Indonesian High-Speed Railway to Begin Operations in August: Minister

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Indonesian High-Speed Railway to Begin Operations in August: Minister

The $7.2 billion project, a key part of China’s Belt and Road Initiative, will be officially opened on Indonesia’s independence day.

Indonesian High-Speed Railway to Begin Operations in August: Minister

Workers lower an electric multiple unit, part of a Chinese-made high-speed passenger train, onto a truck at Tanjung Priok Port in Jakarta, Indonesia, Friday, Sept. 2, 2022.

Credit: AP Photo/Dita Alangkara

Indonesia’s first high-speed railway will begin operations in August, a high-ranking member of President Joko “Jokowi” Widodo’s cabinet said yesterday, bringing the Chinese-backed project to a successful terminus after years of delays and cost overruns.

Luhut Panjaitan, Indonesia’s coordinating minister for maritime and investment affairs, told reporters that the Jakarta-Bandung High-Speed Railway, a key part of Beijing’s Belt and Road Initiative (BRI), was now mostly complete.

“The trial run will start by the end of May at the latest and it will be good to go,” Luhut said, according to a report by BenarNews. “We expect to start operating on August 18, 2023, as a gift for the 78th anniversary of Indonesia’s independence.”

The 142-kilometer rail line is set to link the capital Jakarta to the city of Bandung in West Java, greatly easing congestion along one of the most densely populated travel corridors in the world.

The project, which is being spearheaded by the Indonesian-Chinese consortium PT Kereta Cepat Indonesia China (KCIC), has been beset by delays and cost overruns of various kinds. In September 2015, when Jokowi’s administration awarded the contract for the project, it was initially slated to be completed by 2019, at a cost of $5.5 billion. That has since blown out due to mostly predictable factors due to complications in land acquisition. There have also been concerns about how long it will take for the project to turn a profit.

In 2021, Jokowi announced that his government would use the state budget to cover the excess costs of the project, overriding a 2015 decree that barred the use of state funds in the construction of the railway. (Indeed, one of the reasons that the Indonesian government opted for a Chinese proposal over a rival Japanese one was that it required no financial contributions or guarantees from the Indonesian government.)

Thankfully for Jokowi, the cost overrun is lower than initially expected, with Kartika Wirjoatmodjo, the deputy minister of state-owned enterprises, telling Parliament in February that the two sides had settled on a total excess of 18 trillion rupiah (around $1.2 billion), down from the more than $2 billion previously reported. (The total cost of the project now sits at around $7.2 billion.)

However, Luhut said yesterday that the Chinese government has insisted on keeping the interest rate for the project loan at 3.4 percent, despite an Indonesian request to lower it to 2 percent. But he expressed confidence in Indonesia’s ability to pay back the loan because the economy was improving, and tax revenues were increasing.

While the spiraling costs and construction delays have prompted a good deal of negative commentary, the completion of the Jakarta-Bandung High-Speed Railway marks a milestone for the BRI – the project is Southeast Asia’s first high-speed rail line – and for Jokowi’s goal of filling out the large gaps in Indonesia’s infrastructure.

For China, the fact that it has found a willing partner in Indonesia, a nation with a long history of anti-Chinese sentiment and ongoing tensions in the South China Sea, stands as a vindication of its economics-first approach to its Southeast Asian relationships.

For Indonesia, too, the project will likely be brandished as a sign of the country’s independent foreign policymaking, in which Indonesia welcomes all foreign partnerships, as long as they are mutually beneficial. As Luhut said yesterday in response to a reporter’s question, “We don’t want to depend on anyone. If China has good technology and comes to us, we accept it.” But he added, “No country can dictate to Indonesia.”