Indonesia Rail Company Receives US$200mil Capital Boost For China-Backed Project

PT KAI, Indonesia's state-owned railway company, announced on Tuesday (Jan 3) that it has received a financial infusion from the government worth 3.2 trillion rupiah (US$205.33 million) to assist a partnership of Indonesian and Chinese state businesses in completing a high-speed rail project. The capital increase would help to cover some of the escalating costs of constructing a 142-kilometer (88.23-mile) high-speed rail route from Jakarta to the textile hub of Bandung, West Java.

The total project cost was previously estimated at $6 billion, but Jakarta said last year that an extra $1.45 billion was required to reach a June 2023 commercial launch deadline. Companies in the partnership, known as KCIC, were expected to expand their equity involvement, and Indonesia was expected to seek an additional $1 billion loan from the China Development Bank to cover the cost excess. Other issues with the project, which is a component of China's Belt and Road Initiative and was given to KCIC in 2015, include construction delays brought on by the pandemic.

60% of KCIC is under the control of Indonesian state corporations, such as KAI and Wijaya Karya, and the remaining 40% is owned by China Railway Engineering Corporation and other Chinese businesses. According to state news agency Antara, two Chinese workers died last month when a construction train veered off the tracks. Lu Kang, China's ambassador to Indonesia, said the incident did not jeopardise the railway's safety.