Indonesia’s High-Speed Rail: Financial Quagmire?

When Indonesia’s first high-speed rail line, the Jakarta–Bandung Whoosh, was inaugurated in October 2023, it was hailed as a triumph of progress and modern engineering. President Joko Widodo (Jokowi) proudly rode the train alongside Chinese officials, marking Indonesia’s arrival in the club of nations with high-speed rail. 

Yet one year later, the celebration has faded into a sobering reckoning. The project, once touted as fully commercial and self-financing, has turned into a financial quagmire. Its mounting debt, sluggish ridership and dependence on Chinese financing have forced the Indonesian government to deploy its newly created sovereign wealth agency, BPI Danantara, to renegotiate the project’s debt with the China Development Bank (CDB).

 

Source: https://en.wikipedia.org 

The Whoosh project’s numbers are stark. Initially budgeted at around US$6.07 billion, total costs ballooned to more than $7.3 billion due to land acquisition delays, technical complications and pandemic-related overruns. The project’s operator, PT Kereta Cepat Indonesia China (KCIC), has reported massive losses, with state-owned shareholders forced to inject capital to keep it running. 

Despite assurances that the project would be funded without sovereign guarantees, the Indonesian government now finds itself indirectly underwriting the costs. BPI Danantara’s intervention is an admission that the line is not commercially viable under its current structure. The agency’s task, renegotiating loan terms and restructuring repayment schedules, is as much about fiscal rescue as it is about face-saving. 

The decision to build the Jakarta–Bandung line, which is only 142 kilometres long, was flawed from the outset. First and foremost, the route is too short to justify the enormous capital outlay. Before Whoosh, travellers could already drive the route in about three hours or take a regular train in a little over that time. The high-speed line cuts travel time to roughly 40 minutes, but once the distance to the remote stations, Halim in Jakarta and Tegalluar near Bandung, is factored in, the actual time saved is minimal, if at all. The ridership potential, confined largely to weekend leisure travellers and upper-middle-class commuters, could never sustain the financial burden of a multibillion-dollar project. The result is a sleek train running at world-class speeds but burdened by unsustainable debt and limited utility. 

A far more logical and transformative project would have been the Jakarta–Surabaya line. Spanning almost 780 kilometres, it connects the country’s main economic artery through Cirebon, Semarang, Solo and Surabaya, cities that collectively account for over 60% of Indonesia’s GDP. A high-speed connection along this corridor would not just shorten travel time from ten hours to under four, it would fundamentally alter Indonesia’s logistics, trade and regional development patterns. It would stimulate new industrial hubs, reduce the cost of goods and integrate the economies of western and eastern Java. In contrast to Whoosh, which serves symbolism more than strategy, a Jakarta–Surabaya line would have real economic impact. 

The government has already indicated plans to proceed with feasibility studies for the Jakarta–Surabaya high-speed project, and this time, it cannot afford to repeat past mistakes. If Indonesia is to regain credibility after the Whoosh fiasco, it must start with a clean slate, free from the shadow of political favouritism and foreign dominance. 

The stakes go beyond economics. The Whoosh crisis has exposed how infrastructure can become an instrument of geopolitical influence. For China, Indonesia’s infrastructure boom under Jokowi has been a showcase of its BRI success in Southeast Asia, a region where the US and Japan have struggled to match Beijing’s scale and speed. 

The Whoosh experience should not be dismissed as an outright failure, but as an expensive lesson in sovereignty and foresight. It has revealed the dangers of political haste and the pitfalls of overreliance on any single foreign partner. Indonesia now stands at a crossroads: it can either repeat the past by rushing into another politically expedient partnership, or it can learn from Whoosh and design a model of infrastructure development that is economically sound, transparent and geopolitically balanced. 

The next chapter of Indonesia’s high-speed dream will determine more than the speed of its trains – it will reveal the pace of its political maturity. If Jakarta can resist the temptation of short-term wins and instead commit to long-term integrity, the Jakarta–Surabaya project could become not only a symbol of progress but a declaration of independence. 

Reference:

Indonesia’s high-speed rail a Belt and Road cautionary tale, Ronny P Sasmita, 4 October 2025, Asia Times