3-10-2023 (JAKARTA) The Jakarta-Bandung high-speed railway, which connects Indonesia’s capital, Jakarta, with the major city of Bandung, officially commenced its operations on Monday. During the inauguration ceremony, Luhut Pandjaitan, the Indonesian Minister of Maritime Affairs and Investment, highlighted the numerous challenges faced during the construction of the railway project, including land acquisition and budgetary difficulties.
Indonesian President Joko Widodo, commonly known as Jokowi, presided over the unveiling of the Jakarta-Bandung high-speed railway, a project that has faced several delays and incurred an estimated cost of $7.3 billion (approximately S$10 billion). The high-speed rail, stretching 142 kilometers, was constructed by a Chinese company and links the two major cities, Jakarta and Bandung. This ambitious project is one of President Jokowi’s flagship infrastructure initiatives and serves as a prominent example of China’s Belt and Road Initiative within Southeast Asia.
Luhut Pandjaitan, responsible for overseeing the project, acknowledged the numerous challenges encountered throughout the Jakarta-Bandung high-speed railway’s development since it broke ground in 2016. These challenges ranged from difficulties in land acquisition to budget constraints.
Speaking at the inauguration ceremony, Pandjaitan stated, “To be frank, since we received the president’s mandate to continue the Jakarta-Bandung high-speed railway project in 2019, we have encountered many problems and obstacles, from the difficulties in coordinating land acquisition to the financial difficulties due to the pandemic.”
The Jakarta-Bandung high-speed railway project initially saw the participation of both Chinese and Japanese companies in a bidding process. The Indonesian government engaged in multiple discussions with both China and Japan to consider their respective proposals. Ultimately, China secured the project in October 2015, with an offer that did not require the Indonesian government to allocate state budget funds. Additionally, China pledged to assist in technology transfer, which was an attractive feature of their bid.
However, as the construction progressed, the costs of the high-speed rail escalated, and the Indonesian government found itself compelled to allocate budgetary funds. In 2021, President Jokowi authorized the utilization of the state budget to support the Jakarta-Bandung high-speed railway project, a decision that raised questions about the project’s funding.
Moreover, in April 2021, China agreed to reduce the loan interest rate for the Jakarta-Bandung high-speed railway from 4% to 3.4%. Nevertheless, this rate remains significantly higher than the 0.1% offered by Japan during their bid for the project.
