Tokyo [Japan], April 17 : Indonesia is worried over the possibility of falling into a debt trap like Sri Lanka by China as the country has seen complaints about the decision to go with China over Japan to build a high-speed railway, reported Nikkei Asia.
Kereta Cepat Indonesia China, which is 40 per cent owned by Chinese concerns, in December proposed adding another 30 years to its 50-year concession of a high-speed railway under construction in Java.
If the Indonesian government cannot turn down the proposal, the railway would be under China's influence until early in the 22nd century, reported Nikkei Asia.
In 2015, Indonesian President Joko Widodo chose China over Japan to build the railway because the date of completion was set for as early as 2018, with trains to start rolling a year later. But construction remains ongoing.
The delay has raised total construction costs by about 40 per cent, forcing the Indonesian government to raid state coffers for 7 trillion rupiahs (USD 468 million).
Jakarta's worries about a possible 80-year concession are not unfounded. To find a precedent, it need only look across the Indian Ocean, to Sri Lanka, reported Nikkei Asia.
There, the Hambantota Port in 2017 was leased to China for 99 years after the Sri Lankan government began having difficulty repaying the construction loans. The episode is considered a classic case of "debt trap diplomacy."
It refers to when a creditor nation extends an excessive amount of loans, and then extracts economic or political concessions when the debtor country becomes unable to meet its repayment obligations. In this case, China won the use of a geostrategically important port.
Friction is growing between China and some countries participating in its Belt and Road Initiative. It has been a decade since Chinese President Xi Jinping announced the Belt and Road Initiative, a massive infrastructure binge that would help Chinese products and influence spread around the globe. Since then, more than 150 countries, hungry for funds and infrastructure, have concluded deals with China.
In 2020 and 2021, the parties began renegotiating the loan terms of 40 Belt and Road deals. This number represents an increase of 70 per cent from the previous two years, according to an estimate by the US-based Rhodium Group.
Meanwhile, information is hard to come by as China insists on nondisclosure agreements and friction between China and its would-be beneficiaries is expected to increase as more projects flounder, reported Nikkei Asia.
A study by researchers from the World Bank, Harvard Kennedy School, AidData and the Kiel Institute for the World Economy, found that China had spent USD 240 billion bailing out 22 countries between 2008 and 2021, the researchers' report revealed in March. The report said the amount has been soaring in recent years as more recipients struggle to repay their Belt and Road loans.
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