China inked an agreement with Indonesia on Friday to launch a joint venture for a high-speed rail linking Jakarta with Bandung, the capital of West Java. Analysts said it is a breakthrough for China's high-speed rail's overseas efforts.

The $5.5 billion project will be conducted on a business to business basis, in which the Indonesian side controls 60 percent of the joint venture's stake, while the Chinese partner controls the remaining 40 percent share.

The deal was signed between China Railway Co Ltd and the Indonesian consortium joined by four state-run firms comprised of PT Wijaya Karya, PT Jasa Marga, PT Kereta Api Indonesia and PT Perkebunan Nusantara VIII. 

"This is a brand new episode in Indonesia, particularly for transportation projects, as it will further boost economic activities in areas along the corridor served by the high-speed train that eventually contribute to the national economic growth," said Sahala Lumban Gaol, chairman of PT Pillar Sinergi BUMN Indonesia.

Speaking at the signing ceremony, Chinese Ambassador Xie Feng said the high-speed rail would be China's first overseas project entirely using Chinese technology and the largest investment value ever.

"The high-speed railway connecting Jakarta and Bandung has resulted from the agreement of both countries' leaders upon the need to synergize strategies to attain higher growth," he said.

The project was part of the two countries' initiatives to materialize the 21st century Maritime Silk Road and "World's Maritime Axis" through pragmatic cooperation between Indonesia and China in various sectors.

The ambassador said that it would serve as an Indonesia-China model of cooperation that is mutually beneficial to both sides.

The train, which will stop at four stations between Jakarta and Bandung, is expected to travel at a speed of between 200 to 250 kilometers per hour.

"China has established a reputation in global high-speed rail construction, as we have proven our abilities to carry out construction in Indonesia despite all difficulties, including frequent natural disasters," Lu Yaorong, an expert at China Academy of Railway Sciences, told the Global Times on Friday.

In comparison with Japan, the other bidder on the project, China is cheaper and builds quicker, and has an established construction team, Wang Mengshu, an academician with the Chinese Academy of Engineering, told the Global Times on Friday.

"As Indonesia shares similar weather conditions with [South China's] Hainan Province, the successful operation of the high-speed rail in Hainan has also demonstrated its quality," Wang noted.

"The joint venture makes China and Indonesia share common interests and a joint fate. As the largest ever cooperation project, it will be a flagship for bilateral strategic cooperation and a new bond for bilateral friendship," Xie told the Global Times, pledging to share technology with Indonesia and help train managers for the venture.

The 150-kilometer railway is the first transportation project in Indonesia conducted solely on a business basis and without any government funding.

Construction of the railway will largely be financed by the China Development Bank with a 40-year loan and a grace period of 10 years.

"The high-speed rail will not only promote China's 'Belt and Road' initiative but also help boost Indonesia's economic development by increasing job vacancies and accelerating the development of the economic corridor linking Jakarta and Bandung," a press release from China Railway sent to the Global Times on Friday cited an anonymous company head as saying.

Sahala expected the Indonesia-China joint venture to expand its service to similar projects in Southeast Asia and Middle East in the future.

The Chinese partner was also willing to provide technological transfers, which would build facilities to produce high-speed trains in Indonesia and supply them to new markets served by the joint venture, he added.