The National Development Planning Ministry has confirmed that Japanese state-owned and private companies will not be participating in Indonesia's first-ever high-speed rail project, but the two governments were still planning to co-operate in other infrastructure development projects.
National Development Planning Minister Sofyan Djalil, who attended a meeting with the head of the Japanese Cabinet, secretary Yoshihide Suga, on Monday in Tokyo, said that Japan's private companies could not get involved in the project's business to business co-operation scheme, since it would violate the country's business model and regulations.
"Japan's business model and regulations have made it impossible for Indonesia to give a concession credit to Japanese companies," said Sofyan on Wednesday as quoted by Antara news agency.
According to Japan's feasibility study, the high-speed rail project would require around US$6.2 billion (S$8.9 billion) to go to completion. The Chinese proposal, on the other hand, foretasted a lower cost of US$5.5 billion.
The Indonesian government has decided that the project would only run using a business to business scheme, without any budget, guarantee or state capital injection (PMN). It officially announced the stance in Monday's meeting.
Sofyan asserted that the state budget would only be used for strategic infrastructure projects, which were in accordance with national development priorities.
During Monday's meeting, Sofyan also acknowledged that infrastructure co-operation between Indonesia and Japan was still open, such as the Cilamaya seaport project in West Java.