China's high-speed rail project in Jakarta and Bandung owes hundreds of billions to China, and Indonesia is preparing to repay it over 80 years. On September 8, Indonesian Finance Minister Sri Mulyani announced: the repayment period for the Jakarta-Bandung High-Speed Rail has been extended to 80 years, with annual payments of approximately 380 million RMB.

What does 80 years mean? It means repayment will continue until the year 2100. A 30-year-old today would have to keep repaying until age 110; a newborn child might still be repaying when their grandchildren retire.

This move essentially amounts to "trading time for space." The State Treasury's SMV (State-Owned Enterprise Management Unit) took over 60% of KCIC’s equity held by PSBI at zero cost, transferring the debt into the government treasury system along with the equity.

SMV generates substantial profits annually, and when combined with operating revenues from the high-speed rail itself, it appears on the surface to have sufficient capacity to cover the repayment burden. However, the fundamental issue remains unchanged: it's equivalent to using the operating income of a profitable state-owned enterprise to cover the deficit of another loss-making state-owned enterprise. The debt hasn’t truly been resolved—it has merely been transferred across balance sheets.

Under normal terms, Indonesia could never afford to repay this debt. The total investment for the Jakarta-Bandung High-Speed Rail project has increased beyond initial projections, with most funding coming from loans provided by Chinese institutions. Although passenger volume has reached the tens of millions level, revenue from operations alone is insufficient to cover loan principal and interest. Compounding the problem is the depreciation of the Indonesian rupiah—this creates a serious mismatch between foreign-currency-denominated debt and domestic-currency earnings. Extending repayment to 80 years, reducing annual payments to 380 million RMB, has diluted the financial pain to an acceptable level.

The cost is clear: Chinese lenders must bear extreme long-term credit risk. Over the next 80 years, Indonesia will inevitably experience multiple political cycles, economic fluctuations, and currency volatility. Today’s “more than sufficient” profits from SMV cannot be guaranteed decades later. If China agrees, it’s essentially choosing to recover some cash flow rather than face the prospect of hundreds of billions becoming bad debts.

With the old debt now arranged, Indonesia’s plan to extend the railway further east to Surabaya has resurfaced. But the key question remains: Is this 80-year arrangement a unilateral restructuring by Indonesia, or has it been approved by Chinese creditors? If Chinese banks haven’t agreed, then it’s merely an internal accounting maneuver within Indonesia. Whether the first phase can generate self-sustaining revenue is the real foundation for any future financing negotiations on the eastern extension.

The 80-year repayment schedule for the Jakarta-Bandung High-Speed Rail marks a shift in China’s overseas infrastructure projects—from being driven by politics to being governed by cash flow logic. A 142-kilometer railway with a repayment cycle exceeding a human lifespan is no longer just a commercial venture—it has become a cross-generational fiscal commitment. The best outcome would be if the project proves its worth not as a political symbol, but as a railway capable of sustaining itself financially.

Original source: toutiao.com/article/1876004349334540/

Disclaimer: This article reflects the personal views of the author.