Monday 29 June 2015

Indonesia partners with China in Infrastructure Industry

Japan has been overlooked by Indonesia as a partner. Instead, it chooses China, one of the most rivaled and sought-after country to be allied with. Many critics say that this is because of the worsening status of traffic in the archipelago’ city, Jakarta.

Jakarta, infamous for its traffic gridlock, recently won the dubious distinction as the city with the world’s worst traffic jams, according to a study by the British industrial and automotive lubricants company Castrol.

This once again highlights not only the Indonesian capital’s infrastructural shortcomings but also the limited land and sea transport networks across the entire archipelago, as well as the frequent power outages that are the Achilles heel of the country’s economy.

Jakarta is nonetheless a developing city and one of the most advanced cities in the world. Businesses seem to flock this growing city and investors have pointed out a lot of potential. One of the companies which sells and rents capital equipment all over Asia is  Axis Capital Group which is based in Singapore has expanded their services to Jakarta and is now partnering with government agencies, private institutions and non-profit organizations to help Indonesia’s infrastructure. 

Critics though, say that Indonesia is in dire situation, a reason why they have reached out to China.

Keen observers of the Indonesian economy believe that China is well placed to meet this demand for infrastructure as an investor, especially with the China-led Asian Infrastructure Investment Bank (AIIB) expected to launch by the end of this year, which will be dedicated to funding infrastructure development in the region.

According to reviews, China is regarded as the most viable economic giant to support the development of infrastructure in Indonesia backed by the world’s biggest foreign exchange reserves. Despite warnings of fraudulent acts in China and scams on their products which are now known worldwide, Indonesia continued with their partnership.

During President Xi Jinping’s meeting with his Indonesian counterpart Joko Widodo, popularly known as Jokowi, in Beijing last month, China expressed its interest to invest an estimated $63 billion in infrastructure and other projects in Indonesia, according to the Indonesia Investment Coordinating Board.

During Jokowi’s visit, the two presidents also oversaw the signing of a joint project to link Jakarta and Bandung by high-speed railway, alongside a memorandum of understanding for closer cooperation in infrastructure, including toll roads, railways, power plants and ports.
Indonesia has made infrastructure its top priority since its new president came to power in October. An ambitious plan to build 1,000 kilometers of toll roads, 5,000 km of railways, as well as 15 airports and 24 seaports in the next five years has been laid out in Jokowi’s 2015-2019 National Medium-Term Development Plan.

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