Comparation of China and Japan: infrastructure investment to Indonesia under the government of President Joko Widodo (2000-s)

5. Meanwhile the second type of banks that supported BRI projects is the “State Owned Banks”. Presently, the Agricultural Bank of China (ABC), the Bank of China (BOC), the China Construction Bank (CCB), and the Industrial and Commercial Bank of China (ICBC) are four key actors that participate in financing BRI related activities.

6. With regard to the second institution, there are certain Funds that were designated for achieving China's goals. The China Investment Corporation (CIC) and the Silk Road Fund (SRF) are two notable examples where Chinese Funds also participated in BRI. In 2007, the CIC was created as a tool to diversify China's foreign exchange holdings and seek maximum returns for its shareholder within acceptable risk tolerance, See <http://www.china-inv.cn/chinainven/About_CIC/Who_We_Are.shtml>. whilst the SRF was created a year after OBOR being declared by President Xi in 2013. In collaboration with domestic and international enterprises and financial institutions, the SRF is designed to promote the development and prosperity for all participating economies in the BRI. See <http://www.silkroadfund.com.cn/enweb/23775/23767/index.html>.

7. Moreover, under the third category, the author asserts that certain international financing institutions also playing an important role for ensuring China's agenda on BRI could take place. In addition to the Asian Development Bank (ADB) and the New Development Bank (NDB), there is also a new international institution that is created as a positive gesture in welcoming the BRI. The said international institution is the Asian Infrastructure Investment Bank (AIIB). Presently, 74 countries have become the members of AIIB, whilst 26 others acting as its prospective members. See AIIB, “Members and Prospective Members of the Bank”, (Sept. 24, 2019) <https:// www.aiib.org/en/about-aiib/governance/members-of-bank/index.html>. With its huge amount of investment that reached up to US$ 9.03 billion, the AIIB is now capable for conducting 47 BRI projects. AIIB, “Approved Projects”, (Sept. 2019) <https://www.aiib.org/en/projects/approved/ index.html>. With the above-mentioned financial resources, the BRI is currently conducting around 118 projects across its corridors and roads. BRI, “BRI Projects”, (2019) <https://www.beltroad-initiative.com/projects/>; see also World Bank, Op.Cit., Appendix B. Among these projects, thirty-four (34) of them are located and/or involving Southeast Asian countries.

This is really explain why Indonesia sees China as one of the good partner in the development as both countries seemed to have mutual benefit in this situation.

The two countries held the view that the initiative of the 21st-Century Maritime Silk Road proposed by President Xi Jinping and the strategy of the Global Maritime Fulcrum initiated by President Joko Widodo are highly complementary to each other and synergize them to each other advantage by advance maritime infrastructure connectivity and deep cooperation in industrial investment and major project construction. See “Joint Statement on Strenthening Comprehensive Strategic Partnership Between The PRC and Republic of Indonesia”. (26 05 2015). Beijing. Retrieved from https://www.fmprc.gov.cn

China's investment in Indonesia could be seen from the signing of various Memorandum of Understanding (MOU) in infrastructural sector. China's investments are continuing to gain compared from the previous years. In November 2014, Indonesia and China signed 12 MOU in the infrastructure, transportation, mining, and energy at the Indonesia- China Forum Business in Beijing and was opened by President Jokowi himself. This forus was attended by 170 investors from China and 150 businessman from Indonesia. As elaborated in Table 1 infra, here several investments from the meeting between two countries.

Table 3

China- Indonesia MoU on Investment 2014

No	Investor	Investment Amount
	Indonesia	China	(in USD)
1	PT Zadasa	Shen Zhen Tian He Wei Hang	5,510 Million
2	PT Eka Sampoerna	Fujian Yinhai Group	1,3 Million
3	Maspion group	Shining Resources	100 Million
4	Cahaya Sukses International	Fujian Tian Mao	1,5 Million
5	PT.Wijaya Infrastruktur Indonesia	Golden Mega International Holdings	120 Million
6	PT. Integral Mining Nusa	Jiangsu Wei - Wei Mining	775 Million
7	PT. Sinar Sukses Mandiri	Zhong Ji Hao	306 Million
8	PT. Indonesia Energy Prima	SDIC International Trade	350 Million
9	PT. Kayan Hydro	Shanghai Electric Power	17,8 Billion
10	PT Adaro Power	China Senhua Overseas	-
11	PT Maesa Optimal Mineral	Vansung Holding Group	-
	PT Restell Industry	China Railway Construction

Source: http://harnas.co

In 2015, the investment increased by 26 percent into US $ 628 million with total of 1.052 projects. In first quarter of 2016, it was increased by approximately US $ 1 billion and reached the total US $ 2,7 billion with the total 1.734 projects. Below, are listed projects which are in preparation, under construction, in operation or were initiated under BRI but later have been discontinued under the reign of President Jokowi (2015-2019)

BRI Transportation and Toll Road Projects

1. Jakarta - Bandung High Speed Rail

Location: Jakarta - Bandung (West Java)

Year: 2016- 2021

Status: In construction

Total Investment: 5.9 Billion USD

Contractors: China Railway Construction Corporation Ltd, China Railway International Group, PT Jasa Marga Persero, PT Kereta Api Persero, PT Perkebunan Nusantara, PT Wijaya Karya

Details : Jakarta - Bandung High Speed Rail is one of the Indonesia's first high speed rail projects, connecting Jakarta and the second largest City In Indonesia, Bandung City in West Java. Later, It is planned to be extended to connect to Surabaya in Northeastern Java. The idea of building high speed train was initially by President Susilo Bambang Yudhoyono in 2008. In this era, Indonesian government appointed Japan through Japan International Coorperation Agency (JICA) to study about the estimated concept and budget. This plan was continued into President Jokowi's era, however, the coordination with Japan was stopped and replaced with China. (source: Database of Central Strategic and & International Studies)

This project is developed by PT Kereta Cepat Indonesia and China Railway International. The total length of the railway is 150 Km and expected to cut times between cities from three hours by train into only 40 minutes. China is financing this project without any aid from Indonesian government. 75% of the funding is given by China Development Bank while the rest 25% will be arranged by joint venture partners

2. Cisumdawu (Cileunyi-Sumedang- Dawuan) Toll Road

Location: West Java

Year: 2016- 2020

Status: In construction

Total Investment: 165,5 Million USD

Contractor: PT Adhi Karya, PT. Wijaya Karya - PT. Nindya Karya - PT. Waskita Karya, PT Citra Karya Jabar Tol, PT Girder Indonesia, China Road and Bridge Coorporation, Metallurgical Corperation of China,

Loan provider: EX-IM Bank of China

Detail: Bandung - Cileunyi - Sumedang - Dawuan (Cisumdawu) toll road, which has been built along 61.5 Km, is one of the toll roads in the West Java region that is unique from the construction process to being one of the most beautiful toll roads in Indonesia. The process of building was devided into 4 sections. The 1^st section of the segment was built from the Cileunyi- Tanjungsari with total length of 12 km. 45,47% of progress was carried out by China Road and Bridge Corporation (CRBC) - PT Adhi Karya (Joint Venture). Section 2 which also devided into 2 phases, the 1^st phase of construction had fully 100% completed with total length of 7.2 Km and the 2^nd phase the progress still completed 74,62% with total length of 10,7 Km.

Then the section 3 and 4 from Sumedang to Cimalakama is constructed by PT Gider Indonesia and the progress already reached 78,01%, Section 5 is built with total length of 8.20 Km from Catulaga to Legok and the 5^th section of Legok-Ujung Jaya with a length of 14.90 Km. Government already planned to extend the section into 6^th started from Ujungjaya-Kertajati with total length of 6.06 Km but the contruction has not already begun yet. Rakyat, Kementrian Pekerjaan Umum dan Perumahan. Cisumdawu Toll Road, the Most Beautiful Toll Road Built by Indonesian Talented Engineers. (26 09 2019). Retrieved from http://bpjt.pu.go.id/berita/cisumdawu-toll-road-the-most-beautiful-toll-road-built-by-indonesian-talented-engineers (accessed 04 26, 2020).

3. Manado- Bitung Toll Road

Location: Manado-Bitung (North Sulawesi)

Year: 2017-2019

Status: Finished

Total Investment: 503 Million USD

Loan Provider: EX-IM Bank of China

Contractors: Hebei Road and Bridge Group, PT Hutama Karya, PT Jasa Marga, PT Pembangunan Perumahan (Persero), PT Wijaya Karya, Sino Road and Bridge Co.,Ltd

Description: This toll road connects two biggest cities in North Sulawesi Manado city and Bitung City. The construction is devided into four total segments with the funding from the state budget, local investor, and overstate loan (China). The first construction which consist of 2 segments has total length of 14 Km. The 1^st segment with 7 Km of construction is started from Manado - Sukur. Indonesia, PwC. Infrastructure: Manado - Bitung toll road accelerated. (September 28, 2018). Retrieved from https://www.pwc.com/id/en/media-centre/infrastructure-news/september-2018/manado-bitung-toll-road-accelerated.html (accessed 26 04 2020). And the left 7 Km is continued exactly from Sukur - Air Madidi. These two first segments was funded by private companies and loan from China.

The second construction also consist 2 segments with total length of 25 Km. The 3^rd segment with total length of 11.50 Km construction along Air Madidi - Danowudu and the 4^th segment with total length of 13,5 Km is started from Danowudu - Bitung. These second construction is funded by Jasa Marga. Once completed, the operation of the toll road expected to support the tourism sector wich could gain the economic growth. This toll road will cut the time of travel from Manado to Bitung from 90 Minutes to 45 minutes only. Marga, Jasa. ?PT JMB is Optimistic that Manado Bitung Toll Road Construction will complete by July 2020. October 10, 2019. https://jasamarga.com/public/en/activity/detailactivity.aspx?title=%E2%80%8BPT%20JMB%20is%20Optimistic%20that%20Manado%20Bitung%20Toll%20Road%20Construction%20will%20complete%20by%20July%202020 (accessed April 26, 2020).

4. Solo - Kertasono Toll Road

Location: Central Java - East Java

Year: 2015- 2018

Status: Finished

Total Investment: 200 Million USD

Loan Provider: EX-IM Bank of China

Contractors: China Road and Bridge Corporation, PT Jasa Marga, PT Pembangunan Perumahan, PT Wijaya Karya

Description: This toll road is a part of Trans Java Road Project, Solo- Kertosono project has total length of 177.12 Km started from Solo City in Central Java until Kertosono - Mojokerto City in East Java. The administration of this toll is devided into two segments, the first segment is Solo- Mantingan- Ngawi with the total length of 90.01 Km, and the second segments is continuation from Ngawi - Kertasono, Mojokerto with total length of 87.02 Km. Post, The Jakarta. Ngawi-Kertosono toll road section to begin operation this month. (07 01 2018). Retrieved from https://www.thejakartapost.com/news/2018/01/07/ngawi-kertosono-toll-road-section-to-begin-operation-this-month.html (accessed 26 04 2020)

The toll road is expected to cut the heavy traffic on Java's nothern coastal road which is called Pantura road. This road is very crowded because it passing some important cities in Java Island such as Boyolali, Karanganyar, Solo, Sragen, Ngawi, Madiun, Nganjuk, and Jombang City. The traffic will hit heavily especially in the Ramadhan month because people from Jakarta will come back to their hometown which mostly located from Central and East Java cities. This toll could be considered as one of the longest toll road in Indonesia.

5. Kuala Tanjung Port

Location: Kuala Tanjung Village (North Sumatra)

Year: 2016- 2023 (estimated)

Status: In constrution

Total Investment: 188 Million USD (the 1^st phase)

Loan Provider: Zhejiang Provincial Seaport Investment & Corporation Group Co, Ltd, and Rotterdam Port Authority

Contractor: Indonesian Port Corporation I

Description: Kuala Tanjung Port expected to become a world class port and industrial area which would encourage regional and national economic growth. With benefit worth up to 30 Billion USD and open 90.000 jobs. The construction is devided into four phases. The 1^st phase is establishing as multipurpose terminal and already completed in 2018 and already operating. It classified as a deep sea port with LWS depth of -17 m which allowsmother vessel ship to berth at Kuala Tanjung. This is very important as the port located in one of the bussiest shipping lane in the world, Malacca Strait.

The 2^nd phase will be developed in 3,400 hectare industrial estate and the rest 3^rd and th phases will be built as the urban area development and the port hub. Wire, Press Release News. Kuala Tanjung strengthen its position in Malacca Strait through cooperation with Europe and Asia's biggest Ports. Market Insider. Retrieved from https://markets.businessinsider.com/news/stocks/kuala-tanjung-strengthen-its-position-in-malacca-strait-through-cooperation-with-europe-and-asia-s-biggest-ports-1028694963 (accessed 26 04 2020)

Based on report above, China through Belt and Road initiative is giving huge investment in the transportation sector, 3 toll road projects with total length of 277.62, 1 high speed train projects with total length of 150 Km,and 1 port. The total amount of these projects is almost reached 7 Billion US$.

BRI Investment in Energy Infrastructure

China also planning to invest in Indonesian energy bulding such as coal power plants, steam power plants, dam, and smelters which located in Kalimantan, Sumatra, and Bali island.



Table 4

Energy Infrastructure Investment by BRI

No	Name of Project	Location	Total Investment
1	Gas Power Plant 250 Megawatt	North Sumatra	US $ 8,9 Billion
2	Kayan Hydro Enegry Powerplant	North Kalimantan	US $ 17.8 Billion
3	Coal fired power plant capacity 1.000 Mw Tanah Kuning	North Kalimantan	US $ 5.2 Billion
4	Hydro Power Plant Gezhouba 900MW	North Kalimantan	US $10 Billion
5	Coal Fired Power Plant (CFPP) capacity 2x350 MW	Bali	US $4 Billion
6	2 Mine mouth Coal Fired Power Plant Kalseteng	Central Kalimantan	US $4 Billion
7	Salo Pebatua Hydroelectric Power Plant	Central Sulawesi	US $ 560 Million
TOTAL	US $ 50.46 Billion

Source: redacted from various souces

From the table above, we could see Indonesia is proposing four coal fired power plant projects with a combined investment of about US$4 billion at the second BRI forum. They are the 400 to 600 megawatt PLTU Tanah Kuning-Mangkupadi in North Kalimantan that has a generation capacity of between 400 and 600 MW; two coal mine-mouth PLTUs, Kalselteng 3 and 4 in Central Kalimantan, that have capacities of 200 MW each and the expansion of PLTU Celukan Bawang in Bali that has a planned capacity of 700 MW.

The Kayan Hydro energy will be the biggest water power plant in Indonesia which located on the Kayan River, North Kalimantan. The capacity could reach 9000MW. The construction of this hydro is already begun and the government expecting to finish the first stage in 2024, and the 2^nd stage will be finished in 2025 while the total amount of time to completely finish the project is 25 years.Arvirianty, Anastasia. China Bangun PLTA Terbesar di RI, Kapasitas Sentuh 9000 MW. (19 08 2019). Retrieved from https://www.cnbcindonesia.com/news/20190821194312-4-93758/china-bangun-plta-terbesar-di-ri-kapasitas-sentuh-9000-mw (accessed 27 04 2020)

The Memorandum of Understanding (MoU) was signed by Power Construction Corporation of China ( PowerChina) and PT Indonesia Kayan Hydropower Energy. Another MoU was signed between PT Adhidaya Suprakencana and China Gezhouba Group International Engineering Co. The two companies committed to invest up to 10 Billion US$ to develop the hydro power plant in North Kalimantan Journal, IPP. MoU signed for US$17.8 billion hydropower project in Indonesia. (23 04 2018. Retrieved from https://www.ippjournal.com/news/ipptoday-197-mou-signed-for-us-17-8-billion-hydropower-project-in-indonesia (accessed April 27, 2020)..

There is one investment in the hydroelectric sector. The contract was signed in 2017 between CGCC company from China and PT Lentera Damar Amerta Indonesia. This hydroelectric power plant has a capacity into 300MW could generate up to 1.6 Billion kWh annually. China Gezhouba Group Co. CGGC Signs Contract Agreement of 300MW Hydroelectric Power Plant in Indonesia. Retrieved from http://en.gzbgj.ceec.net.cn/art/2018/9/19/art_23066_1765010.html (accessed 05 11 2020)

These all investments in energy sector are expected to help the energy shortage and opening new job for the local people in the area while the company could transfer their skills by giving training by the experienced to the local worker, also developing the equipment and building material in this industry.

2.1.2 Indonesia and China partnership under AIIB

In addition of capital funding from BRI, a number of infrastructures in Indonesia are funded by Asian Infrastructure Investment Bank (AIIB). AIIB is a multilateral development bank with a mission to improve social and economic outcomes in Asia by supporting sustainable infrastructure. Asian Infrastructure Investment Bank. Our Projects. Retrieved from https://www.aiib.org/en/projects/list/index.html. (accessed 19 04 2020) The establishment of AIIB is led by China in 2013 during President Xi Jinping's visit to Southeast Asia. He announced China's intention to create new multilateral bank in response to infrastructure gap. He believes that Asia countries has high demand to enhance their infrastructure development by constructing new ports, road, utilities, and telecommunication networks.

AIIB is willing to finance projects not only in their regional member state but also in non-member state as long as the proposed project could give benefit for a member state. However, they also have preliminary criteria before the proposed project is accepted by the executive committee. These criteria include: Mathilde Beniflah, I Vivek Kai-Wen, Alex Kaplan, and Akanksha Santdasani. The AIIB and the Future of Multilateral Infrastructure Financing. Perry World House, n.d.: 27-29.

ь Commercial viability

ь Environmental and social viability

ь Eminent domain

ь No slave or prison labor

ь No corruption

ь Attention to the Procurement Policy for all hiring practice

The AIIB also has list of prohibited practices, they already guaranteed that the bank will not fund any activities involving:

ь Corruption

ь Mislocation of fund

ь Bribery

Since the establishment in 2014, AIIB has investing as many as 45 projects in 18 countries with total amount of US$ 8.5 Billion. Hari, Kurniawan. AIIB welcomes 100th member, channels $8.5b in four years. (14 07 2019). Retrieved from https://www.thejakartapost.com/news/2019/07/14/aiib-welcomes-100th-member-channels-8-5b-in-four-years.html (accessed April 27, 2020). In Indonesia, AIIB agreed to help government fund the proposed infrastructure projects, Indonesia constantly suffering from natural disaster and crumbling infrastructure. Being the member of AIIB, Indonesia sees it as an opportunity to enhance the infrastructure in the country which involves the energy sector, transport, telecommunications, logistic, and other service products. Below, is the projects that have been approved and proposed in Indonesia which is funded by AIIB;



Table 5

AIIB Approved and Proposed Projects in Indonesia

Approval Year	Sector	Project Name	Financing Amount	Status
2016	Urban	National slum Upgrading	US$ 216.5 Million	Approved
2017	Institution	Regional Infrastructure Development Fund	US$ 100 Million	Approved
2017	Water	Dam Operational Improvement and Safety Project Phase II	US$ 125 Million	Approved
2018	Urban	Mandalika Urban and Tourism Infrastructure	US$ 248.4 Million	Approved
2018	Water	Strategic Irrigation Modernization and Urgent Rehabilitation	US$ 250 Million	Approved
-	Energy	PLN East Java & Bali Power Distribution Strengthening Project	US$310 Million	Proposed

Source: Project list of AIIB See Our Projects. n.d. https://www.aiib.org/en/projects/list/index.html

In the administration of President jokowi, he launched program to upgrade the quality of living by enhancing the access to potable water, 0 slums, and easy accest to sanitation. The program namely “Kota tanpa Kumuh” that could be translated into “City withouth slums”. The target of this program are the slum are in 289 cities across Indonesia. The AIIB and World Bank was agreed to help funding 153 cities and one special region in Jakarta while the other 136 cities are financed by other multinational development bank. See (National Slum Upgrading Project in Indonesia Factsheet 2017)

In 2017, Indonesia proposed project to restore the existing dams to make sure they are functioning in the highest level of safety. The authorities recognized that there were at least 100 dams which desperately needs technical support and will give benefit more than 11 million people. This is project has five components which involves;

1. Dam Operational Improvement and Safety Works and Studies

2. Operations & Maintenance Improvement and Capacity Building.

3. Reservoir Sedimentation Mitigation

4. Dam Safety Improvement, and

5. Project Management

This project is implemented as a national government project. Overall, this is expected to enhance the safety if the dams institutions. Beside the funding from AIIB, this project is also funded by national and provincial budget. See PROJECT INFORMATION DOCUMENT APPRAISAL STAGE." Dam Operational Improvement and Safety Project (DOISP). World Bank Document,. In the 2018, AIIB also approved the project of Strategic Irrigation Modernization And Urgent Rehabilitation. This project is located in the DI Pamukkulu, Takalar District, South Sulawesi province. It is aimed to improve and strengthen the irrigation service, management, maintenance, and operation in the area. Its supporting the rehabilitation of 100,000 hectares of ittigated area and has four components which includes; Early Warning System. Strategic Irrigation Modernization and Urgent Rehabilitation Project (WB-P157585). Retrieved from https://ewsdata.rightsindevelopment.org/projects/p157585-strategic-irrigation-modernization-and-urgent-reha/ (accessed 28 04 2020)

1. Component A: Urgent Rehabilitation and Infrastructure Improvements, The Government has identified a preliminary list of 41 irrigation schemes, with a total of 335,268 hectares, spread across 11 provinces and 12 balais or river territories.

2. Component B: Strategic Infrastructure Modernization focus on Jatiluhur Irrigation Scheme, which is served by the Citarum River in Java

3. Component C: Modernization of Management Systems

4. Component D: Institutional Modernization and Empowerment

Totally, this project was funded by World Bank and co-financed by AIIB with total amount of US$250 million, and Indonesian government with total amount US$ 7.8 million.

In the same year, AIIB also approved another project namely Mandalika Urban and Tourism Infrastructure. This project is proposed to provide sustainable basic infrastructure for the development of a new tourism destination in the Mandalika region of Lombok which will improve the basic infrastructure and services. The construction is consisting two components, the 1^st component is the provision and basic infrastructure such as the construction of road, drainage, solid waste management, water supply, water waste, irrigation, sanitation, electricity distribution, landscape, and community facilities.

The 2^nd components involves the technical assistance and capacity building which includes the support to institutional development, management, studies and training of the implementation of the long term social and environmental management plan. System, Early Warning. Indonesia: Mandalika Urban and Tourism Infrastructure Project (AIIB-000069). n.d. Retrieved from https://ewsdata.rightsindevelopment.org/projects/000069-indonesia-mandalika-urban-and-tourism-infrastruct (accessed April 28, 2020). AIIB is financing this projects with total amount of US$ 248 million and also funds from an implementing agency namely Indonesia Tourism Development Corporation with total amount of US$ 68.11 million.

2.2 Japan's Infrastructure Investment in Indonesia as Bilateral Initiative

Indonesia and Japan has shared many historical events since the establishment of bilateral diplomatic relations between the two countries in April 1958. See Treaty of Peace between Japan and the Republic of Indonesia. April 1958. For more than 60 years both Indonesia and Japan have maintained cooperative relationship among each other, particularly in the context of Japan's contribution for Indonesia's development in many sectors, including in infrastructure sector.

Historically, there are numerous Japanese companies that are invested in Indonesia, inter alia, Matshushita, Toyota, Nissan, Suzuki, Honda and Mazda, by virtue of the enactment of the Law No. 1 of 1967 on Foreign Investment.Kemu, S.Z. Indonesia Japan Economic Relations: (Investment and Trade). Kajian Ekonomi dan Keuangan. Vol. 14 (4). (2010) p.26. In return, Indonesia is permitted to supply raw materials and energy, such as, oil, gas, coals, nickel and tin that are useful for the Japanese industry.Ibid.

In fact, Danis H. Sumadilaga, the Chief of Research and Development Center of the Indonesian Ministry of Public Works and Public Housing, admitted the importance of bilateral relationship between Indonesia and Japan. In his view, Mr. Sumadilaga opined that:

“Cooperative relationship between Indonesia and Japan has not only gave positive impact on the physical infrastructure building, but also on the enhancement of Indonesian human resource capacity, technological experts, and the establishment of new institutions in Indonesia. This has been proved from the infrastructure construction dam in East Java from 1960 to 1970, and also the establishment of water resources management company like Perum Jasa Tirta 1 and PT Indra Karya.” BKPM. Japan's Commitment Related to Indonesian Infrastructure Development. Retrieved from https:/www.investindonesia.go.id/en/article-investment/detail/japans-commitment-related-to-indonesian-infrastructure-development (accessed April 28, 2020).

Having this longstanding relation between Indonesia and Japan, the following sections will enunciate the cooperative arrangement between these countries under (1) the Agreement between the Republic of Indonesia and Japan for Economic Partnership (IJEPA), and (2) the South-South and Triangular Cooperation (SSTC).

2.2.1 Indonesia-Japan Partnership under IJEPA

A strong Indo-Japan cooperation was enlarged in 2007 when President Susilo Bambang Yudhoyono of Indonesia and Prime Minister (PM) Shinzo Abe of Japan signed the IJEPA, which culminate a new era for Indonesia-Japan partnership itself. Substantively, IJEPA was built on the basis of three pillars, namely: (i) liberalization, (ii) facilitation, and (iii) cooperation.Presentation of the Ministry of Trade of the Republic of Indonesia. Indonesia-Japan Economic Partnership Agreement (IJEPA) and its Effects on Indonesian and Japanese Economy. Tokyo, Nov. 30, 2007. https://www.indonesia-investments.com/upload/documents/Indonesia-Japan-Economic-Partnership-Agreement-IJEPA-Indonesia-Investments.pdf, p.7 (accessed April 28, 2020) [MoT Indonesia `IJEPA Effects'].

First pillar: liberalization, it represents the reduction or elimination of any retaliatory and other forms of trade barriers.Ibid.

Second pillar: facilitation, it confers the improvement of cooperation and transparency in various sectors that facilitate the trade between Indonesia and Japan, inter alia, customs performance, anti-trust policy, intellectual property rights, port handling and trade-related services.Ibid.

Third pillar: cooperation, it denotes a feature related to the economic partnership agreement between Indonesia and Japan in diverse fields outside the trade itself, as well as the activities where Japan are committed to build capacity and movement of natural persons in Indonesia.Ibid.

All of these pillars are implemented through eleven major elementary sectors.Ministry of Foreign Affairs of Japan. JOINT PRESS STATEMENT: Indonesia-Japan Economic Partnership Agreement. Nov. 28, 2006. Retrieved from https://www.mofa.go.jp/region/asia-paci/indonesia/joint0611-2.html (accessed April 28, 2020) [MoFa Japan `Basic Data']. As regard to the infrastructure itself, IJEPA laid its intention to promote cooperation between the two countries in the field of government procurement on infrastructure development See Joint Statement at the Signing of the Agreement between the Republic of Indonesia and Japan for an Economic Partnership. Aug. 20, 2007. Attachment para. 1(1). through infrastructure investment mechanism from Japan to Indonesia. MoT Indonesia `IJEPA Effects', Op.Cit., p.4.

The existence of IJEPA is further reinstated during President Joko Widodo regime. It was reaffirmed at PM Abe's visit to Bogor Presidential Palace in West Java, Indonesia. Both Indonesia and Japan agreed to start a general review on the implementation of IJEPA in 2017. Office of Assistant to Deputy Cabinet Secretary for State Documents & Translation. Indonesia, Japan have Agreed to Further Strengthening Cooperation in Various Fields. Retrieved from https://setkab.go.id/en/indonesia-japan-have-agreed-to-further-strengthening-cooperation-in-various-fields (accessed April 29, 2020). During that 2017 meeting, they are also agreed to enhance their bilateral ties in the development of numerous infrastructures in Indonesia, namely:Ibid.

1. Patimban Seaport in Subang, West Java;

2. Masela Block; and

3. Initial discussion for construction of Jakarta-Surabaya high-speed train.

The importance of Indo-Japan economic partnership in the sense of IJEPA is also proven by the high amount of foreign direct investment (FDI) from Japan to Indonesia. Although the amount of Japan's FDI is varied every year, however this investment is crucial to support the development of infrastructure in Indonesia.

During the first term of President Jokowi's administration alone, the Japanese Ministry of Foreign Affairs calculated Japan investment in Indonesia has reached approximately 21 billion US$, with 5,400 million US$ as the largest amount of Japan's annual investment in Indonesia.MoFA Japan `Basic Data', Op.Cit. The detail calculation for Japan's investment in Indonesia is provided in the following table and graphic.

Figure 4 Fluctuation of Japan's Investment in Indonesia During Joko Widodo Administration

Source: MoFA Japan (2019)



Table 6

Amount of Japan's Investment During Joko Widodo Administration

Year	Amount (in Million US$)
2014	2,750
2015	2,877
2016	5,400
2017	5,000
2018	4,950
TOTAL	20,977

Source: MoFA Japan (2019)

With such huge amount of investment, Japan can assist Indonesia to rebuild the economic infrastructure in the latter's territory. It was recorded that Japan's contribution in Indonesia's infrastructure is conducted either through grants or loans mechanisms. Both grants and loans are also existed during Jokowi administration until today. As explained in the following paragraphs, here are several examples of Japan's investment of infrastructure in Indonesia.

In November 2015, Japan provided loans for three projects in Indonesia, which are the Engineering Services for Jakarta Mass Rapid Transit East-West Line Project (Phase I) in amount of 1,92 billions Yen.Ministry of Foreign Affairs of Japan. Exchange of Notes in Fiscal Year 2015: Loan Aid by Region. Retrieved from https://www.mofa.go.jp/mofaj/gaiko/oda/page23_000087.html (accessed April 29, 2020). Moreover, Japan also lent 75,218,000,000 Yen for the construction of Jakarta Mass Rapid Transit Project (II), and 62,914,000,000 Yen for Java-Sumatra Interconnection Transmission Line Project (II).Ibid.

On 29 March 2017, Japan initiated its loan schemes for the Rentang Irrigation Modernization Project in amount of 48,237,000,000 Yen, and Komering Irrigation Project (III) amounted to 15,896,000,000 Yen.Ministry of Foreign Affairs of Japan. Exchange of Notes in Fiscal Year 2016: Loan Aid by Region. Retrieved from https://www.mofa.go.jp/mofaj/gaiko/oda/page25_000059.html (accessed April 29, 2020). The Second Phase of Bali Beach Conservation Project also received loan aid from Japan as equal to 9,86 billion Yen in March 2017.Ibid.

By the end of 2017, Japan participated in Patimban Port Development Project (I) by lending 11,890,600,000,000 Yen to the Government of Indonesia.Ministry of Foreign Affairs of Japan. Exchange of Notes in Fiscal Year 2017: Loan Aid by Region. Retrieved from https://www.mofa.go.jp/policy/oda/page22e_000806.html (accessed April 29, 2020) The former also giving loan aid for the development of World Class University with Socio Entrepreneurial Spirit at University of Gadjah Mada (UGM), Yogyakarta. That financial aid is equal to more than 830 billion Yen.Ibid. In addition to that, Japan also granted 500 million Yen for the Economic and Social Development Programme in Indonesia.Ministry of Foreign Affairs of Japan. Exchange of Notes in Fiscal Year 2017: Grant Aid by Region. Retrieved from https://www.mofa.go.jp/policy/oda/page22e_000804.html (accessed April 29, 2020).

In 2018, the focus of financial assistance from Japan to Indonesia is primarily for the construction of Jakarta Mass Rapid Transit Project (Phase 2) (I).Ministry of Foreign Affairs of Japan. Exchange of Notes in Fiscal Year 2018: Loan Aid by Region. Retrieved from https://www.mofa.go.jp/policy/oda/page22e_000838.html (accessed April 29, 2020). On 24 October 2018, Indonesia received loan aid from Japan in amount of 70,021,000,000 Yen.Ibid. Japan also granted 2.5 billion Yen for the Programme for the Development of Fisheries Sector in Outer Islands.Ministry of Foreign Affairs of Japan. Exchange of Notes in Fiscal Year 2018: Grant Aid by Region. Retrieved from https://www.mofa.go.jp/policy/oda/page22e_000840.html (accessed April 29, 2020).

In May 2019, Japan endorsed the continuity of Jakarta Sewerage Development Project (Zone 6) (Phase 1). Such endorsement is manifested from their 30,980,000,000 Yen loans to Indonesia.Ministry of Foreign Affairs of Japan. Exchange of Notes in Fiscal Year 2019: Loan Aid by Region. Apr. 21, 2020. https://www.mofa.go.jp/policy/oda/page22e_000891.html (accessed April 29, 2020) [MoFA Japan `Fiscal Year 2019: Loan Aid']. Furthermore, Japan has provided granted for the following projects in Indonesia, which are:Ministry of Foreign Affairs of Japan. Exchange of Notes in Fiscal Year 2019: Grant Aid by Region. Apr. 10, 2020. https://www.mofa.go.jp/policy/oda/page22e_000878.html (accessed April 29, 2020) [MoFA Japan `Fiscal Year 2019: Grant Aid'].

1. The Programme for the Reconstruction of Palu 4 Bridges in Central Sulawesi province (2.5 billion Yen);

2. The Economic and Social Development Programme (600 million Yen); and

3. The Project for Strengthening Disaster Prevention Information (1.989 billion Yen).

Japan's financial support to Indonesia's infrastructures continues to be implemented in this year. For example, in January, February and March 2020, Japan agreed to provide loan for certain projects across the archipelago, which are:MoFA Japan `Fiscal Year 2019: Loan Aid', Loc.Cit.

1. Jakarta Sewerage Development Project (Zone 1) (57,061,000,000 Yen);

2. Urban Flood Control System Improvement in Selected Cities (Phase 2) (7,299,000,000 Yen);

3. Disaster Resilience Enhancement and Management Program Loan (31,800,000,000 Yen); and

4. Infrastructure Reconstruction Sector Loan (IRSL) in Central Sulawesi (27,970,000,000 Yen).

In addition to that, Japan also consistently providing grants for certain projects and programmes in Indonesia throughout 2020, namely, the Programme for the Development of Fisheries Sector in Outer Islands (Phase 2) that is amounted to 3 billion Yen, and the Project for the Development of Outer Islands and the Enhancement of Fishery Surveillance Capacity that is tantamount to 2.2 billion Yen of grant for Indonesia.MoFA Japan `Fiscal Year 2019: Grant Aid', Loc.Cit.

To sum up the aforementioned loans and grants from Japan for the development of infrastructures in Indonesia during the regime of President Joko Widodo, the author below provides a comprehensive summary of such projects, as seen in Table 7.



Table 7

List of Japan's Investment on Indonesian Infrastructure During Joko Widodo Administration

Year	Projects	Typology	Amount (in 100 Million Yen)
2015	Engineering Services for Jakarta Mass Rapid Transit East-West Line Project (Phase I)	Loan	19.19
2015	Construction of Jakarta Mass Rapid Transit Project (II)	Loan	752.18
2015	Java-Sumatra Interconnection Transmission Line Project (II)	Loan	629.14
2017	Rentang Irrigation Modernization Project	Loan	482.37
2017	Komering Irrigation Project (III)	Loan	158.96
2017	Bali Beach Conservation Project (Phase 2)	Loan	98.55
2017	Patimban Port Development Project (I)	Loan	118,906
2017	Development of World Class University with Socio Entrepreneurial Spirit at Universitas Gadjah Mada, Yogyakarta	Loan	8,309
2017	The Economic and Social Development Programme	Grant	5
2018	Construction of Jakarta Mass Rapid Transit Project (Phase 2) (I)	Loan	700.21
2018	The Programme for the Development of Fisheries Sector in Outer Islands	Grant	25
2019	Jakarta Sewerage Development Project (Zone 6) (Phase1)	Loan	309.8
2019	The Programme for the Reconstruction of Palu 4 Bridges in Central Sulawesi Province	Grant	25
2019	The Economic and Social Development Programme	Grant	6
2019	The Project for Strengthening Disaster Prevention Information System	Grant	19.89
2020	Jakarta Sewerage Development Project (Zone 1)	Loan	570.61
2020	Urban Flood Control System Improvement in Selected Cities (Phase 2)	Loan	72.99
2020	Disaster Resilience Enhancement And Management Program Loan	Loan	318
2020	Infrastructure Reconstruction Sector Loan (IRSL) in Central Sulawesi	Loan	279.7
2020	The Programme for the Development of Fisheries Sector in Outer Islands (Phase 2)	Grant	30
2020	The Project for the Development of Outer Islands and the Enhancement of Fishery Surveillance Capacity	Grant	22
Sub-Total	Loans	131,606.7
	Grants	132.89
TOTAL	131,739.59

Source: Redacted from various sources

On the basis of Table 7, it can be identified that Japan has provided 13,173,959,000,000 Yen as a form of their good faith in providing financial support for the development of infrastructure in Indonesia. This amount consists of 13,160,670,000,000 Yen of loans and 13.289 billion Yen as a grant to Indonesian stakeholders. With this massive amount of financial assistance for Indonesian infrastructure alone, Japan can fully realized its contractual obligations in cooperating with Indonesian counterpart under the scheme provided by IJEPA.

2.2.2 Indonesia-Japan Partnership under SSTC

Just like the economic cooperative arrangement under IJEPA, Japan International Cooperation Agency (JICA) also supported the improvement of infrastructure in Indonesia. JICA's contribution in this respect is conducted pursuant to the Japanese SSTC that is based upon mutually benefited and respected relations between each other. To fully understand the notion of SSTC itself, the following graphic provides a comprehensive understanding of SSTC model under JICA in Indonesia.Japan International Cooperation Agency (JICA). Indonesia-Japan: Dynamic Development for Prosperity (Practices of South-South and Triangular Cooperation (SSTC)). (Jakarta: JICA Indonesia, 2012) p.3.



Figure 5 Model of SSTC under JICA Indonesia

Source: JICA, (2012)

Historically, mainstreaming South-South and Triangular Cooperation (SSTC) has become one of the keys of Indonesia's national development. The vision for having a south-south triangular cooperation that is built on the basis of mutual benefit and mutual respect between Indonesia, foreign countries, and JICA, as one of the development partners in Indonesia, has been stipulated in the 2011-2025 Grand Design of Indonesia's National Development Plan and the 2011-2014 Blue Print of Indonesia's National Development Plan.Ibid.

Under SSTC scheme with JICA, Indonesia at the moment is still in the position as the beneficiary, and prepares itself to become the provider of SSTC due to its status quo as the only Southeast Asian country in the Group of Twenty (G20),Ibid. the premier international forum for global economic cooperation between twenty countries that represent world's major advanced and emerging economies.

During 50 years of JICA's presence in providing aid for the development in Indonesia, JICA has demonstrated four core values in supporting the implementation of SSTC, which are:Ibid, p.4.

1. Capacity development for the provider (providing country);

2. Scale-up the capacity of the beneficiary countries;

3. Development of experiences in beneficiary countries; and

4. Pioneering role to trigger the innovation in both provider (providing country) and the beneficiary countries.

In implementing their SSTC projects or programmes, both JICA and Indonesia must adhere to the following principles, namely:Ibid, p.5.

1. Principle of mutual benefit and mutual respect;

2. Principle of asset and supporting centers located in provider country;

3. Principle of alignment with the on-going project in a beneficiary country; and

4. Political commitment of all relevant stakeholders to utilize SSTC as a driving force for transformation into a new dimension, such as, innovation.

In this respect, both JICA and Indonesia, as the provider country, have committed their SSTC agenda in numerous countries, such as, Afghanistan, Palestine, and Timor-Leste. Although the SSTC scheme is designed simply to boost the development of infrastructure in the third States' territory, however as regard to the SSTC between JICA, Indonesia and Timor-Leste, the story tells differently.

The SSTC between them are actually located in certain portion of territory of Indonesia. In other words, such economic development partnership is also conducted in Indonesia. For example, there were trainings and missions conducted for the infrastructure in road sectors at the border between Indonesia and Timor-Leste under the SSTC scheme, which is divided into three Batches.Ibid, p.13.

Conclusively, as comprehensively explained above, it can be understood that the strategic partnership between Indonesia and Japan is getting stronger and better every single year during Jokowi era. Their close relations to one another are indeed help the development of infrastructure in Indonesia, either through direct grants and loans or through Japanese agency, such as JICA. It is unimaginable how Indonesia's infrastructure can grow without Japan's participation in it.



3. Infrastructure Priorities for Indonesia's Economic Development Prospects - 2050

3.1 Comparative potential of Chinese and Japanese infrastructure FDI in light of Indonesia's current and perspective needs

Indonesia's economy is South East Asia's largest. It has a population of 250 million and an average annual growth rate of about 5%. By 2050 it is expected to be the fourth largest economy in the world, after China, India and the United States, according to PwC Price Waterhouse Cooper. (2017). The World in 2050. PWC Article, 4. Retrieved from www.pwc.com: https://www.pwc.com/gx/en/issues/economy/the-world-in-2050.html the table has explained below:

But analysts routinely say that Indonesia isn't punching its weight, because it's been plagued by decades of under-investment in infrastructure, as well as suffering from corruption and red tape. In this review, i will compare the infrastructure policies undertaken by Indonesia with the infrastructure policies carried out by China and Japan.

President Jokowi often said that infrastructure is the main capital for Indonesia to move forward and compete with other countries in the future. However, the President apparently has a number of other reasons regarding the choice of the main programs of the Jokowi and Jusuf Kalla governments in 2014-2019. One of his reason is because infrastructure is the main foundation of the Indonesian nation to compete with other countries. At present, the Indonesian state is still trying to continue to improve its competitiveness. According in journal “ Marine policy basis of Indonesia as a maritime state: The importance of integrated economy”, it is said that the Indonesian archipelago needs to rebuild what is so-called “maritime culture” and reformulate integrated economic policies for maritime identity. The existence of maritime culture is seen as flexible, reconstructed, complex, changeable, and identified by great variation and divergent tendencies, and it is deeply embedded by merchant navy Yety Rochwulaningsih, S. T. (2019). Marine policy basis of Indonesia as a maritime state: The importance ofintegrated economy. Department of History, Faculty of Humanities, Diponegoro University.

The merchant navy culture formulates the seafarer's identity, the maritime organizational culture, ship's culture, safety culture, and working and living standards in a multicultural environment. Furthermore, a maritime identity views sea-lanes and ships as a media or tool for marine trade and cultural influences that combine the port cities in the sign of the common identity. Maritime identity is also the basis for collective memory that shapes and develops social, political, cultural, and economical aspects of the seaside cities. In this point of view, we can find one reason why President Joko Widodo wants to kick off waters into infrastructure.

The following infrastructure projects that have been built during the five years of the Jokowi-JK administration (2014-2019): Akhir, J. (2019, October 19). Daftar Infrastruktur yang Dibangun Jokowi Selama 5 Tahun. Retrieved from https://economy.okezone.com: https://economy.okezone.com/read/2019/10/18/320/2118803/daftar-infrastruktur-yang-dibangun-jokowi-selama-5-tahun

· 980 Km Toll road

· 3,793 Km National road

· 2,778 Border Roads

· 330 Hanging Bridge Units

· 7 Cross Country Posts

· 18 Sea Routes

· 15 New Airport

· MRT (Mass Rapid Transit) and LRT (Light Rail Transit)

· 79 Sports Infrastructure

· 65 dams

Reporting from the five-year report of the Joko Widodo and Jusuf Kalla governments, it was also stated that with the Air Bridge program, the government provides a route serving airlines to the interior, regions remote and outermost islands to improve logistics connectivity, and cutting economic inequality and regional disparity Sekretariat Negara Republik Indonesia. (2019). Lima Tahun Maju Bersama: Capaian Pemerintahan Joko Widodo - Jusuf Kalla. Artikel Sekretariat Negara Republik Indonesia, 116..

President Xi Jinping and President Jokowi thus reached an important consensus on promoting synergy between the BRI and GMF, for the benefit of the peoples of both countries in 2014. In terms of infrastructure connectivity, China supports the building of the maritime highway proposed by President Jokowi and has participated in strategic and major infrastructure projects in Indonesia such as roads, railways and ports. The Jakarta-Bandung high-speed railway (HSR) is the flagship project of the first stage of strategic alignment. In addition, the two sides have begun intergovernmental cooperation on the Regional Comprehensive Economic Corridor, which is the flagship project of the second stage of strategic alignment, of which some early-harvest projects are well underway. The cooperation between China and Indonesia is mutually beneficial in nature. Synergizing our respective development strategies has brought high-quality Indonesian products for ordinary Chinese consumers, outstanding Indonesian students to Chinese colleges and universities, reliable partners and broader prospects for Chinese businesses Yose Rizal Damuri, V. P. (2019). Perception and Readiness of Indonesia towards the Belt and Road Initiatives. Jakarta: CSIS Indonesia..

This can be beneficial in terms of the benefits obtained, it can be in the form of salaries, bonuses, or facilities obtained by someone who works on this project, where the project was built in collaboration with the Indonesian and Chinese governments. in this two-way investment, trade and personnel exchanges create new employment opportunities for Indonesia. For example, Huawei Indonesia now has more than 2,500 staff and local staff members account for 86 percent of the workforce. For example, HSR Jakarta-Bandung, as another example, has created around 8,000 jobs and Qingshan Morowali Industrial Park in Sulawesi has created more than 30,000 jobs for local people.

Meanwhile, the biggest challenge for the AIIB is prioritizing the selection of projects so that it is optimal in utilizing existing financial resources and functions as a transparent and impartial organization. This AIIB becomes important for China if it is seen as a 'China-led Initiative' which is not a 'China-owned Initiative' which generates equal benefits for all its member countries so that it can lead to strengthening the influence of the Chinese economy in Asia. This research intends to find out how the AIIB is used by China to strengthen the influence of political economy in the Asian region by using theories of national interest and neo-realism Aghnaita Firdayanti, N. R. (2017). Asia Infrastructure Investment Bank (AIIB) Sebagai Instrumen Peaceful Development Cina. Yogyakarta: Departemen Ilmu Hubungan Internasional, Fakultas Ilmu Sosial dan Ilmu Politik, Universitas Gadjah Mada..

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