KUALA LUMPUR (Nov 5): Indonesia’s high-speed train operator is struggling with debts and the government will step in with financial support, the Straits Times reported on Wednesday.
The consortium operating the service, Kereta Cepat Indonesia China, is currently in advanced talks to restructure around 85 trillion rupiah (RM21 billion) in debts with China Development Bank amid interest payment burdens, the Singapore newspaper said.
“Basically, there is no problem” for Indonesia to help with the repayments, President Prabowo Subianto was quoted as saying by Straits Times. “We would pay maybe around 1.2 trillion rupiah per year [in interest expense].”
The 142km railway connecting the capital Jakarta and Bandung, the country’s third-largest city, began operations in October 2023. Whoosh sold a little over six million tickets last year, according to Indonesia’s statistics agency, far below the government’s annual target of 31 million.
Indonesia shelled out more than US$7 billion (RM29.38 billion) on the project after suffering a US$1 billion cost overruns. China lent Indonesia about 75% of the project’s cost at an interest rate of 2% through China Development Bank. Interest rate on the cost overruns, meanwhile, run up to 3.4%.
“Consider the benefits — reduced traffic jams, lower pollution, faster [inter-city] travels,” the Straits Times quoted Prabowo as saying in justifying state support. “All these have to be taken into account.”
The remarks come at a time when Probowo’s own Cabinet colleagues are pushing back against tapping state coffers to support Whoosh’s finances.
South China Morning Post reported last month that Finance Minister Purbaya Yudhi Sadewa has argued that Indonesia’s sovereign wealth fund Danantara, which controls roughly 1,000 state-owned enterprises (SOEs), should be responsible for the debt instead.
“Using the state budget [to pay Whoosh’s debt] is a bit ridiculous,” Purbaya was quoted as saying. “All the SOEs’ profits go to Danantara, but the burden comes our way. If Danantara takes the dividends from SOEs, they should take everything, including the debt burden.”