After more than five years of feasibility studies and high-level advocacy, Japanese officials thought they were about to bring bullet trains Indonesia. After China appeared.
"Suddenly, the minister of state owned enterprises announced that they had done something with the Chinese," said Hiromichi Muraoka, Indonesia senior representative of the Japanese International Cooperation Agency, the arm of the country's foreign aid. "That surprised me."
Japan versus China. It is a story being written in large in the region where decades of investment by Japan and its companies are being challenged by China. And nowhere could the change be more influential than in Indonesia.
The largest economy in Southeast Asia has the largest population and most of the natural resources in the region. His vast archipelago stretches from the Indian Ocean to the Pacific and is bordered by some of the busiest shipping routes in the world.
China's desire to develop political and commercial ties with the country is a boon to the president of Indonesia Joko "Jokowi" Widodo, a former furniture exporter who thinks he can take advantage of the competition with Japan for better offers, according Wellian Wiranto, economist of Oversea- Chinese Banking Corp in Singapore.
"Indonesia needs a lot of infrastructure and China has the experience and the money," Wiranto said. "You add that with the political factor between Japan and China, and is quite hopeful that China will be pumping more money into Indonesia."
Mr. Jokowi and President of China, Xi Jinping, also have interests in common. The Indonesian leader wants to develop the ports and fisheries in the country to create a "global maritime hub", an ambition that complements the plan of Mr. Xi a 'Maritime Silk Route "in Asia. Indonesia also supports the suggestion of China to Asia Infrastructure Investment Bank, which could end up funding projects in Indonesia need.
With wages rising China and slower economic growth, Chinese companies have to invest additional incentives abroad.
Hence the headache for Mr. Muraoka. Feasibility studies of Japanese high speed trains in Indonesia dates back to at least 2009. The aim is to cut the rail journey between Jakarta and Bandung, the country's third largest city, less than 40 minutes from three hours.
The project would cost ¥ 726.4 billion (US $ 6.1 billion), partly by the government of Indonesia, according to a feasibility study published in November 2012 on the website of External Trade Organization Japan.
Until March 24, JICA President Akihiko Tanaka Jokowi urged to consider the Japanese proposal when the two met in Tokyo, according to a news agency.
Then on April 23, the Public Enterprises Minister Rini Soemarno of Indonesia dropped the bomb. She said the government was considering an offer from China to build the railroad as part of a US $ 50 million dollars committed financing from Chinese state banks.
Ms. Soemarno told reporters that the Chinese proposal was attractive because it did not require Indonesia to provide financing guarantees.
"Japan always ask for a guarantee," he said. "While they are in partnership with a state-owned enterprise, Chinese enterprises will never ask a government guarantee."
Indonesia estimates it needs to spend $ 450 million in roads, railways, ports and power plants to revive an economy that shrank in the last two quarters. The state budget can only cover about 30 percent of that, according to investment advice.
China still has a long way to go to unseat Japan, Singapore and South Korea as major sources of investment in Indonesia. The three together spent more than $ 3 billion in the first quarter, compared to US $ 75 million in China, according to the investment advice, not including oil and gas and financial services.
That is partly because China is from a low base. Only diplomatic relations with Indonesia was restored in 1990 after a break of 23 years. During that time, former President Suharto carried out a brutal repression against communism and repressed the language and culture of local ethnic Chinese.
Japan has been conducting programs of economic assistance and development in Indonesia since the late 1950s.
Rizal Affandi Lukman, vice minister for international economic cooperation, said he hopes China will jump from its current ranking of tenth-largest investor topping the list in five years.
"There is much enthusiasm for the Chinese to enter infrastructure projects investors," Lukman said in an interview.
High-level contacts between Indonesia and China suggests Jokowi is happy to cut investment. He has visited China twice since taking office in October.
When Indonesia hosted the Asia-Africa summit last month, Mr. Xi flew on the last day of Bandung, the location of the first meeting of the group 60 years ago. He walked along Jokowi to the conference venue, the recreation of a ride than its predecessors, Mao Zedong took Sukarno and again in 1955.
China passing interest in real investment has been more elusive. China has a history of not delivering the promised projects, said Tamba Hutapea, deputy director of planning at the investment board, which attributed to the lack of familiarity between the two nations.
"There is mistrust about Chinese investment is masked by Jokowi and anxious efforts aides' to market Indonesia for Chinese investors," said Aaron L Connelly, a researcher at the Program of East Asia at the Lowy Institute for International Policy in Sydney . "Policymakers in Indonesia have been frustrated with the quality of Chinese companies working in the projects financed by Chinese investment, particularly in the energy sector."
Even with the Chinese as competitors scale infrastructure needs of Indonesia means is unlikely to end the investment from Japan. Japanese companies are building a mass rapid transit system in Jakarta, and JICA said they approved loans for seven projects last year worth ¥ 62,300,000,000.
On his trip to Japan in March, Mr. Jokowi urged a group of businessmen and officials to invest in infrastructure in Indonesia. He has promised to resolve land disputes that have blocked a Japanese-backed Central Java.
Chinese companies hoping to join them must also navigate the corruption, bureaucracy, cultural differences and changing regulations that have plagued foreign investment in the country for decades. Chinese investments in countries such as Vietnam and Ethiopia have been based on the inclusion of their own workers for many jobs and factory construction. Chinese companies could find it more difficult in Indonesia, which are drastic measures on work visas for foreigners doing jobs that locals could do.
"There are obstacles when going global, but we are looking on the bright side," said Li Huaizhen, president of China, Minsheng Investment Corp, which announced on April 20 its intention to build a $ 5 billion industrial park in Indonesia.
"This is a good time to invest in Indonesia," he said. "The two countries are getting very friendly."
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