The Whoosh high-speed rail project connects Jakarta and Bandung, with plans for an extension to Banyuwangi, the easternmost city in Java. -- PHOTO: KERETA CEPAT WHOOSH/FACEBOOK via The Straits Times/ANN
JAKARTA (The Straits Times/ANN): An Indonesia-China joint venture operating South-east Asia’s first high-speed train, Whoosh, will receive financial support from the state’s coffers, said Indonesian President Prabowo Subianto on Tuesday (Nov 4).
The consortium, named Kereta Cepat Indonesia China (KCIC), is currently in advanced talks to restructure around 85 trillion rupiah (S$6.6 billion) in debts with China Development Bank (CDB), as it struggles to cover interest payments.
“Basically, there is no problem. We would pay maybe around 1.2 trillion rupiah per year (in interest expense). Consider the benefits – reduced traffic jams, lower pollution, faster (inter-city) travels. All these have to be taken into account,” Mr Prabowo told reporters after inaugurating a new commuter train station in Jakarta.
The 142km line, which began operations in October 2023, generates sufficient revenue from ticket sales to cover operating costs, but ridership has fallen short of targets.
The service connects the capital Jakarta and Bandung, the country’s third-largest city, and the trains can reach a speed of up to 350kmh. Total travel time is 45 minutes.
Mr Prabowo added that a study is needed to explore extending the line to Banyuwangi – the easternmost city in Java that is located right across the popular main tourist island of Bali.
“Last time, we talked about extending it to Surabaya (the largest city in East Java). We are past that. We are talking about Banyuwangi now,” Mr Prabowo said, pointing out that the project is a symbol of Indonesia and China’s good bilateral relations.
With a total project cost of US$7.3 billion (S$9.5 billion), including a US$1.2 billion cost overrun, it costs US$51.3 million per km, compared with just US$17 million to US$21 million per km in China, according to a 2014 World Bank report titled “High-speed railways in China: a look at construction costs”.
Seventy-five per cent of the total costs were financed by debts, which carry a 2 per cent annual interest rate on the dollar portion and a 3.46 per cent rate on the yuan portion. The debt agreement was signed in 2017, with a 10-year grace period.
The grace period means principal repayment begins only in 2027, with the first 10 years requiring only interest payments to be made.
Pilar Sinergi BUMN Indonesia (PSBI), a consortium of Indonesian state-owned companies, owns 60 per cent of KCIC. The rest of the stake is owned by Beijing Yawan HSR, a consortium consisting of Chinese state-owned companies, including China Railway.
On Aug 22, PSBI’s top official, Mr Bobby Rasyidin, told a Parliament public hearing that the financial burden of KCIC is a “time bomb” as it faces a heavy debt-servicing burden.
On Oct 20, China’s Foreign Ministry spokesman Guo Jiakun announced that his country would support Indonesia to ensure Whoosh can continue to operate, in a bid to allay public fears. Mr Guo reiterated that Whoosh will help boost Indonesia’s regional connectivity, and consequently, its economic growth and social development.
China’s state news agency Xinhua cited Mr Guo as saying that Whoosh has been operating safely, smoothly and efficiently since the service commenced in 2023. He added that the project has boosted economic development along the railway line.
The Straits Times understands that the average number of daily passengers rose from around 15,000 in 2023 to about 17,000 in 2025. However, this is still below the target of 30,000 daily passengers.
“When it comes to evaluating a high-speed railway project, not only financial data and economic indicators, but also public effects and comprehensive benefits, should be taken into account,” Mr Guo was cited as saying.
KCIC is now in advanced talks with creditor CDB, with key proposals for debt restructuring involving an extension of the loan tenure from the current 40 years to between 50 and 60 years, and lowering interest rates. It also proposed additional measures, such as including a potential extension of the line from Jakarta-Bandung to other cities farther east on the country’s most populous island of Java.
Mr Septian Hario Seto, a member of the Indonesian economic council, which advises on the debt negotiations, told ST on Oct 28: “We are seeking a longer tenure and are currently discussing a possible 60-year tenure to ease debt service level.”
He added: “The debt revamp proposal makes sense because the project runs on a positive Ebitda, meaning it is operationally sustainable.” Ebitda refers to earnings before interest, taxes, depreciation and amortisation, a widely used measure of operational profitability.
Responding to Whoosh’s extraordinarily high construction cost, which prompted a corruption investigation by graft buster KPK, Mr Septian argued that factors such as elevated structures, tunnels, complex terrain, and land acquisition significantly influence the final cost.
“It is not an apple-to-apple comparison. Here, we spent about US$1 billion on land procurement alone, while such a cost is non-existent in any project in China,” Mr Septian told ST.
Whoosh’s financial sustainability has also divided the nation politically. Former president Joko Widodo told reporters on Oct 27 that the project cannot be gauged merely by monetary gains, but also by social and environmental gains.
“The basic principle of mass transportation is that it is a public service, not a profit-seeking endeavour,” said Mr Widodo.
Public transport and urban planning analyst Dedi Kusuma Wijaya suggested that subsidies may be required to fund a public service, comparing the situation to bus rapid transit line Transjakarta, which started operating in 2004 to provide a fast public transport system and help reduce rush hour traffic within Jakarta.
Mr Dedi, who is managing director of Karsa City Lab, a Jakarta-based think-tank that advises on urbanisation and climate change, said Transjakarta receives between three trillion and four trillion rupiah of subsidies a year from the municipal government after it expanded the network significantly in 2016.
“Ample subsidies for Transjakarta enable smoother daily commutes for residents, reduce city traffic jams and raise efficiency. It’s an investment in public service that has clear benefits,” he told ST.
