Indonesia high-speed train, backed by China, comes untracked

Land, finance and security issues have dogged the much ballyhooed Rp68 trillion (US$5.1 billion) Jakarta-Bandung high-speed rail project, Indonesian President Joko Widodo’s signature infrastructure undertaking. His government, keen to bridge a yawning infrastructure gap, awarded the contract to Chinese developers two years ago.

Construction was meant to have begun last year, with an ambitious completion date set for 2019. But the joint venture between China Railway International and a consortium of four Indonesian state-owned enterprises has yet to leave the station.

Asked recently what had happened to the project, a coordinating ministry official laughed, telling Asia Times: “It was a joke, but it was early in [Widodo’s] presidency and Rini (State Enterprise Minister Rini Soemarno) was so convincing.”

One of Widodo’s known favorite ministers, Soemarno pushed for China’s involvement from the start, even though the Japanese — a loyal investor in Indonesia for decades — produced the first feasibility study during previous president Susilo Bambang Yudhoyono’s administration in 2011.

The China Development Bank (CDB) has pledged to provide 75% of the total cost, with the rest coming from state-run construction company Wijaya Karya, state railway firm Kereta Api, state toll-road outfit Jasa Marga and plantation company Perkebunan Nusantara.

But the CDB has refused to disburse the funds, offering instead a bridging loan until the Indonesian government has resolved the many land issues that still stand in the way of the project getting off the ground.

The Indonesian consortium, for its part, has had difficulty finding the additional Rp2 trillion (US$150 million) needed for the acquisitions, mirroring the financial difficulties delaying Jakarta’s Rp23 trillion (US$1.7 billion) light-rail system that has been under construction since 2015.

Tracking along the city’s inner ring road, the light rail will connect the southern suburbs with the north-south Mass Rapid Transit (MRT) system, an over-and-under 27-kilometer corridor stretching as far as North Jakarta’s Kota district.

Scheduled for completion next year, the MRT is long overdue. Jakarta is the largest city in Asia not to have a modern rail-based people-mover, with transportation experts predicting total gridlock in the city by 2020.

But despite more infrastructure building underway than at any time in the Indonesian capital’s 400-year history, efforts to improve rail and road networks across other parts of the densely populated island of Java face familiar difficulties.

Also on hold – but now undergoing a detailed feasibility study — is a proposed medium-fast rail link between Jakarta and Surabaya, which despite its much higher cost appears to make more economic sense than the shorter, high-elevation Bandung line.

Offered to the Japanese as geo-political compensation for China winning the shorter Bandung track, the new line will cut the time for the 685-kilometer journey to Indonesia’s second biggest city from 12 hours to around five hours, depending on the design speed of the train.

Despite more infrastructure building underway than at any time in the Indonesian capital’s 400-year history, efforts to improve rail and road networks across other parts of the densely populated island of Java face familiar difficulties.

Finance will again be a major factor. Experts estimate it will cost as much as US$25 billion because of the need to elevate at least 70% of the electrified track to avoid 988 level crossings along the route and smooth out bends.

With the Trans-Java Highway only now nearing completion, revived interest in the Surabaya link comes 20 years after British developers were forced to abandon a similar venture because of the 1997-98 Asian financial crisis. The price then: US$3-$4 billion.

China controversially won the Jakarta-Bandung project over Japanese bidders after the speed on the 150-kilometer link was reduced from a planned 350 kilometers-per-hour to 200-250 kph and the number of stations reduced from eight to four.

The link is initially expected to carry 44,000 passengers a day and cut the travel time between Jakarta and the bustling highland city from three hours to 36 minutes, despite a 700-meter difference in elevation.

Apart from an earlier completion date, what swung the project in China’s favor was its readiness to provide guarantee-free loans.

Yet Chinese developers did a bait-and-switch on a guarantee-free pledge in the mid-2000s to build nine out of 10 stations of a 10,000-megawatt fast-track power program. After the contracts were signed, the developers still demanded Indonesian government guarantees. The problematic program quickly shifted from a fast to slow track.

President Widodo attended the January 21, 2016, ground-breaking, but barely five days later transport minister Ignasius Jonan called a halt to construction, saying there were a variety of “sensitive” unresolved issues and incomplete paperwork.

Widodo was not pleased, perhaps mindful of officiating at a similar event for a Japanese-funded 2,000MW power plant in Central Java four months previously, which likewise turned out to be premature because of an unresolved land dispute.

In fact, it is widely believed to be the reason why Jonan was removed from his post in last year’s August reshuffle, although he was kept on in the Cabinet as mines and energy minister where the challenges may be even greater.

The joint venture still needs to come up with a revised spatial plan and acquire 500 hectares between the industrial suburbs of Karawang and Purwakarta; the new link can’t follow all of the existing track because fast rail demands a much straighter alignment.

Indonesia’s 2012 Property Law was supposed to establish the principle of eminent domain for public infrastructure, but the reality on the ground is a lot different, particularly in pricing land that’s value has predictably escalated since the high-speed rail project was announced.

It is still unclear as well whether the Indonesian Air Force is prepared to release 49 hectares of the Halim Perdanakusuma Airbase on the southern outskirts of Jakarta for the station that will serve as the starting point for the new railway.

With only a single 3,000-meter runway and no taxiway, Halim is already home to four air force transport and VIP squadrons – including the presidential Boeing 737 – and the air defense command. It is also the gateway for private jets and state visitors.

Opened for commercial flights in 2014, Halim is already used by Citilink and Batik Air, state-owned Garuda’s two budget carriers, and six smaller airlines. Parliament’s defense commission opposes the China-financed rail plan, saying it will compromise national security.

How long it takes to resolve all the outstanding issues plaguing the Jakarta-Bandung venture is anyone’s guess, but it is almost certainly one item Widodo can cross off his list of first-term successes when he runs for re-election in 2019.