China interested in resolving Indonesian high-speed railway’s financial crisis

China has publicly offered to cooperate with Indonesia in managing financial challenges surrounding the $7.27 billion “Whoosh” high-speed railway, Southeast Asia’s first bullet train, which connects Jakarta to Bandung.

The project, once touted as a symbol of bilateral partnership and technological progress, is now facing mounting debt and revenue shortfalls, according to an article by South China Morning Post.

The railway is operated by Kereta Cepat Indonesia China (KCIC), a joint venture between Indonesian and Chinese state-owned companies. The Indonesian consortium, Pilar Sinergi BUMN Indonesia (PSBI), holds a 60 percent stake, while Chinese partners own the remaining 40 percent.

Initially budgeted at $6.02 billion, the project was primarily financed by a loan from the China Development Bank, which covered about three-quarters of the total cost at a 2 percent annual interest rate. When costs ballooned by an additional $1.2 billion, the same bank extended another loan at a 3.4 percent interest rate to fund the overrun.

However, operational losses and disappointing passenger numbers have deepened concerns about the railway’s long-term viability. According to Indonesia’s statistics agency, Whoosh sold only 6.06 million tickets in 2024, far below the government’s projected 31 million annual passengers. The Indonesian consortium PSBI posted a 4.19 trillion rupiah ($251.8 million) loss last year and another 1.625 trillion rupiah loss in just the first six months of this year.

As the financial strain intensified, Indonesia’s government faced growing pressure to intervene. Yet Finance Minister Purbaya Yudhi Sadewa rejected calls to use public funds to cover the project’s swelling debt, declaring that “he would not pay the debt using the state budget.”

Instead, he argued that Danantara, Indonesia’s sovereign wealth fund that oversees the dividends and assets of roughly 1,000 state-owned companies, should bear responsibility for managing and servicing the debt.

Beijing, for its part, has signaled readiness to help stabilize operations and ensure the project fulfills its economic potential.

“China stands ready to work with Indonesia to continue facilitating the high-quality operation of the Jakarta-Bandung high-speed railway so that the project will play a bigger role in driving Indonesia’s economic and social development and enhancing connectivity in the region,” Chinese Foreign Ministry spokesman Guo Jiakun said in a press briefing in Beijing earlier this week.

The offer reflects China’s broader interest in safeguarding one of its flagship Belt and Road Initiative projects in Southeast Asia. The Whoosh line, launched in October 2023, was celebrated as a major milestone for regional infrastructure cooperation, but it has since been clouded by cost overruns, delays, and lower-than-expected demand.

Indonesia has remained cautious in responding to China’s overture. Officials from Danantara said the government plans to finalize its approach to the debt issue by the end of this year.

By Nazrin Sadigova