Jakarta-Bandung HSR on track despite cost overrun

  • President Joko “Jokowi” Widodo has said that the high-speed train connecting Jakarta and Bandung in West Java was an investment project and not foreign aid from the Chinese government.
  • Jokowi also added that the Indonesian government was still in discussion with China over whether Chinese President Xi Jinping could make a stopover for a site visit in Jakarta on the sidelines of the Group of 20 summit in Nov 22.
  • Jokowi also said that the project would boost connectivity between ASEAN countries.
  • The high-speed train, which is part of the Chinese-backed Belt and Road Initiative, is on track to have its launch in 2023, despite a number of setbacks that have caused the budget to overrun.
  • Undertaken by Indonesian-Chinese consortium PT Kereta Cepat Indonesia China, the high-speed rail project was originally expected to cost around USD6bn, but the cost has ballooned to around USD8bn after the delays.
  • Construction began in 2016 and was initially expected to be completed in 2019, but the project ran into problems mostly over land acquisition, delaying its completion several times.
  • Jokowi said the project was 88.8% complete and could be ready for its commercial launch in Jun 23. The President also added that the high-speed train, once operational, would be a boon for the local economy.
  • Critics of the project have said that despite connecting Jakarta and Bandung, many of the stations were located away from city centers. Two stations in Bandung are actually located in the suburbs of the city, about 30 to 45 minutes away from the city center by car.
  • Separately, the Transportation Ministry’s interim Railway Network Director General Zulmafendi said the high-speed train connecting Jakarta and Bandung would be integrated with the existing transportation system in Jakarta.
  • KCIC has said the project is facing a cost overrun of about USD2bn, raising the estimated total cost to IDR113tr (USD7.36bn). China estimates the project is less than USD1bn over budget, according to Koran Tempo newspaper. KCIC’s President Director Dwiyana Slamet Riyadi confirmed the discrepancy in cost calculations, saying negotiations are underway to resolve it.
  • Indonesian state companies, including Wijaya Karya and PT KAI, control 60% of KCIC, while China Railway Engineering Corporation and other Chinese companies control the rest. The project is funded by a loan from China Development Bank.
  • The Indonesian firms have been lobbying their Chinese counterparts since 2021 to fund the rise in costs, while a capital injection from the Indonesian government is also awaiting authorities’ approval.

External Link : https://www.reuters.com/world/asia-pacific/indonesias-china-funded-rail-project-track-despite-cost-overrun-2022-10-13/