SmartRail World has been following the progress of Indonesia’s high-speed rail line since it was initially proposed in 2015. Two years on and the line could begin construction at the end of this month. The Jakarta – Bandung line has been eagerly anticipated to reduce travel time for the 150km route from three hours to just 45 minutes. A consortium between Indonesian and Chinese companies will build the country’s very first high-speed railway with a $4.5 billion loan provided from China Development Bank. It has been decided that China Railway International will be in charge of 70 percent of the construction work, while Indonesian state companies will cover the rest of the line.
"It is hoped that works will meet the 2018 completion deadline and the 2019 target to have the line running."
The Indonesian government has however faced a long up-hill battle which meant that the high-profile railway contract was cancelled mid-way through plans in 2015 due to high costs and funding issues. As a result, the project had to be compromised and were changed to a medium-speed rail link that would be 40 percent cheaper.
Competing to win the contract were China and Japan in order to have a greater influence on Indonesia’s economy. According to reports, it was China’s offer to build the Jakarta-Bandung line with guarantee-free loans which sealed the deal, whereas Japan still requested Indonesian government funding. This allowed China Railway Construction Corporation (CRCC) to enter a joint venture with a consortium of Indonesia's state-owned enterprises (SOEs) and has committed to cover three quarters of the project’s costs. The deal will be carried out on a business to business basis with Indonesia having 60 percent interest in the joint venture, while China will have 40 percent.
China is keen to export the high-speed rail technology in order to create its ‘One Belt, One Road’ initiative to revive trade from Asia to Europe. It is hoped that works will meet the 2018 completion deadline and the 2019 target to have the line running. To secure the deal, China offered the Indonesian government breaks on financing.
Once the project begins, daily passenger flow is expected to be 44,000 with large growth forecasts in later years. 40,000 jobs a year are also expected to be generated for each year of construction. Associated industries such as smelting, manufacturing, infrastructure, power generation, electronics, services and logistics will also receive a boost. Plus, urban and rural areas along the route could experience balanced development.
As Southeast Asia’s biggest economy, Indonesia is trying to lure investors for a $450 billion infrastructure drive to revive economic growth. In October 2016, the Indonesian government had announced to build 600km medium-high speed railway between Jakarta and Surabaya which they have invited Japan to invest in.
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