China Railway Group has won a US$4.8bn contract to build an operate an Indonesian coal railway in South Sumatra, the latest in a series of Southeast Asian contracts for China's state-controlled companies.
Indonesia is the world's largest exporter of thermal coal, with 15 per cent of its coal exports going to China in 2009. However, inadequate infrastructure outside Java, Indonesia’s most populated island, has hindered companies’ ability to develop resources in Southeast Asia’s biggest economy.
The deal is a sign of further thaw in the once icy relationship between East Asia's two largest nations. In a few weeks, Wen Jiabao, the Chinese premier, will make his first visit to Indonesia. This will come a few short weeks after US President Obama postponed his much-anticipated visit to the archipelago.
China Railway wins US$4.8 billion coal transport contract in Indonesia [China Post]
China Railway wins $4.8 billion Indonesia project [BusinessWeek]
China Railway wins $4.8bn deal to build Indonesian coal route [Financial Times]