Jakarta. Indonesia is set to make the final decision on the solution to the country's hefty train debt to China by the end of 2025, according to the sovereign wealth fund Danantaraon Friday.

The fund is currently exploring the best possible option to settle the Chinese loans that Indonesia had taken out to construct the Jakarta-Bandung bullet train. The project had a price tag of $7.3 billion, and Indonesia mainly relied on Chinese loans to cover the costs. Indonesia is now facing financial stress as it must pay Rp 2 trillion ($120.6 million) in interest each year.

While Danantara has floated some ideas, including a possible equity injection, the fund has yet to make a decision. Danantara’s chief executive officer, Rosan Roeslani, refused to disclose the details of how the review went, only repeating that the fund was still searching for the most feasible way out of the debt.

“Once the review is done, we will present it to all relevant ministries. … We are aiming for a comprehensive solution that does not lead to future problems,” Rosan told the press in Jakarta.

Asked whether Danantara would make the final decision before the year-end, Rosan replied: “Yes, yes.”

Indonesia has entered talks with the Chinese government on the debt restructuring. Rosan, too, admitted that he was aware of how the bullet train project was part of Chinese President Xi Jinping’s Belt and Road Initiative (BRI), hence its importance to negotiate with Beijing. The BRI initiative saw China making colossal infrastructure investments worldwide in a bid to grow its international influence.

Operating the rail is the KCIC joint venture, whose 60 percent of the stakes are owned by PSBI, a consortium of four Indonesian state-run firms, while the remaining 40 percent is held by Chinese businesses. Railway operator Kereta Api Indonesia (KAI) is the majority shareholder within PSBI with a 58.53 percent stake, making it the biggest bearer of the losses. KAI’s boss Bobby Rasyidin had even called the project a ticking financial “time bomb”.

“The review not only deals with the financial problems. We want to make sure that whatever we decide on goes well and brings a positive impact to KAI. If the company is affected, it will take a toll on the train services,” Rosan said.

Aside from equity increases, Danantara is mulling handing over parts of the bullet train's infrastructure to the government. Finance Minister Purbaya Yudhi Sadewa has his heart set on not letting the debt be covered by the state budget, citing that Danantara’s multi-billion annual dividends were enough to pay off the debt, including its interests.

President Prabowo Subianto is expected to ink a presidential decree on the debt, according to his senior economic advisor Luhut Binsar Pandjaitan, without mentioning the timeframe. The former investment tsar claimed he had spoken with Rosan on this presidential decree.

“In this world, there is no public transport that makes a profit. There are always government subsidies that help sustain it, but of course, well-measured subsidies,” Luhut explained in Jakarta on Thursday.

Indonesia had borrowed money from the government-owned China Development Bank to cover 75 percent of the total costs to build the rail, popularly known as Whoosh. The principal came with a 2 percent fixed interest rate per annum over the course of 40 years. Pandemic-related movement restrictions and land acquisition trouble led to a $1.2 billion cost overrun, which came at a 3.4 percent annual interest rate. KCIC covered 25 percent of the construction costs using its own funds.

Whoosh has served over 12 million passengers since its commercial launch in mid-October 2023.

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