One year after the grand inauguration of Indonesia’s first high-speed railway, the Whoosh line that seamlessly connects the bustling capital, Jakarta, to the vibrant city of Bandung, officials are now actively reaching out to China for potential investments aimed at extending this vital rail corridor eastward toward the significant port city of Surabaya in East Java.
The Whoosh rail service, a centerpiece in the ambitious infrastructure agenda of former President Joko Widodo, is not just a national milestone but also a crucial component of China’s expansive Belt and Road Initiative. In its inaugural year alone, the Whoosh has already captured the interest of more than four million passengers, prompting the government to schedule additional trips to accommodate rising demand.
A detailed feasibility study is currently underway, focusing on the proposed extension of the Jakarta-Bandung railway to Surabaya, with hopes of dramatically enhancing the utilization of the rail service. This ambitious extension is projected to slash the travel time from Jakarta to Surabaya from a daunting eight hours to a mere four, thereby revolutionizing access to this key economic region.
Danang Parikesit, a renowned professor of transport policy at Gajah Mada University, emphasized the far-reaching positive economic implications of extending the high-speed rail to Surabaya. He articulated, “This development will significantly advance the economic integration within the island of Java and fortify Indonesia’s growth momentum in both service and trade sectors.”
During a prominent rail expo in Shanghai in June, Indonesia showcased three major railway projects to attract foreign investment. These significant projects encompass plans to connect the Whoosh high-speed train with urban rail systems in Bandung, a futuristic airport line to serve the future capital city of Nusantara, and an urban railway line linking Nusantara with surrounding cities.
Transportation Ministry and Railways Director General Risal Wasal confirmed that these ambitious projects are integral components of the ministry’s strategic roadmap for the years 2024 to 2029, indicating a clear commitment to evolving Indonesia’s transportation landscape.
The Bandung railway is projected to yield a remarkable investment return rate of 11.9%, bolstered by government support through a viability gap fund that will cover nearly half of the total costs. This financial backing showcases the government’s dedication to fostering viable transport solutions.
Risal declared in a statement directed at potential investors, “With such potential, we invite you to participate in the Bandung Urban Railway project through a public-private partnership (PPP) scheme, featuring a concession period that could last up to 30 years.” This strategic initiative is designed to attract investment and enhance the region’s transportation infrastructure.
Danang also highlighted the pressing need to address the long-standing backlog in Indonesia’s transportation infrastructure, which has significantly hampered the country’s competitiveness in both domestic and international goods and services markets.
He articulated the vision that Indonesia’s comprehensive development plans aim to cut logistical costs in half. “Consequently, we urgently need international partners to invest in and enhance our highways, railway systems, ports, and airports, in addition to other vital infrastructures such as gas pipelines and floating storage facilities.”
Chinese investment in Bali and Nusantara
In an impressive showcase during Indonesia’s 79th Independence Day celebrations held in Nusantara, an Autonomous Rail Rapid Transit system (ART) funded by China was revealed, highlighting the potential for future collaborations in transportation infrastructure.
Furthermore, other rapidly developing urban centers such as Bali are actively courting Chinese investment with aims to establish the island’s first Light Rail Transit (LRT) system. The state-owned China Railway Construction Corporation (CRRC), notable for its role in the construction of the Jakarta-Bandung high-speed railway, is preparing to contribute to the development of Bali’s LRT system.
However, Danang cautioned against an over-reliance on Chinese investments as a long-term strategy. He advised, “Diversifying our partnerships with other nations will lay a stronger foundation for our future transportation advancements. It’s critical that we balance our immediate transportation investment needs with a strategy to diversify our partnerships and leverage the strengths offered by different countries.”
China overtaking Japan in Indonesia’s railway sector
China’s influence extends beyond the construction of new railway lines, as it increasingly becomes integral in modernizing Indonesia’s aging Greater Jakarta Commuter Line fleet, according to insights from various experts.
Research conducted by the University of Malang underscores the historical role of Japan, which previously supported Indonesia through official development assistance loans for modernization projects in Jakarta and surrounding areas, now overshadowed by China’s relentless push in the railway sector.
Fadlan Muzakki, a researcher at the ASEAN-China Research Center of Universitas Indonesia, asserts that China has surpassed Japan in the advancement of Indonesia’s railway network due to its willingness to offer knowledge transfer without complex stipulations. “Indonesia chose China because they offered to transfer technical knowledge to Indonesia without any conditions or complicated requirements and they were persistent in their lobbying efforts,” he elaborated.
Fadlan’s extensive research suggests that Japan’s willingness to fully transfer technological knowledge came with the stipulation that Indonesia pay off 25% to 30% of its debt first, which meant Indonesia would face a waiting period of five to ten years before full access to this technology.
This resulted in a strategic agreement signed in February between PT Kereta Commuter Indonesia, a subsidiary of PT Kereta Api Indonesia, and China’s CRRC for the procurement of three complete trains totaling $49.15 billion, highlighting a significant commitment to enhancing Indonesia’s rail capacity. Just five months later, the company opted to secure an additional eight trains, further solidifying this collaborative effort.
Fadlan cautioned against excessive dependence on Chinese investments in the transport sector, advocating for diversification of investment sources, public fundraising opportunities, and robust risk assessment strategies when engaging with Chinese partners.
According to Mark Green, president of the Wilson Center, a decade into the Belt and Road Initiative, an alarming 80% of China’s government loans to developing nations have been funneled to countries already experiencing debt distress, exacerbating issues such as inflation, currency devaluation, and rising poverty levels.
Djoko Setijowarno, a transportation analyst, further echoed the sentiment that Indonesia should channel efforts toward developing its state-owned train manufacturing entity, PT Industri Kereta Api (INKA), to better accommodate the nation’s rising train demand instead of relying heavily on imports from China. INKA has already successfully exported trains valued at $72.39 million to Bangladesh and over $26 million to the Philippines.
Danang emphasized that Indonesia’s long-term development plans aim to position the country as a high-income nation by the year 2045. He stated that increased investment in transportation infrastructure is vital for enhancing Indonesia’s global competitiveness and reducing economic disparities across regions and social classes, thus proving instrumental in achieving this ambitious target.
Interview with Danang Parikesit, Professor of Transport Policy at Gajah Mada University
Editor: Thank you for joining us today, Professor Parikesit. It’s been a year since the Whoosh high-speed railway began operation between Jakarta and Bandung. Can you share your insights on the impact it’s had so far?
Danang Parikesit: Thank you for having me. The Whoosh line has made a significant mark in just one year. With over four million passengers already, it has transformed travel between these two cities and has become a vital part of our national infrastructure, supporting both economic activity and passenger convenience.
Editor: The Indonesian government is now looking to extend this line to Surabaya. What do you think are the potential economic implications of this expansion?
Danang Parikesit: Extending the Whoosh to Surabaya will drastically enhance connectivity across Java. The travel time could be reduced from eight hours to four, facilitating trade and services, and significantly bolstering economic integration on the island. It’s essential for supporting our growth in both domestic and international markets.
Editor: There are plans for additional railway projects aimed at attracting foreign investment, particularly from China. How do you view these developments in the context of Indonesia’s transportation strategy?
Danang Parikesit: Attracting investment, particularly from partners willing to share technology, is necessary for addressing our transportation infrastructure backlog. However, while Chinese investment is valuable, we need to be cautious about over-reliance. A diversified partnership approach is essential for sustainable growth.
Editor: You mentioned challenges in infrastructure development. What specific areas do you think require urgent attention to enhance Indonesia’s competitiveness?
Danang Parikesit: We need substantial improvements in our highways, railway systems, ports, and airports. High logistical costs have been a barrier for businesses, and comprehensive development plans aim to address this gap by cutting these costs in half, which is critical for our economic competitiveness.
Editor: Lastly, given the historical context that Japan played a crucial role in Indonesia’s railway development, how does the current shift to Chinese investment reflect on our global partnerships?
Danang Parikesit: China’s willingness to facilitate technology transfer without stringent conditions has made it an attractive partner, surpassing Japan in this sector. However, maintaining a balanced and diversified approach to our international partnerships will ensure we are not reliant on a single source of investment or technology, thereby laying a stronger foundation for the future.
Editor: Thank you for your insights, Professor Parikesit. It’s clear that Indonesia’s transportation landscape is entering an exciting phase, and we look forward to seeing these developments unfold.
>Editor: You mentioned the need for diversified partnerships. Can you elaborate on the potential risks of relying heavily on Chinese investments for Indonesia’s transportation infrastructure?
Danang Parikesit: Absolutely. While Chinese investments have brought significant advancements in technology and infrastructure, an over-reliance poses risks such as economic dependency and vulnerability to external pressures. If we diversify our partnerships, we can leverage different strengths and reduce potential strategic risks. This approach will help us build a more resilient transportation network.
Editor: Indonesia’s ambition includes reducing logistical costs significantly. What steps should be taken to achieve this goal in the transportation sector?
Danang Parikesit: Achieving this goal requires a comprehensive approach—investment in modern infrastructure, efficient management of existing assets, and the implementation of advanced technologies. Additionally, we should focus on integrating various modes of transport, enhancing connectivity between urban areas and ports, and ensuring effective public-private partnerships that can drive innovation and investment in the sector.
Editor: Looking ahead, what milestones do you envision for Indonesia’s transportation system by 2045?
Danang Parikesit: By 2045, I envision Indonesia emerging as a high-income country with a robust and integrated transportation network. This includes a modern railway system that facilitates faster and more efficient movement of people and goods across the archipelago. The goal is to reduce economic disparities, enhance global competitiveness, and create a sustainable transportation ecosystem that meets the needs of all Indonesians.
Editor: Thank you, Professor Parikesit, for sharing your insights into Indonesia’s transportation future. Your expertise is invaluable as the country navigates this critical phase of development.
Danang Parikesit: Thank you for having me. It’s an exciting time for Indonesia, and I look forward to seeing how our transportation network evolves in the coming years.
