Indonesia's Belt And Road Train Off To An Uneconomic Start

The planned Surabaya extension, elevated along its entire length, was never going to be feasible under President Joko Widodo, whose infrastructure achievements have become the hallmark of his two-term presidency.

Discussing the 750-kilometer venture, stretching from Bandung to West Java's new but barely used Kertajati International Airport, then on to Purwokarta, Jogjakarta, Solo, Madiun and the East Java port city of Surabaya, Panjaitan told Asia Times in 2018:“It's a 20 to 30-year objective.”

By then, he said Jakarta and Bandung, already the country's third-biggest city, would be one sprawling metropolis.“We have to look beyond just five years. The transport has to be in place – and it has to extend over hundreds of kilometers.”

Although the new Jakarta-Bandung railway will cut travel time from three hours to 40 minutes, it may have trouble attracting customers. Many potential passengers are likely to continue using the existing expressway
–
a journey of two hours
–
rather than fight traffic just to get to the train.

KCIC has said the railway is not expected to turn a profit for more than 40 years, twice the assumption of a return on investment laid out in the original feasibility study. One report last year calculated demand at 31,215 passenger trips a day, about half of the company's initial estimate.

Ticket prices range from $16 to $22, similar to that of the regular train service that conveniently leaves from the main stations in the center
of both cities. Even with a permanent subsidy, the fare is sure to be higher during full operation.

Without a competitive fare at this early stage, transport experts fear the Jakarta-Bandung fast-rail may never lose its novelty value, even with a light rail commuter service at the Bandung end
of the line.

Chinese President Xi Jinping made clear his annoyance at the lengthy delays holding up what was meant to be a showpiece of China's trillion-dollar Belt and Road Initiative (BRI), almost all
of
them due to land and technical difficulties.

Clearly aware of the harm it was doing to the image of China's unprecedented global infrastructure development
drive, Xi sought to inject new urgency into the project during a meeting last year with Widodo in Beijing.

A joint statement issued by the two leaders said they were committed to the completion of the new railway“on schedule as a flagship project” and to work on what
they referred
to as
“more strategic projects.”

Both governments wanted the railway ready for trials last November, allowing for an opening by Xi when he attended the G20 summit in Bali
last November. But while the two leaders watched a trial run, it was not the grand occasion they had hoped for.

On the high-speed line's extension to Surabaya, an Economic Coordinating Ministry spokesperson confirmed the Chinese rejected
Jakarta's proposal that the CDB meet 75% of the funding shortfall, using the same financing structure that applied to the original loan for the project.

Instead, it will apportion who pays what via the current composition of shareholders, with 60% of the KCIC consortium controlled by four Indonesian state-owned firms and the remaining 40% in the hands of the China Railway International Corp and four other Chinese companies.

Disgruntled Indonesian commentators point out that in its tender documents in 2015, the Chinese estimated the cost of the project at $5.1 billion, lower than Japan's $6.2 billion
alternative bid to build the line.

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In the end, it was that – and the idea that the Chinese would get the job done more quickly – that swung the project
Beijing's
way, even if the patient Japanese had done much of the early feasibility work.

In Widodo's Indonesia,
speed has been everything, which explains why he is determined to proceed with moving the new national capital from Jakarta to East Kalimantan, the ultimate cap on his considerable
infrastructure-building
legacy.

Critics say engineering difficulties should also have been anticipated when an authorized study conducted by KCIC in 2016 identified at least four points along the track that were considered geologically unstable.

The proposed Jakarta-Surabaya extension would elevated the entire line and a feasibility shows vulnerable to geological risks. Image: KCIC

Public policy critics conveyed their misgivings about the project, some of them in representations direct to Widodo, with one outspoken expert saying that such a short fast-rail wasn't feasible because it would take decades to recover the cost

Echoing the late tech-savvy president B J Habibie, Widodo insisted Indonesia needed a cutting-edge mode of transport.“We must not be afraid to learn and try new things, despite unexpected difficulties that may arise during the process,” he said at last week's launch
of the Jakarta-Bandung line.

Like the long-planned bridge across the Sunda Strait linking Java and Sumatra, its time will come – just not now. As one senior transport official told Asia Times:“Future governments will have to put it on the list of national strategic projects, otherwise it will be beyond our economic capabilities.”

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