China begins shipping trains for Indonesia’s high-speed rail line — BenarNews

The first trains of the Beijing-backed Indonesian high-speed rail line are being shipped from China, the transport ministry said on Friday as questions linger over who should pay for the $2 billion cost overrun that has beset the controversial project.

Meanwhile, an opposition lawmaker said he and others would demand an investigation into the plan to link Jakarta and Bandung. Once built, the country’s first high-speed railway is expected to cut travel time between the two cities by more than half.

“Electric Multiple Units (EMUs) or trains for the Jakarta-Bandung High-Speed ​​Rail (KCJB) project began to be shipped from China to Indonesia today,” the ministry said in a statement on Friday. .

Transport Minister Budi Karya Sumadi said the rail line was due to undergo dynamic testing in November to coincide with the G20 summit in Bali which Chinese President Xi Jinping is expected to attend. Dynamic testing is a procedure to ensure that the system is working properly.

Budi said the project is expected to be fully operational in June 2023.

The railway line “is a manifestation of the friendship between Indonesia and China”, he said.

“For this, let’s support this project so that it can work well and in a sustainable way.

The trains can run at a speed of 350 km/h (217 mph) and make up to 68 trips a day between the Indonesian capital and Bandung. Journey time is expected to be between 34 and 45 minutes, compared to 2.5 hours on a regular train, Budi said.

Hot air balloon cost

The cost of the rail line, however, has ballooned to almost $8 billion from its original estimate of $6 billion. The project is part of Belt and Road InitiativeChina’s $1 trillion+ program to fund and build infrastructure around the world.

Since construction began in 2017, the rail line has faced criticism over its impacts on surrounding areas as well as concerns over rising costs.

In October 2021, President Joko “Jokowi” Widodo decided to allow the government to share the cost of the project, in contradiction to an earlier commitment and decree from 2015 that prohibited the use of public funds for its construction.

A month later, the finance minister told a parliamentary panel that the government had decided to inject 4.3 trillion rupees ($299 million) into the project. Critics had expressed concern that the move could deplete state coffers and drive Indonesia into a debt trap.

The Indonesian government had proposed that the China Development Bank, which is financing the project, assume 75% of the cost overrun, with the consortium of Indonesian and Chinese companies covering 25%.

KCIC, the railway line contractor, is a joint venture between a consortium of four Indonesian state-owned companies – KAI, Wijaya Karya, PTPN VIII and Jasa Marga – and a consortium of Chinese companies.

The Indonesian consortium controls 60% of KCIC, while China Railway Engineering Corp. and other Chinese companies control the rest.

On Sunday, Alia Karenina, spokeswoman for the Coordinating Ministry of Economic Affairs, said the China Development Bank had asked the Indonesian government to fund the cost overrun.

“The request was not immediately approved by the government and discussions will still be held to ensure that if the government bears the burden of the cost overrun, then it complies with the applicable regulations,” he said. she said in a statement.

Meanwhile, Arya Sinulingga, spokesperson for the Ministry of Public Enterprises, said 75% of the cost overrun could be financed with a loan.

“This [the loan] may be from China or elsewhere,” Arya said Wednesday, according to CNBC Indonesia.

Opposition MPs call for inquiry

A lawmaker from the opposition Prosperous Justice Party (PKS) said his faction wanted an investigation into the project.

“The proposal to use the right of inquiry is very important to investigate and get to the bottom of the issues that beset the project, with a view to accountability for the use of government money,” said Jazuli Juwaini, President of the PKS faction in the House of Representatives.

Jazuli said China’s demand that Indonesia bear the cost overrun and the financing structure of the project puts the country at a disadvantage.

“China’s dominance in the project… will be a problem for Indonesia’s national interests in the future,” he said.

“The PKS faction will immediately communicate with the parliamentary leadership to submit an official proposal and gain the support of other members so that the project does not become a burden on the state,” he said.

In February, the consortium said the high-speed rail service should become profitable 40 years after completion – not 20 as previously expected – partly because plans to move the national capital from Jakarta to Borneo could significantly reduce the number of runners.

“Hidden Debt”

A HelpData A study published last year noted that Indonesia owes China $17.28 billion in “hidden debt”, more than four times its $3.90 billion in reported sovereign debt.

Nearly 70% of China’s overseas loans go to state-owned enterprises and private sector institutions and the debts, for the most part, do not appear on government balance sheets, the development research lab said. international based in the United States.

Bhima Yudhistira, director of the Center for Economic and Legal Studies, said Indonesia needed to fund the cost overrun with a loan – or it could seek debt relief from China.

“It’s a double whammy. Construction costs have ballooned and you have to look for a loan.

Jose P. Rogers