Jakarta. Sovereign wealth fund Danantara said Wednesday that Indonesia had begun official talks with China for a debt restructuring of the multi-billion-dollar high-speed train megaproject. 

In October 2023, Indonesia launched Southeast Asia’s first high-speed train, also known as the Whoosh, which links Jakarta and the West Javan capital of Bandung. The $7.3 billion project mainly relied on Chinese loans, but Indonesia is now struggling to return the money it had borrowed. Danantara’s chief executive officer Rosan Roeslani admitted that Jakarta had been in talks with Beijing to avoid defaulting on its debts.

“Yes, the negotiations with the Chinese government are ongoing,” Rosan told the press on the sidelines of the 2025 Investor Daily Summit in Jakarta. 

Rosan chose to stay tight-lipped on the details, saying that the fund will make an announcement once a deal is struck. However, he said that Indonesia would avoid any schemes that could lead to a similar problem in the future. 

“We don’t want the kind of debt restructuring that might cause problems later on, but we wish for something that is more comprehensive, a reform. So once we restructure the debt, we will not face these kinds of problems, including the risks of defaulting.” 

Rosan alluded that the government would also be extra careful when extending the high-speed train to East Java’s Surabaya. 

“The extension is Chief Infrastructure Minister Agus Harimurti Yudhoyono’s domain. But the bottom line is, if we do proceed with the expansion to Surabaya, the [financing] structure must be sustainable,” Rosan said.

The rail project has cut Jakarta-Bandung travel time from 3 hours by car to just 45 minutes. The government-owned China Development Bank covered 75 percent of the entire bill. Media reports showed that China had set a 2 percent annual interest rate on the principal. Pandemic-related movement restrictions and land acquisition trouble, however, led to a $1.2 billion budget overrun. China is charging a 3.4 percent annual interest rate for the overrun costs.

Operating the rail is KCIC, a joint venture of Indonesian and Chinese state-run enterprise consortia. Jakarta’s side Pilar Sinergi BUMN Indonesia (PSBI) owns 60 percent of KCIC’s stake, while the rest of the shares go to Beijing Yawan HSR. Railway operator Kereta Api Indonesia holds the majority stake in PSBI at 58.53 percent. Followed by construction firm Wijaya Karya (33.36 percent), tollway operator Jasa Marga (7.08 percent), and plantation company Perkebunan I (1.03 percent). KCIC took care of 25 percent of the construction costs using its own funds.

Whoosh has put Kereta Api Indonesia, also known as KAI, under financial stress. In 2024, PSBI recorded nearly Rp 4.2 trillion ($253.1 million) in losses, about Rp 2.23 trillion of which had to be shouldered by KAI, reports showed. KAI’s boss Bobby Rasyidin told the Indonesian lawmakers back in August that the Whoosh project was a financial “time bomb”, while adding that his company would try to discuss the possible solutions with Danantara. All state-run enterprises are now under the sovereign fund.

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