Indonesia expects the China Development Bank to disburse a $4.1 billion loan by March, providing crucial financing required to continue construction of the archipelago's first high-speed railway. (Antara Photo/Rivan Awal Lingga)

Indonesia Expects CDB Loan for Jakarta-Bandung High-Speed Railway Project in March


JANUARY 21, 2017

Jakarta. Indonesia expects the China Development Bank to disburse a $4.1 billion loan by March, providing crucial financing required to continue construction of the archipelago's first high-speed railway.

The $5.5 billion railway project would cut travel time between Jakarta and Bandung, West Java, by a third to just two hours.

Kereta Cepat Indonesia China (KCIC), a consortium of both countries' state-owned firms that is tasked to develop the railway, began preparations and land clearance for the track last year, but observers noted that progress has been slow, highlighting a lack of funding.

State-Owned Enterprises Minister Rini Soemarno told local media earlier this week that the CDB would disburse the loan "at the end of February, or March."

The loan will comprise three quarters of the project cost, with the remainder coming from KCIC equity, paid up by its members. They are construction firm Wijaya Karya, toll road operator Jasa Marga, railway operator Kereta Api Indonesia and plantation firm Perkebunan Nusantara (PTPN) VIII, as well as a group of Chinese state-owned enterprises.

The Indonesian companies are limited in terms of cash and only able to contribute to KCIC's equity in stages over the next few years.

Rini said the CDB loan would accelerate construction of the railway and that the government expects contractors to complete 30 percent of the project by the end of this year and finalize it by December 2019.

KCIC granted a $4.3 billion construction procurement engineering contract to Wijaya Karya in December, together with Chinese state-owned companies China Railway International, China Railway Group, Sinohydro Corporation, CRCC Qindao Sifang, China Railway Signal and Communication Corporation and the Third Railway Survey and Design Institute Group Corporation.

Darmaningtyas, director at the Transportation Study Institute, a nongovernmental organization, said the Jakarta-Bandung high-speed railway project only progressed by 5 percent last month.

"Chinese funding is key to this project, because we could not realistically expect local members of the consortium to pay," he said.

While most of the track passes through land owned by PTPN, Darmaningtyas highlighted potential conflict with the remaining landowners.

"Many locals whose land is affected by the project have yet to be informed about the construction plan," he said.

Minister Rini said the government is currently focusing on clearing land at Halim Perdanakusuma International Airport in East Jakarta, the location of the high-speed train terminal. The site is currently occupied by houses belonging to members of the Indonesian Military (TNI) and the government is still negotiating to determine the best way to relocate them, she said.