Lawmaker: Indonesia High Speed Train Project a Chinese Debt Trap?

TheIndonesia.co - Member of Commission VI of the Indonesian House of Representatives, Amin Ak, rejected the use of State Budget to finance the cost overrun of the Jakarta-Bandung high-speed rail infrastructure project. He suspected that this project was a kind of trap for Indonesia to owe to China.

"Don't be trapped in wanting to disburse state budget funds to cover cost overruns," said Amin Ak in a written statement quoted by Antara in Jakarta, Thursday, August 4, 2022.

Amin said his warning was based on a number of irregularities in the Jakarta-Bandung high-speed rail project since the project proposal was submitted by China in mid-August 2015. At that time, he said, China offered lower project costs than Japan and promised projects to be carried out on a business-to-business (B2B) basis without the need for government guarantees.

But along the way, according to Amin, this development has made Indonesia stuck in a dilemma, to continue the project with the risk of an increasing debt burden or stop the project with the risk of the project stalling, but still paying the debt that has already been running. To stop it, said Amin, is also difficult, apart from the fact that huge funds have already been used, the work on this project has already exceeded 80 percent.

"Since the beginning, the feasibility study has been carried out by the Chinese side. It would be strange if they were unable to detect such potential cost overruns. Is this because of the low credibility and quality of the feasibility study or is it a trap to keep the project running at a loss?" Amin asked.

Another oddity, Amin continued, is from a business standpoint. The Jakarta-Bandung high-speed rail operation is difficult to break even because by calculating the amount of development costs, which swelled to US$7.9 billion from the initial US$5.13 billion, the business calculation is very unlikely to get return of investment.

According to Amin, the situation is similar to several countries that use Chinese funding for infrastructure development, such as Sri Lanka and Pakistan.

Meanwhile, the Deputy for Coordination of Regional Development and Spatial Planning of the Coordinating Ministry for Economic Affairs, Wahyu Utomo, said that the government is optimistic that the Jakarta-Bandung High Speed Train (KCJB) can operate in 2023. "We believe that the high-speed train will be operational soon, hopefully next year," he said in a media briefing that was monitored online in Jakarta, Tuesday, July 26.

He emphasized that his ministry and the Coordinating Ministry for Maritime Affairs and Investment launch a strict supervision on the KCJB project. Another reason is that the KCJB project is one of the goals of Chinese President Xi Jinping's visit during the G20 Summit in Indonesia in November 2022.