Jakarta-Bandung high-speed railway benefits Indonesian economy

The smooth-running Jakarta-Bandung high-speed railway (HSR) project officiated by Indonesian President Joko Widodo this January will improve connectivity and greatly benefit Indonesia's economic growth, Indonesian officials and experts have said.

The construction of the HSR is going just as planned and the company is finalizing the land acquisition process which has reached 82 percent, Hanggoro Budi Wiryawan, president director of the Indonesian-Chinese consortium PT Kereta Cepat Indonesia-China (KCIC), told reporters recently.

All the permissions regarding the construction, operation and environmental protection have been issued by respective ministries, said Bintang Perbowo, president director of the Indonesian state-owned construction firm Wijaya Karya (Wika) under the KCIC.

Perbowo said he is optimistic that the HSR will start operation on schedule as the land acquisition will be 100 percent completed within this year.

The 142.3 km-long project with an investment of 5.1 billion U.S. dollars will connect Jakarta and West Java's capital Bandung in the southeast. With a maximum speed of 250 kmph, the travel time between the two cities will be cut from three hours to less than one hour.

Chinese and Indonesian state-owned enterprises (SOEs), namely China Railway and PT Pilar Sinergi BUMN Indonesia, officially signed the deal to build the mega project in October 2015. According to the deal, Indonesian SOEs will be holding 60 percent of KCIC.

PT Pilar Sinergi BUMN Indonesia consists of four Indonesian SOEs, namely Wika, train operator PT Kereta Api Indonesia, toll operator PT Jasa Marga, and plantation company PT Perkebunan Nusantara VIII.

KCIC was granted a 50-year concession period that will commence on May 31, 2019. The company will bear 25 percent of the project's cost and the remainder will be financed by a loan from China Development Bank after all required land has been acquired. KCIC isn't seeking a financial guarantee from the Indonesian government for the project to proceed.

A director from China Railway International Co. Ltd., the international arm of China railway, denied the report that Jakarta-Bandung HSR was halted or faced any obstacle.

"The project is going on in an orderly fashion, the views that the project is not proceeding as fast as expected are normal because different parties have different understandings and perceptions," said the director, who requested anonymity.

Widodo's administration and he himself fully support the first railway project in Indonesia and even in Southeast Asia.

It is a great project that could benefit local people both in the short and long term as well as improve the country's global competitiveness, Widodo said at the groundbreaking ceremony.

Indonesian SOE Minister Rini Soemarno told Xinhua that the Jakarta-Bandung railway economic zone will promote local economic growth.

"It also acts as a foundation for the bigger project of the Jakarta-Surabaya high speed train which has bigger potential in terms of economic growth," she said.

A possible later extension of the Jakarta-Bandung HSR to Indonesia's second-largest city Surabaya is under discussion in the country. According to the plan, the 730-km Jakarta-Surabaya high-speed train will link up the densely populated corridor from the capital Jakarta to Surabaya on the eastern part of Java island, which suffers greatly from both freight and passenger congestion. 

West Java Governor Ahmad Heryawan told Xinhua that the project connecting Jakarta and Bandung will improve the connectivity between the two cities and increase the investment environment. 

Economic activities, employment and tourism will get a boost, he added.

The Jakarta-Bandung HSR project has great economic benefit for Indonesia in both the short and long run, said Hari G. Soeparto, chairman of the Indonesian Association of Project Management Professionals. 

The project will create 40,000 jobs yearly in the construction period and promote the development of Indonesia's sector of smelting, cement, manufacturing, electronics, services and logistics, Soeparto said. 

In the long term, Soeparto expects that the operation of railways and stations will create more business opportunities.

The local property market and productivity will be spurred, and generally it will promote local economic growth, he added.

As the world's largest archipelago with more than 17,000 islands, Indonesia has a huge demand for infrastructure and inter-island connectivity.

Indonesian experts are welcoming the project, saying it will greatly improve the region's infrastructure and connectivity.

Bambang Suryono, an Indonesian scholar and president of the Jakarta-based Nanyang ASEAN Foundation, told Xinhua that the high cost of mobility of goods and people are the bottleneck of Indonesian development, resulting in logistic costs that account for a quarter of the country's gross domestic product.

The scholar said the project, part of the 21st Century Maritime Silk Road initiative, will boost Indonesia's and ASEAN regional connectivity as well as improve Indonesia's global competitiveness.

Experts also said the Jakarta-Bandung HSR and Jakarta-Surabaya HSR enable Indonesia to obtain modern railway technology transfer from China as well as a boost of bilateral cooperation.

Rene L. Pattiradjawane, an Indonesian expert and founder of the Center for Chinese Studies, said the Jakarta-Bandung HSR project should become a model of strong, comprehensive cooperation between the two nations.

The HSR system marks a revolution in national transportation infrastructure and a path to win-win cooperation, Pattiradjawane said.