to the development priorities of Java and outside Java. President Jokowi must patiently wait for the groundbreaking moment of the fast train, because he prioritizes the groundbreaking process of the construction of the Sulawesi and Kalimantan train projects.


All of the preparations for this project were rapid, including the preparation of a feasibility study by China which only lasted May-August 2015. In fact, the fast train project was not included in the Ministry of Transportation's 2030 RIPNas. This project was really prepared for completion in 2019.


The Jakarta-Bandung fast train line is a priority even though it is "consuming" the route along the 5 km plan for the Jabodetabek light rail transit (LRT) project. Adhi Karya as the LRT developer must budge, and change the LRT line for the Jakarta-Bandung fast train. The official government cooperates with China to work on projects that are not in accordance with the 2030 RIPNas. However, the journey of this project still seems to be long. New battles await a consortium of Chinese and Indonesian SOEs, ranging from funding issues to technology. People still have to be patient to be able to feel the Jakarta-Bandung fast train.


Reporter: Suhendra

Author: Suhendra

Editor: Nurul Qomariyah Pramisti

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