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The Indonesian government is in debt negotiations with China over its $7.3bn “Whoosh” bullet train, as the Beijing-backed high-speed railway racks up losses and risks creating an unmanageable debt burden for Jakarta.
The rail link connecting the capital Jakarta with the third-most populous city of Bandung was developed jointly by Indonesian and Chinese state-owned companies under Chinese President Xi Jinping and former Indonesian president Joko Widodo. Three-quarters of the project was funded by Chinese loans.
But just two years since commercial operations began, shareholders are struggling to make a profit and pay back debt. The much-vaunted project could strain Jakarta’s finances, which are already under pressure from President Prabowo Subianto’s spending plans, as the debt comes with state guarantees.
Investment minister Rosan Roeslani has said that Jakarta is seeking a “comprehensive” debt restructuring to prevent “things like the possibility of default and so on in the future”.
Finance minister Purbaya Yudhi Sadewa has ruled out using state funds to rescue the project but Danantara, the newly created sovereign wealth fund that owns and manages all Indonesian state-owned enterprises, has said it is in talks with China to find a solution.
“Our points of negotiations [with China] are concerning loan period, interest rates, and currencies,” Danantara’s chief operating officer Dony Oskaria said last month, adding that a deal was expected to be reached this year.
Both countries bet heavily on the project. It is one of China’s flagship developments under its Belt and Road Initiative, while Widodo championed the railway as part of his sweeping infrastructure drive.
China is one of Indonesia’s top foreign investors, and its support is pivotal to meeting Prabowo’s ambitious growth targets.
But the rail link, which covers a distance of 145km in just 45 minutes, has not proved popular. Stations are far from city centres, and tickets are pricey: the cheapest one-way fare of Rp250,000 ($15) is more than five times that of the slower train. Passenger traffic was about a third of forecasts, lawmaker Darmadi Durianto said in a parliamentary hearing in August.
The Indonesian consortium — which owns 60 per cent of the high-speed railway — reported a loss of nearly Rp4.2tn ($253mn) last year and another Rp1.6tn in the first half of 2025. Chinese SOEs own the other 40 per cent of the project.
“It’s a ticking time bomb,” Bobby Rasyidin, the chief executive of Kereta Api Indonesia, a state-owned railway operator and the largest shareholder in the consortium, said at the parliamentary hearing.
Guo Jiakun, a spokesperson for the Chinese foreign ministry, said that Beijing remained committed to the project. “It needs to be stressed that, when assessing a high-speed railway project, apart from the financial figures and economic indicators, one must also take into consideration its public benefit and comprehensive returns,” he told a press conference.
From the start, many had questioned the need for a high-speed link between two cities so close to each other, said Eko Listiyanto, vice-director of the Institute for Development of Economics and Finance.
The choice of China as an investor over Japan — which had offered an interest rate of 0.1 per cent in return for state guarantees — also raised eyebrows. Indonesia said it had picked China’s offer, with 2 per cent interest, because it did not require a state guarantee.
But as project costs ballooned, Widodo allowed the Indonesian consortium to access state funds and guarantees.
“It’s not China’s fault. We’re the ones who set ourselves up for a trap,” said Eko.
Other BRI projects around the world have also had to be restructured in recent years, with Beijing writing off some debt or providing billions in bailout funds.
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In Indonesia’s case, the most likely outcome is that China will suspend payments for a certain period of time, said Brad Parks, executive director of AidData, a university research lab at William & Mary in Virginia. “And then the question becomes, when is it getting repaid? This is really where a lot of the negotiation happens,” he said.
For now, Jakarta’s involvement offers Beijing reassurance that “the state will be ready to intervene whatever costs appear in the future,” said Trissia Wijaya, a McKenzie Research Fellow at the University of Melbourne.
In the worst-case scenario that Indonesia was unable to meet its payments, China could take ownership of the project and let Indonesian companies serve as operators, she added.
However, “in the current state of the Chinese economy, which is struggling with their own construction and real estate crisis, I do not think it’s easy for them to take over this project”, she said.
Additional contributions from Tina Hu in Beijing
Indonesia’s ‘Whoosh’ high-speed rail project
© Yasuyoshi Chiba/AFP/Getty Images
2008
Proposal to build a high-speed rail from Jakarta in western Java to Surabaya in eastern Java first discussed but project does not proceed
2014
Joko Widodo’s administration decides to start with a Jakarta-Bandung line and invites bids
October 2015
Indonesia picks China over Japan as investment partner
2016
Project groundbreaking
2017
Financing agreement with Beijing signed in presence of Widodo and Xi Jinping
October 2 2023
Widodo inaugurates railway. Commercial operations begin later that month
Late August 2025
Bobby Rasyidin, chief executive of the largest Indonesian shareholder, says project is a “ticking time bomb”
October 2025
Investment minister Rosan Roeslani says Indonesia has begun negotiations with China over debt
