Indonesia seeks to rework China-funded high-speed rail’s debt
Demand for Whoosh, Southeast Asia’s first high-speed train, has not met Jakarta’s expectations since it started operations in 2023
Indonesia is considering a plan to renegotiate a debt linked to the China-funded Jakarta-Bandung high-speed rail project, as its operator faces a financial “time bomb” due to ticket sales alone being unable to cover the costs of the high-interest loan.
The rail line, known as Whoosh, connects the capital Jakarta with the city of Bandung in West Java in 45 minutes – much shorter than by car, which can take up to three hours.
The US$7.27 billion project has, however, been dogged by controversies since the beginning, including delayed completion and cost overruns. In 2015, former president Joko Widodo chose to partner with China rather than Japan to complete the line amid intense competition between the two countries to secure the project. Jakarta said then that it chose to partner with China due to easier financing provided by Beijing.
Whoosh, Southeast Asia’s first high-speed train, was officially inaugurated in October 2023, but demand so far has not met Jakarta’s expectations while operational costs continue to rise.
The rail line came under fresh scrutiny last month when the head of state-owned PT Kereta Api Indonesia (KAI), Bobby Rasyidin, told lawmakers the railway operator faced a financial problem over Whoosh.
“We are also investigating the [Whoosh] issue; it’s indeed a ticking time bomb. We will coordinate with Danantara to resolve this issue and then improve and restructure the existing portfolios,” Rasyidin said on August 20, referring to Indonesia’s new sovereign wealth fund.