Back on track: China’s high-speed railway project in Indonesia to resume soon as permit granted

Beijing will continue work on its first overseas high-speed link, with Jakarta promising to issue building licence ‘immediately’

PUBLISHED : Saturday, 19 March, 2016, 7:03am
UPDATED : Saturday, 19 March, 2016, 10:09am

China is one step closer to resuming building its US$5.1 billion joint-venture high-speed railway project in Indonesia, after it received its operation permit on Friday.

With the Indonesian government to grant the Chinese-invested consortium one more licence – the construction permit – “immediately”, building of the rail link from Jakarta to Bandung is expected to resume very soon.

China’s high-speed railway project in Indonesia suspended over incomplete paperwork

The project – the first of its kind in Southeast Asia – has made headlines over the past months, with the latest being the sudden suspension of the construction just days after Indonesian President Joko Widodo officiated its groundbreaking ceremony.

The consortium that won the intense bidding – PT Kereta Cepat Indonesia China (KCIC), a joint venture between China Railway International and an Indonesian consortium of four state-owned firms – had received a permit for only 5km of the rail and had not obtained further permits in time because of incomplete paperwork, earlier reports said.

On Friday, KCIC received the exclusive rights to operate the Jakarta-Bandung railway for 50 years, starting from May 31, 2019, when the high-speed link is expected to be completed.

Indonesian transport minister Ignasius Jonan said his ministry would “immediately” issue a business permit and a licence for the railway construction, Xinhua reported.

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Observers say this is a significant step for China’s flagship overseas high-speed railway project.

It will also boost the country’s efforts to export infrastructure along its “One Belt, One Road” route, which has faced local resistance, observers say.

“It is definitely good news for the Chinese, but the way ahead is not yet fully cleared. People should not overlook the obstacles coming up next,” said Zhang Mingliang, a Southeast Asian affairs expert at Jinan University.

The building of the 150km Jakarta-Bandung rail link has sparked widespread discontent in Indonesia despite the project being supported by Widodo.

Provincial representatives have slammed the project for being too costly, unfair to less-developed regions and unhelpful to the poor.

Zhang believed new problems would crop up involving matters like land acquisition, resident relocation and environmental protection, Xinhua reported.

KCIC president director Hanggoro Budi Wiryawan said during the signing ceremony that the construction would train and hire local labour and include a transfer of technology.

Discontent in Indonesia over high-speed rail project jointly developed with China may turn the current impasse into a more protracted one

But Zhang said the project might not create as many jobs as locals hoped, as more experienced Chinese workers might be required to meet the deadline.

The Indonesian government requires the project to be completed in three years.

The project’s budget was revised to US$5.1 billion from US$5.5. billion. China Development Bank will provide 75 per cent of its loans.

Jonan expected the company to break even within 40 years.

Indonesian President Joko Widodo with Sheng Guangzu, general manager of China Railway, at the groundbreaking ceremony for the Jakarta-Bandung fast-train railway line in Indonesia in January. Construction was suspended days later. Photo: Reuters