China funding derailed Japan's bid -- Indonesian development chief
Indonesian National Development Planning Minister Sofyan Djalil
TOKYO -- Indonesia's decision last September to choose China over Japan to construct its first high-speed railway came as a shock to many in Japan. The Nikkei Asian Review sat down with National Development Planning Minister Sofyan Djalil, a close confidant of President Joko Widodo, during the 22nd International Conference on The Future of Asia in Tokyo to talk about the decision and the Southeast Asian nation's economy.
Q: Why did Indonesia choose China's plan for the high-speed train, and what do you see as the respective strengths and weaknesses of Japan and China?
A: China's infrastructure investment has been growing very fast, but that is because it began from a small basis. Overall, Japanese investment in Southeast Asian infrastructure is much larger. As for the fast train between Jakarta and Bandung, it follows a new policy introduced in Indonesia where these kinds of investments will be conducted by the private sector, under public-private partnerships.
If PPP does not work, we will have our state-owned enterprises conduct the project because they have leverage. Then the last resort is to use the government budget. If we use our budget, say $1 million, we can only do a project worth $1 million. In the private sector, there is more possibility for leverage.
Last year, the fast-train plan that was offered by the Chinese was without government guarantees and without government money whatsoever. Because of that, the Chinese won the project. But that does not mean that our relationship or our commitment to working together with the Japanese was reduced. Today, our cooperation with Japan is as strong as before.
Q: It has been reported that Indonesia is looking to team with Japan to build a train between Jakarta and Surabaya.
A: We need to participate in all kinds of infrastructure investment in Asia. I met with representatives of the Japan International Cooperation Agency during this visit. We are working on a big port in northern Java to be financed by official development assistance from Japan. Regarding the train from Jakarta and Surabaya, actually this is not a new train (but an upgrade). Now we have lots of crossings so the train cannot move fast -- maybe a maximum speed of 80kph. We would like to remove all of the crossings, possibly by using flyovers or underpasses. We are working on this project and we will communicate with Japan in the near future.
Q: Indonesia will be borrowing from both the Japan-led Asian Development Bank and the China-led Asian Infrastructure Investment Bank. What are the differences between the two?
A: We have been working with the ADB for many years, and like Japan, it is one of the most trusted partners of Indonesia. I think the AIIB's role is to bridge the gap and fill the void. Right now the need for infrastructure money is so huge that the coming of the AIIB will bring more resources for infrastructure development. For us, there is not much difference. Right now we are working with the World Bank, and the AIIB is working through the WB system to lend us some money for projects in Indonesia.
Q: Have you had contact with the AIIB?
A: Oh yes. Some managers came to Jakarta last year, introduced themselves and said they are ready to extend credit.
Q: President Widodo said Indonesia intends to join the Trans-Pacific Partnership. What kind of benefit do you see and when do you intend to sign up?
A: The president intends to join the TPP. It means several things. First of all, we have to prepare ourselves so that one day if we do join the TPP we will be ready. At the same time, by intending to join the TPP, we force our economy to be open and more competitive because the TPP subscribes to very competitive standards. We believe that in this globalized world, we cannot live in closed borders. We have to be competitive and we have to be a member of the global community. In the meantime, we have to do a lot of homework to prepare our people as well as change laws and regulations to ensure that our economy is ready for the TPP.
Q: What is your outlook for the Indonesian economy?
A: Our target is still 5.3% to 5.5% growth. The International Monetary Fund projected lower growth, but the IMF is famous for its conservatism. We still hope we can achieve more than 5% this year.
Q: What can you tell me about President Widodo?
A: This president is very reformist and thinks out of the box. In this current situation we should think out of the box because the world is moving so fast in various sectors. What was thought to be a strength in the past may not be so now. In the case of Japan, things like a long life (expectancy), lifetime employment, consensus-building and seniority were all thought to be strengths. But in this fast-changing world you have to adapt quickly to the outside world. Therefore, a leader has to be reformist, to be agile and not be dogmatic so that we can adjust.
Interviewed by Nikkei deputy editor Ken Moriyasu
... Looking forward to have Polytron and Maspion as well hehehe 
