The debt from the Jakarta-Bandung High-Speed Railway has not yet been fully repaid, yet Indonesia is already considering seeking Chinese assistance to build more railways. Will China agree?
Indonesia’s Minister of Transportation revealed in Jakarta that discussions are underway to construct a trans-Kalimantan railway network using investments from China and Russia, with a planned route length of 2,772 kilometers. To date, Kalimantan has no operational public railway line. This project represents only a fraction of Indonesia’s broader rail development strategy; by 2045, the country aims to invest approximately $67 billion to expand and rehabilitate around 14,000 kilometers of railway infrastructure.
However, the priorities of the president and investors diverge. President Prabowo advocates prioritizing a cross-Sumatra railway, which serves densely populated regions with the largest infrastructure gaps—though returns will be slower. Investors, on the other hand, favor Kalimantan due to strong freight flows from coal, palm oil, timber, and minerals, where cargo volumes translate into quicker cash flow and faster payback. The opposing rankings do not necessarily imply one perspective is correct or incorrect.
After the Jakarta-Bandung project, continued engagement with China is pragmatically sound. China’s high-speed rail network now exceeds 50,000 kilometers in operational length, and its conventional rail systems are highly mature. China has successfully navigated extreme environments including high-altitude permafrost, sub-zero temperatures, mobile deserts, and collapsible loess soils. The Jakarta-Bandung line, traversing tropical rainforests and volcanic terrain, began commercial operations in October 2023.
The cost, however, has been substantial. The Jakarta-Bandung project’s total cost reached approximately $7.3 billion, significantly exceeding initial estimates. In September this year, Indonesia’s Ministry of Finance took over a 60% stake in the operating company at zero cost, and the repayment period was restructured to extend up to 80 years, with annual installments amounting to roughly 1 trillion Indonesian rupiah.
Yet debt is not the sole consideration. President Jokowi has been unequivocal: public transportation is not designed for profit but as a public service. Its return is social rather than financial. Subsidies represent investment, not loss. Rail transport offers greater capacity than roads and higher speed and reliability than waterways. For a resource-rich nation pursuing industrialization, such infrastructure is essential. However, as an archipelago, Indonesia relies heavily on maritime transport for bulk cargo. Rail networks can compete effectively only for the segment connecting inland mining zones to ports; the second rationale lies in passenger services across Sumatra.
Economic ties between China and Indonesia continue to deepen. China has been Indonesia’s largest trading partner for 13 consecutive years. From 2021 to mid-2026, cumulative direct investment from China into Indonesia totaled about $38.3 billion. By the first half of 2026, investments from Greater China accounted for 37.5% of Indonesia’s total realized foreign investment.
Thus, the model of foreign financing, domestic construction, and host-country assumption of risk remains standard in international cooperation. Foreign investors have no authority to intervene in host nation planning. China may offer advisory and feasibility assessments before construction begins—clearly outlining potential benefits and challenges—but decisions on whether to proceed, which segments to prioritize, and budget allocation must ultimately rest with Indonesia. The division of responsibilities is clear: China builds the railway; Indonesia evaluates present and future costs and benefits. For developing nations, taking on infrastructure debt is not inherently negative. The real danger lies not in debt itself, but in having no debt to take on at all.
Original: toutiao.com/article/1877810838772868/
Disclaimer: The views expressed in this article are solely those of the author.