GP Short Notes

GP Short Notes # 886, 11 May 2024

NIAS-CR Special Analysis on Jakarta-Bandung High-Speed Railway
Akhil Ajith

The Jakarta-Bandung high-speed railway service was launched between Indonesia’s two largest cities, Jakarta and Bandung. It covers a distance of 143 kilometers with a maximum operational speed of 350kmph. The travel time between the two cities is 45 mins, which is less than three hours of travel time. The project cost around USD 7.3 billion to build and became operational on 17 October 2023. The service served around two million passengers by 17 January 2024.

Former Indonesian President Joko Widodo, after the inauguration, said: “The Jakarta-Bandung high-speed train marks the modernization of our mass transportation, which is efficient and environmentally friendly.” The rail project is named “WHOOSH,” which is an acronym for “Waktu Hemat, Operasi Optimal, Sistem Hebat,” meaning “timesaving, optimal operation, great system” in Indonesian.”

The project was built with the assistance of China and is considered a part of China’s Belt and Road Initiative (BRI) connecting China and Southeast Asia. 

Jakarta-Bandung High Speed Railway: A brief background
The plans to initiate the high-speed railway project began with the talks at the Bandung Conference in 2013. Japan and China had expressed their desire to build and operate such rail systems. China’s price war in the tender auction led to its victory over Japanese price quotes. On 26 March 2015, former Indonesian President Joko Widodo signed an MoU with Chinese President Xi Jinping during his state visit to Beijing in 2015.

The project was financed with a loan from the China Development Bank for 75 per cent of the cost. The remaining 25 per cent came from the consortium’s own funds. The project is part of a planned 750-kilometer high-speed train line that would cut across four provinces on Indonesia’s main island of Java to the country’s second-largest city, Surabaya.

On 21 January 2016, the ground was broken for the project. Despite facing issues related to land, finance, and the Covid-19 pandemic, the project faced multiple delays. On 17 October 2023, the KCIC finally opened up the first leg of Indonesia's high-speed railway network.

The project was built under the Kereta Cepat Indonesia China (PT KCIC) consortium, which comprises four Indonesian state-owned companies and China Railway International, a subsidiary of China Railway Group.

Jakarta-Bandung High Speed Railway: Why is China interested?
First, Indonesia’s strategic location for China
Indonesia is located near the Straits of Malacca, a critical maritime trade chokepoint connecting the Indian Ocean with the South China Sea and the Pacific Ocean, where 80 per cent of China’s oil imports pass through this strait. These investments in strategic sectors, like railways, ports, etc., would help China diversify its transport network for critical resources like oil, gas, and other goods. This helps China to reduce its dependency on the Strait of Malacca, through which it receives much of its energy supplies and goods flow, thus helping China avoid the Malacca Dilemma.

Second, political gains for China
Through this railway project under BRI, China aims to exploit its financial capacity to influence partner countries (Indonesia) policies to align with its own interests. This would ensure that the partner country remains on China’s side and would not align with the Western countries, particularly the US, as China considers Southeast Asia as its backyard.

Third, Indonesia’s emerging market potential
Indonesia has a population of 280 million, with an average age of the population at 29 years, making the latter an attractive investment destination for many Chinese companies. The US investment bank Goldman Sachs also forecasted in a report that Indonesia will become the world's fourth-largest economy by 2050.

Fourth, Indonesia’s resource endowment
According to the US Geological Survey, Indonesia possesses one of the world's largest nickel deposits. China’s economic growth and industrial policy, especially the EV sector, have led to a rise in the demand for nickel. For Indonesia, the mining sector has been the backbone of its economy for decades. With China’s specialization in the extraction and processing of nickel, Beijing offers Indonesia a competitive advantage over other countries, which makes it more dominant in the region’s resources. The high-speed railway is seen as an attempt to improve the country’s rial and logistical infrastructure, which will benefit China’s resource movement in the region.

Bobby Nugroho, Nana Shibata And Ismi Damayanti, “
Indonesia's first high-speed rail opens: 5 things to know,” Nikkei Asia, 27 September 2023
Ayman Falak Medina, “
Indonesia Launches Southeast Asia’s First High Speed Railway,” ASEAN Briefing, 05 October 2023
Lu Kang, “
High-speed railway accelerates China-Indonesia cooperation,” China Daily, 07 September 2023
Menghu Xia, “
How a Chinese railway helped Jokowi cement his infrastructure legacy,” East Asia Forum, 08 December 2023

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