Asia Minute: Rail Trouble in Indonesia

Mar 27, 2017

The Java high speed rail
Credit Wikimedia Commons

A major rail project has run into financial trouble. There’s a controversy about funding, and actual construction of the route has been delayed. The story may sound familiar to Hawai‘i residents, but this rail line is thousands of miles from Honolulu. HPR’s Bill Dorman has more in today’s Asia Minute.

 


The government of Indonesia needs more money for a rail project…actually, for two rail projects.

One is a 5 billion dollar high-speed corridor connecting the capital city of Jakarta with Bandung—the third-largest city in the country.

Most of that work is being funded by China with 75 percent of the construction costs covered by the China Development Bank.

But the Indonesian news group Tempo says the project is behind schedule, and the Chinese bank is waiting for a consortium of Indonesian companies to buy land along the route.

The companies are owned at least in part by the government and they are apparently having some trouble convincing stakeholders to part with the purchase price of roughly 150 million dollars.

The other stalled project is Jakarta’s light rail system—an undertaking of about 2 billion dollars.

That started off as a program under the federal government, but President Joko Widodo has moved it off the main national budget and put it under the state-owned railway company.

While that may help protect the central government’s bond rating, it has not made the project move any faster. And the costs are still likely to wind up as the responsibility of the government—in one way or another.

The Jakarta Post reports a likely outcome will involve a cash injection from the federal government, and a loan from a series of banks—all of which are owned by the government.