The newly appointed head of Indonesia’s state railway operator says that the Jakarta-Bandung high-speed railway project faces mounting financial strain that constitutes a potential “time bomb.”
The $7.3 billion rail line, which links the capital Jakarta to the city of Bandung in West Java, began operations in October 2023. With a maximum speed of 350 kilometers per hour, the train has cut travel time between the two cities from three hours to around 40 minutes. However, the railway – its official name is “Whoosh” – has also created a heavy debt burden for the Indonesian government due to cost overruns and construction delays.
Speaking at a parliamentary hearing with Commission VI on Wednesday, Bobby Rasyidin, the CEO of the railway operator PT Kereta Api Indonesia (KAI), acknowledged that he had only recently discovered the extent of financial and operational problems facing KAI and PT Kereta Cepat Indonesia China (KCIC), the Chinese-Indonesian joint venture that has spearheaded the railway project since its inception in 2015.
“We are confident that within a week, we can fully understand the challenges inside KAI,” he told legislators, as per the Jakarta Post. “We are also studying KCIC’s issues, which, as has been said, indeed resemble a time bomb.”
Bobby was appointed as CEO of KAI on August 12, replacing Didiek Hartantyo, as part of a broader board reshuffle at the railway operator.
The Whoosh project has been enveloped in debt controversies since its inception. The price of the project was initially estimated at $6 billion, but this blew out as the project experienced a series of delays and cost overruns, mostly due to the COVID-19 pandemic and complications involving land acquisition along the proposed line. In February 2023, the Indonesian and Chinese governments agreed on a final cost overrun of 18 trillion rupiah (around $1.2 billion).
Of the initial construction cost, 75 percent was contributed by a $4.5 billion loan from the China Development Bank, while the remaining 25 percent was contributed by KCIC. A further loan has since been taken out to cover the cost overrun, at a higher annual interest rate of 3.4 percent, compared to 2 percent for the initial loan.
While the rail line recorded 2.9 million passengers in the first half of this year, a 10 percent increase on the same period in 2024, revenues have yet to catch up with the significant cost of operating the train line and servicing the existing loans.
As the Jakarta Post explains, KAI has borne the brunt of the financial stress, given that it holds the largest stake (more than 58 percent) of the four Indonesian state-owned firms that make up Pilar Sinergi BUMN Indonesia (PSBI). This local consortium controls 60 percent of KCIC, with the remaining 40 percent held by a consortium of five Chinese state-owned companies.
According to the Post, KCIC reported a Rp 1.6 trillion ($98.3 million) loss in the first half of 2025, of which KAI has been forced to shoulder Rp 951.48 billion ($58.4 million). This marks an improvement on 2024, when PSBI’s total losses amounted to Rp 4.2 trillion ($258 million), of which KAI was forced to absorb Rp 2.23 trillion ($137 million). While these figures are moving in the right direction, Jakarta has already announced its intention to renegotiate more advantageous terms in order to relieve the pressure on the bottom line of KAI and other state-run enterprises.
Earlier this month, Indonesia’s new sovereign fund Danantara announced that it was working on a debt restructuring plan for the China-backed project. As I noted at the time, the project’s symbolic importance in the relations between China and Indonesia “ensures that Indonesia will be able to negotiate a debt restructuring of some kind, but also probably imposes limits on how hard it can afford to push.”
Whatever arrangement is reached by Jakarta and Beijing, Whoosh’s debt trouble highlights the inherent risks involved in infrastructure megaprojects of this kind. According to one recent article, cost overruns have made the rail project the most expensive infrastructure project undertaken under the aegis of China’s Belt and Road Initiative. While academic researchers have convincingly debunked the meme of Chinese “debt-trap diplomacy,” particularly the idea that Beijing purposefully seeks to mire partner countries in debt so that it can extract strategic assets in return for debt relief, this is a reminder that debt still carries considerable fiscal risks.
