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China's high-speed railway in Indonesia adds trips, but debt could hold back gravy train

China's high-speed railway in Indonesia adds trips, but debt could hold back gravy train

 


This month, trains increased their regular schedule from 44 to 48 trips per day after a review of ridership trends, the Jakarta Globe reported. The service started with just 14 trips per day.

05:43

Indonesia's flagship Bandung-Jakarta high-speed train finally launches after series of delays

Indonesia's flagship Bandung-Jakarta high-speed train finally launches after series of delays

The railway, called Whoosh, its red and silver trains can travel up to 350 km/h, is expected to continue to attract travelers who live near the four stations, including one outside the capital Jakarta and one near from Bandung, a tourist town located 158 km (98 miles) from the capital. South East.

But ridership over the past six months makes it difficult to predict whether the railroad's popularity will be sustainable and widespread enough to generate profits, analysts said.

It is possible that passengers will lose enthusiasm, stop using this train and revert to their old style of transportation, said Siwage Dharma Negara, a senior researcher at the ISEAS-Yusof Ishak Institute in Singapore.

China and Indonesia regard the railway as the symbol of their bilateral relations and the Broader Belt and Road Initiativecampaign launched by Beijing 11 years ago to build regional infrastructure and facilitate cross-border trade.
Indonesian President Joko Widodo, left, speaks with an official during the opening ceremony of Southeast Asia's first high-speed railway at Halim Station in Jakarta, Indonesia, in October 2023. Photo: AP

The railway was so remarkable that Indonesian President Joko Widodo was present at the launch of the $7.3 billion project in October.

The railway boasts travel times of 40 minutes from start to finish, compared to three to four hours by train or normal road. Fares between 150,000 and 600,000 Indonesian rupiahs ($9.4 to $38) are considered affordable for the middle class, and passengers say prices sometimes drop during less popular seasons. Fares for slower trains can cost as little as 80,000 rupees.

As traffic congestion increases in Jakarta and Bandung, high-speed rail could become even more attractive, Negara said. Jakarta has more than 11 million inhabitants and Bandung 2.7 million.

The project took seven years to build, following a pandemic-induced delay and a $1.2 billion budget overrun.

This made our job easier. The station was clean, the staff were helpful and the train was on time.

Shreemanjari Tamrakar

Bandung now has more appeal as a getaway destination for Jakarta residents, said Nukila Evanty, a member of the Asia Center's research institutes advisory board. The high-speed train appeals to those who want to enjoy the weather, the Jakarta resident said.

It made everything easy for us, said Shreemanjari Tamrakar, a 37-year-old Nepalese tourist who took the train in April. Tickets could be purchased online. The station was clean and systematic, the staff were really helpful and the train was on time.

The railway has already boosted public opinion toward Chinese technology, observers said.

Among Indonesians, we have some negative perceptions about Chinese technology, as if it is definitely cheap but easily broken, said Muhammad Habib Abiyan Dzakwan, a researcher at the Department of International Relations at think tank CSIS Indonesia. But now China can compete with Japan.

However, the total journey time may be more complicated than the headline numbers suggest. The closest train stations to Jakarta and Bandung are in the suburbs, forcing passengers to take feeder trains, buses or minivans from the city center and the latter two options would face notoriously heavy traffic. dense as they left the city of Jakarta.

Another possible weakness: Many travelers, including those who live in Bandung but spend the week in Jakarta for work, have become accustomed to minivans and slow trains, both of which charge more affordable fares to the many Indonesian travelers to low income.

We already have enough transit between Jakarta and Bandung, said Roseno Aji Affandi, professor of international relations at Bina Nusantara University in Jakarta.

Affandi has ridden the high-speed train several times and estimates, from personal experience, that ridership reaches only 20 percent of capacity on some days. At first it was very busy, but today we can see that it is not economically feasible, he said.

Affandi describes his Whoosh trips, mainly for business, as satisfying, of adequate quality and stable. But the schedules and fares, he said, make slower trains or shuttles that stop near his home and work a better option for my needs.

02:04

Presidents Xi and Widodo watch first test of Indonesian high-speed train built in China

Presidents Xi and Widodo watch first test of Indonesian high-speed train built in China

The Jakarta Post claims the debt will reach 3.15 trillion rupiah ($197.7 billion) in the first year, even after earning nearly 2 trillion rupiah from ticket sales.

The growing debt, Negara said, would weigh on state investors backing the project, particularly Indonesia's national railway company Kereta Api Indonesia.

China lent money covering 75 percent of the project's construction, with a duration of 40 years and a grace period of 10 years. Bank loans may be needed to clear an additional debt of 3.15 trillion rupiah, Negara said.

Some Indonesians already feel concerned about the size of the amount owed, Dzakwan said.

In October, Indonesian media quoted PT Indonesia-China President Director Kereta Cepat as saying that Whoosh would take less than 40 years to turn a profit.

The company did not respond to multiple requests for comment.

To attract passengers, the operator will likely use marketing and organize more feeder transportation at both ends of the line, analysts said, with some Jakarta residents predicting that property developers will build housing around commuter stations so that passengers can live nearby.

Leveraging commuter rail stations around the world can be a forward-thinking way to anticipate the needs of ever-expanding urbanization, said Dan Prudhomme, an assistant professor at Florida International University's College of Business.

The operator will attract passengers by running trains on time, keeping the railway safe and marketing so people know about it, Negara said.

02:05

China, Indonesia discuss extension of high-speed railway from Jakarta to Surabaya

China, Indonesia discuss extension of high-speed railway from Jakarta to Surabaya

Last month, Indonesia requested China's support for extend the Whooshs single line by 142.3 km east of Surabaya, an important commercial port. The two cities are 411 km apart. Whoosh will attract more passengers if Surabaya is among the stops, Affandi said.

Paramitangrum, a professor of international relations at Bina Nusantara University, does not ride Whoosh although he lives in Jakarta. Bandung-bound minivans stop all over the city, she said. But it would take the high-speed train to Surabaya in the event of an expansion. This would really save time.

Despite the many obstacles, China is in all likelihood happy with the project so far.

Indonesia's enthusiasm for the railway, expressed through capital expenditure, efforts to popularize the train and the vision of its expansion, has not been replicated in many countries, said Zha Daojiong , professor of international studies at Peking University.

I don't see Indonesian rail as a model for other companies. Many simply aren't ready yet.

Zha Daojiong
Support from China East Coast Rail Link in Malaysia, the project faced several difficulties linked to delays, cost overruns and the surprise relocation of a village. In the Philippines, the transport minister reportedly said last year that China had lost interest in financing three railway projects. Beijing and Manila are engaged in a tense dispute over maritime sovereignty.

I don't see Indonesian rail as a model for other companies, Zha said. Many other companies simply aren't ready yet.

Similar high-speed rail systems, such as those in Japan and Taiwan, have faced debt problems but have maintained operations, sometimes with government subsidies, to keep prices affordable.

China outbid Japan in 2015 to build the Indonesian railway.

The railway project in Indonesia is considered a success in terms of China's industrial capacity and ability to prevail in international competition, Prudhomme said.

Sources

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