Models of high speed trains on display at the China High Speed Railway on Fast Track exhibition in Jakarta

Indonesia abruptly cancels high-speed rail project

Indonesia has decided to scrap plans for the nation's first high-speed railway at the last minute, leaving bidders China and Japan nonplussed.

Tokyo and Beijing had lobbied heavily for the $5bn (£3.3bn) contract to build the line, but the project was abruptly pulled by President Joko Widodo last night when he announced that a bullet train between the capital Jakarta and the textile town of Bandung 150km away was unnecessary.

The reasoning given was that the service would never reach its maximum speed of more than 300km/h in between station stops, prompting the administration to instead advocate a slower train and ask China, Japan and others to submit new proposals.

"It looks like a sudden move because the recommendation was made after a review of both proposals," Teten Masduki, presidential chief of staff, told Reuters. "But the recommendation is in the best interest of the country."

"It was the recommendation from independent consultants that suggested to the government that a medium-speed rail was a better option because the cost is cheaper and the time of the journey isn't much longer," he added.

The train was initially intended to be the first instalment of a 763km rail link connecting Indonesia's two biggest cities, Jakarta and Surabaya and the presidential palace said it still wanted to build a bullet train covering the entire Java island.

Japanese ambassador Yasuaki Tanizaki said he had "expressed his regrets" but he did not think the decision would affect Japan's investment in the country and added that Tokyo was waiting for details on the medium-speed rail project before deciding whether to participate.

A Chinese embassy official in Jakarta declined to comment until more information was provided by Indonesia.

"The project was a priority for China because it would have been one of the first and most visible manifestations of President Xi Jinping's 'One Belt, One Road' overseas investment drive," said Tom Rafferty, Beijing-based analyst at the Economist Intelligence Unit.

"Chinese firms have not always been sensitive to political risk in foreign markets, but on this occasion the lobbying and marketing effort was extensive. The decision therefore seems likely to dim China's confidence in the Indonesian market."

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