Japan betters offer for Indonesia railway in bidding war with China

JAKARTA - Japan has come back with an improved offer for Indonesia's high-speed railway connecting Jakarta to the nearby city of Bandung, just days after China sweetened its own bid to win the contract, an Indonesian official said on Friday.

Japan had offered a 40-year loan at an interest rate of 0.1 percent, with a 10-year grace period, Oura Daisuke, the representative of the Japan International Cooperation Agency in Indonesia, said this week, but declined to reveal the amount.

On Friday, an official of Indonesia's coordinating ministry for economic affairs told Reuters the length and interest rate of Japan's loan remain the same, but would not involve the Indonesian government budget. "They are giving the loan to the state enterprises, our government won't have a share," Luky Eko Wuryanto, deputy minister of infrastructure and regional development, said by telephone, adding that the Indonesian state enterprises could rope in private firms as operators of the railway.

China had offered a loan of US$5.5 billion (S$7.7 billion) with a 50-year tenure, an interest rate of 2 percent and a grace period, bettering its previous bid, the former Indonesian national development planning minister said on Tuesday. "Perhaps both of them see this project as a symbol of friendship, so they are both very serious," Wuryanto said. "We will make a fair assessment so we can truly appreciate the efforts of both countries."