After digging around and asking friends/colleagues, finally the dark secret of IBM JDK revealed. Oracle provided runtime jar - rt.jar - is replaced by IBM's vm.jar. Story doesn't end here, this vm.jar is not even in its standard location i.e. <JDK_HOME>/jre/lib, but has been for some mysterious reason placed in <JDK_HOME>/jre/bin/default/jclSC170 directory. So to make IBM JDK 7 work with IntelliJ IDEA
- Go to your Project Structure -> SDK
- Select IBM JDK if not already selected
- Under Classpath tab, add a new entry pointing to <JDK_HOME>/jre/bin/default/jclSC170/vm.jar
This should resolve all those compilation errors gone, and you should be back doing something productive.
P.S.: Eclipse is intelligent enough to resolve this vm.jar and have no such issues.