Indonesian train car manufacturer INKA and railway operator Kereta Api Indonesia have signed off on a $100 million joint venture with Swiss railroad manufacturer company Stadler Rail to build a railroad factory in Banyuwangi, East Java. (Photo courtesy of SOE Ministry)
INKA, KAI Join Hands With Swiss Stadler Rail for $100m Joint Venture in East Java
SEPTEMBER 22, 2019
Jakarta. Indonesian train car manufacturer INKA and railway operator Kereta Api Indonesia have agreed to establish a $100 million joint venture with Swiss railroad manufacturer Stadler Rail to build a new railroad factory in Banyuwangi, East Java.
The companies signed the cooperation agreement in Bern, Switzerland, on Saturday, witnessed by State-Owned Enterprises Minister Rini M. Soemarno.
"This investment will support development of transportation facilities in Indonesia," Rini said in a statement on Sunday.
The companies aim to complete the construction of the factory by 2020. Once it is opened, the factory will begin by producing 125 train cars per year. It will build up its capacity gradually until it reaches 1,000 train cars annually.
Kereta Api Indonesia (KAI) will be the main buyer for the joint venture company. The 83-hectare factory will be located a mere three kilometers from a seaport, which will help the new company to send train cars across the country and abroad.
"We hope this new railroad factory will increase popularity and sales of Indonesian-made trains in the international market," Rini said.
To ensure the supply of industrial workforce for the factory, Stadler Rail will also establish a vocational railroad school in Indonesia.
"This is our first investment agreement with a Swiss company after we sign the Indonesia-EFTA Comprehensive Economic Partnership Agreement in December 2018," Rini said, referring to a free trade agreement with the European Free Trade Association that includes Switzerland, Norway, Iceland and Liechtenstein as its members.
"We hope this cooperation will encourage investment in other sectors between the two countries," she said.
Indonesia under President Joko "Jokowi" Widodo has been working hard on improving and expanding its railway network. The Jokowi administration has been building 683 kilometers of new railway between 2015 and 2018, data from the Transportation Ministry showed – still a long way behind its medium-term target of at least 3,250 kilometers of new railroad, due to lack of investment from the private sector.