China to Build Indonesia’s High-Speed Train, Experts Remain Cautious

China won the bid over Japan to build the first high-speed rail line in West Java. The Government hopes for an economics boost. Experts weigh in on the project.

President Joko ‘Jokowi’ Widodo’s ambitious plan to improve Indonesia’s infrastructure could boost manufacturing as well as also also create hundreds of thousands of brand-new jobs from the archipelago. right now, Indonesia can be embarking on a brand-new path for infrastructure development by signing an agreement with China last month to build the nation’s first high-speed railway.

The Chairman of state-owned China Railway International, Yang Zhongmin, inked the deal with the President Director of a consortium of Indonesian state companies, PT Pilar Sinergi, to form a joint venture as well as also also get construction underway. The joint venture consists of local construction company PT Wijaya Karya, railway operator PT Kereta Api Indonesia, toll road builder PT Jasa Marga, as well as also also plantation company PT Perkebunan Nusantara VIII.

Ground can be scheduled to break on November 9. The high-speed train can be set to reach eight stations across 150 kilometres between Jakarta as well as also also Bandung. The train will travel at 250 kilometres per hour, as well as also also the ticket fare will be around Rp.200,000 (US$16) when the project can be complete in 2019.

Indonesian Train | Photo Courtesy of Prayitno

A regular trip by train through Jakarta to Bandung costs around US$8, as well as also also takes more than three hours. The railway can be set to be part of 750 kilometres of brand-new rail planned tracks in Jokowi’s infrastructure plan.

“The train will be the first of its kind, not just in Indonesia, yet in all of Southeast Asia. the idea will help ease the traffic congestion, advance commercial development as well as also also socio-economic growth, as well as facilitate the formation of a Jakarta-Bandung economic corridor,” says Chinese Ambassador to Indonesia, Xie Feng. “As for China, This kind of can be its first overseas high-speed railway project which uses Chinese technology, standards, as well as also also equipment. the idea can be the first project to be jointly designed, built, operated, as well as also also managed by China as well as also also its partners.”

Indonesia holds a 60 percent stake from the project, while China holds the some other 40 percent. State-owned China Development Bank will provide 75 percent of the funding at an estimated cost of US$5.5 billion, with the rest coming through the Chinese railway company as well as also also the Indonesian consortium.

The rail line will not need any financing through the Indonesian Government, nor a government guarantee. One reason Indonesian officials gave for rejecting Japan’s bid was which the idea could require government funding.

“The Government will not give any guarantee for the project. We don’t think This kind of agreement [will] go to default, yet if the idea happens, the bank will take the mitigation action, not the Government,” says PT Pilar Sinergi BUMN Indonesia Chairman, Sahala Lumban Gaol.

The consortium will exist for 40 years in order which China’s corporation will not depart, even if the project defaults before the due date. “China will not leave before all debts are paid. We haven’t put any collateral in This kind of project,” says Gaol.

During the construction phase, the joint venture will use as many Indonesian materials, machines, as well as also also equipment as possible. the idea will also hire as many local managers, technicians, as well as also also workers as possible.

“Furthermore, the two sides have signed cooperation agreements on personnel training, local production, as well as also also technology transfer. Both of us have agreed to jointly explore some other markets, especially in Southeast Asia. right now, in This kind of golden autumn of October, they can finally harvest the fruits of their hard labour,” says Ambassador Xie.

To get more specific, the project will use up to 50 percent local materials, says consortium Minister Rini Soemarno. She adds, “The project will also hire 39,000 brand-new local workers, while most of the aluminium will be through local production.”

With heavy involvement of Indonesia’s state-owned companies, the project will be able to buy land for the route using a brand-new law which sets timeframes for land acquisition. Until right now, land acquisition has been a major obstacle for most infrastructure projects from the country, as well as also also has scuppered previous plans to build railways on the islands of Sumatra as well as also also Borneo. The project can also use land through an existing toll road to Bandung.

For Indonesia, projects like This kind of are much-needed as the country suffers through a lack of adequate infrastructure – both in quantity as well as also also quality – often causing logistics spending to rise steeply. As Indonesia requires about US$416.5 billion worth of funds for infrastructure development over the next four years, the Government will rely heavily on private sector involvement.

According to PT Wijaya Karya president director Bintang Perbowo, development of the high-speed railway could create brand-new residences around transit areas using a plan which could integrate with the railway. “With these brand-new areas being opened, people will choose to live there. There will also be development of brand-new cities, such as Walini,” Perbowo says, adding which towns situated near the train should be reachable in a more timely manner after the idea opens.

Walini can be a hillside town near Bandung, as well as also also used to be a tea-producing area. However, in recent years the idea has become unproductive. The area can be required to be utilised as a business centre as well as also also residential area from the future. Some parts of Walini implicated from the project belong to PT Perkebunan Nusantara VIII. The state-owned enterprise also pins hopes on accelerated development in Karawang, which can be already known as an industrial area.

While the Government believes which the planned fast train will bring much benefit to the public, some experts have expressed concerns as well as also also doubts about the project.

Nico Harjanto, Executive Director of Jakarta-based pollster Populi Center, says the project clearly stands against Jokowi’s promise to focus on developing much-needed infrastructure in regions outside Java, an island which already has railways through east to west.

“Where will This kind of high-speed train be built? through the Gambir Station in Jakarta? Why does the project still focus on the capital? In fact, This kind of project can be needed for political reasons in order which for the next election in 2019, there’s something brand-new [through Jokowi],” says Harjanto.

Ilham Malik, a public policy expert through the University of Bandar Lampung’s centre for regional policy studies, meanwhile, expresses scepticism on the effectiveness of the railway due to a lack of public transport in both Jakarta as well as also also Bandung.

“Perhaps This kind of railway will only attract tourists. Today, people wanting to travel through Jakarta to Bandung as well as also also vice versa are served by airplanes, trains, […] buses, as well as also also private vehicles,” he says. “If Indonesia wants to build This kind of high-speed train, the administration has to build interconnected public transportation [also]. If the train only depends on private vehicles, the idea won’t thrive.”