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Resty Woro Yuniar

Indonesia is pushing back against calls to tap the state budget to cover mounting debt from its China-backed high-speed railway, while Beijing has signalled it is open to repayment restructuring talks to ensure the line remains operational.
The dispute over who should shoulder the debt highlights deeper concerns about the project’s long-term viability, the role of Indonesia’s sovereign wealth fund and whether the current financing model risks setting a troubling precedent for future infrastructure deals, according to analysts.
The US$7.27 billion Jakarta–Bandung railway – known as “Whoosh” – has come under renewed scrutiny after a state-owned enterprise (SOE) involved in the project described the debt burden as a “ticking time bomb” in August.
Finance Minister Purbaya Yudhi Sadewa said that he would not pay the debt using the state budget and insisted that Danantara, the wealth fund which controls the operations and dividends of roughly 1,000 state firms in Indonesia, should be responsible for the debt instead.
“Whoosh is already managed by Danantara. Danantara has already taken over 80 trillion rupiah (US$4.8 billion) in dividends from state-owned enterprises. They should just manage it from there,” Purbaya told reporters on October 13.
“Using the state budget [to pay Whoosh’s debt] is a bit ridiculous. All the SOEs’ profits go to Danantara, but the burden comes our way. If Danantara takes the dividends from SOEs, they should take everything, including the debt burden.”
According to Purbaya, Indonesia’s annual repayment for the debt is two trillion rupiah (US$120.1 million).

Meanwhile, Danantara’s chief executive Rosan Roeslani said that he was “thoroughly evaluating” all the options to resolve Whoosh’s debt issue.
Donny Oskaria, Danantara’s chief operating officer, previously said that two options being considered were boosting the Indonesian consortium’s equity in Whoosh and a national takeover of the railway, similar to the ownership model of railways as state assets in other countries.
On Monday, Guo Jiakun, Chinese foreign ministry spokesman, said that China “stands ready” to help Indonesia ensure the “high-quality operation” of Whoosh, which is Southeast Asia’s first high-speed train.
“It needs to be stressed that, when assessing a high-speed railway project, apart from the financial figures and economic indicators, one must also take into consideration its public benefit and comprehensive returns,” Guo said.
Among the public benefits is “creating large amounts of jobs for the local people and boosting economic growth along the line”, according to Guo.
The debate stoked by the debt has driven some high-ranking officials in former president Joko Widodo’s administration to defend the US$7.27 billion project, which was launched in 2023 during his term, including Luhut Pandjaitan, who was Widodo’s top minister tasked with increasing Chinese investments in Indonesia.

“From the beginning of the work, I found the [high-speed rail] project to be rotten. Now we are trying to improve the finances. We conducted an audit together with the Financial and Development Supervisory Agency, then we negotiated [the debt restructuring] with China,” Luhut said on October 16.
Luhut also dismissed the accusation that Indonesia had fallen into China’s debt trap by building Whoosh, which he saw as an important infrastructure to advance the country’s public transport network.
“My advice is, if you don’t understand the data, don’t comment,” he said.
Who will pay the debt?
Analysts are divided over who should ultimately bear the debt burden.
Eddy Junarsin, a lecturer in commerce, finance and investment at Gadjah Mada University, agreed that Danantara should shoulder the debt burden from Whoosh, given its key responsibility of “making decisions regarding investment, funding, dividends and other corporate actions”.
“This naturally includes [state-firms’] interest payments and debt principal repayments. The Ministry of Finance only needs to provide a reference, a signal that it fully supports Danantara’s plan and is ready to assist should any liquidity issues arise,” Eddy told This Week in Asia.
Andry Satrio Nugroho, trade and investment researcher at the Institute for Development of Economic and Finance (Indef), however, said that Whoosh’s debt should be paid using the state budget.
“Historically, it’s very difficult to build a high-speed rail system under a business-to-business deal, instead of government-to-government. State funds must be allocated for this. If the debt burden is paid by Danantara, this will be a [disincentive] for other SOEs. They will give their dividends to Danantara, who will use it to cover Whoosh debt instead of giving it to the SOEs with good performance,” Andry said.

Anthony Budiawan, managing director of the think tank Political Economy and Policy Studies, warned that the government should gain approval from the House of Representatives if it were to use the state budget to pay the debt.
Whoosh is operated by Kereta Cepat Indonesia China (KCIC), a joint venture of Indonesian and Chinese consortiums of state-owned firms. Indonesia’s consortium, Pilar Sinergi BUMN Indonesia (PSBI), owns 60 per cent of KCIC’s stocks, while the rest is owned by the Chinese.
Three-quarters of Whoosh’s initial budget of US$6.02 billion was financed by a loan from China Development Bank, with an annual interest rate of two per cent, while KCIC funded the rest. The bank also provided a loan for the project’s cost overrun of US$1.2 billion, with an interest rate of 3.4 per cent.
Last year, PSBI recorded a loss of 4.19 trillion rupiah (US$251.8 million), while the loss in the first six months of this year reached 1.625 trillion rupiah. The loss was mainly due to lacklustre ticket sales, with data from the statistics agency showing that Whoosh sold 6.06 million tickets last year, far below the government’s annual target of 31 million.
Andry of Indef argued that Whoosh could be beneficial for the country if it were expanded to Surabaya, a major city in East Java with business and commerce activities similar to those in Jakarta.
“I agree that Whoosh does benefit the public, but I hope this train is expanded to connect two business cities, Jakarta and Surabaya. This would increase economic growth in the two cities and be a time-saving option for a lot of passengers,” Andry said.


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A building housing Indonesian sovereign wealth fund Danantara in Jakarta. The fund is evaluating various options for repayment of the Whoosh high-speed railway’s debts. Photo: AFP

Indonesian President Joko Widodo attends the launch of the Jakarta-Bandung high-speed railway known as Whoosh in Jakarta on October 2, 2023. Photo: Xinhua

Passengers on board the Jakarta-Bandung high-speed railway in Indonesia. The railway’s ridership has been below the Indonesian government’s target. Photo: Xinhua

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A train of the Jakarta-Bandung high-speed railway, locally known as Whoosh, leaving a station in Bandung in May. Photo: Xinhua

Passengers chat in a train carriage of the Jakarta-Bandung high-speed railway, locally known as Whoosh. Ticket sales for the service have been lacklustre due to cheaper alternatives, analysts say. Photo: Xinhua

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Jakarta says it will not use the state budget to pay the debts, insisting that wealth fund Danantara should bear repayment responsibility


Jakarta says it will not use the state budget to pay the debts, insisting that wealth fund Danantara should bear repayment responsibility.


Indonesian high-speed railway’s debts spark debate over who should pay the bill

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Jakarta says it will not use the state budget to pay the debts, insisting that wealth fund Danantara should bear repayment responsibility

Jakarta says it will not use the state budget to pay the debts, insisting that wealth fund Danantara should bear repayment responsibility