Jakarta. The government has no plan to use state funds to repay Indonesia’s high-speed train debt to China, according to State Secretary Prasetyo Hadi. 

Indonesia is putting its thinking cap on to address the multi-billion-dollar debt it has incurred to construct the train, also known as Whoosh, that connects Jakarta and West Java’s Bandung. This $7.3 billion rail mainly relied on Chinese loans and had served 6 million passengers throughout 2024. 

“The government has discussed finding a scheme to find a solution to get out of the financial burden,” Prasetyo told reporters, shortly after a cabinet meeting at President Prabowo Subianto’s residence on Sunday night.

However, Prasetyo admitted that the meeting that evening did not discuss the bullet train’s substantial debt.

“Well, Whoosh has become a transportation mode that has been very helpful for people's activities and travels,” he said.

Despite the debt problem, the government does not budge on its plan to extend the rail to the East Java capital of Surabaya. However, Prasetyo did not disclose the financing details of the expansion. 

“We actually want [Whoosh] to expand, not just connecting Jakarta and Bandung, but we have also thought of Surabaya,” he said.

Finance Minister Purbaya Yudhi Sadewa has shifted the responsibility to the sovereign fund Danantara. Danantara, which now oversees all state-run enterprises, should be capable of settling the project’s debt without drawing on the national budget, according to Purbaya. He also pointed out how Danantara generated around Rp 80 trillion (approximately $4.8 billion) in annual dividends.

“The issue can be resolved through Danantara’s dividends without burdening the state fiscally,” Purbaya said. 

“If the government were to take on the debt, then the dividends should also be managed by the government.”

Danantara had said that it had been in talks with the Chinese government to discuss the debt. The fund’s chief operating officer, Dony Oskaria, had told reporters that it was weighing on some options, including having the government acquire parts of the train’s infrastructure and turn it into a public service entity.

The government-owned China Development Bank covered 75 percent of Whoosh’s entire bill. According to media reports, China had set a 2 percent annual interest rate on the principal. Pandemic-related restrictions and land acquisition trouble triggered a $1.2 billion budget overrun. Beijing has slapped a 3.4 percent yearly interest rate on the money borrowed for the overrun costs. 

Operating the rail is KCIC, a joint venture of Indonesian and Chinese state-run enterprise consortia. On Jakarta’s side, Pilar Sinergi BUMN Indonesia (PSBI) holds 60 percent of KCIC’s shares, while the rest of the stake goes to Beijing Yawan HSR. Railway operator Kereta Api Indonesia is the majority shareholder 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.

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