Jakarta. National Economic Council (DEN) chairman Luhut Binsar Pandjaitan has come to the defense of Indonesia’s $7.3 billion (Rp 121.16 trillion) Jakarta–Bandung high-speed rail project, saying the financially strained venture remains vital public infrastructure despite mounting debt concerns.

“There is no public transportation system in the world that turns a profit,” Luhut, economic adviser to President Prabowo Subianto, said in Jakarta on Thursday. “It always involves government subsidies, but those subsidies must be properly measured.”

The flagship project, known as Whoosh, has been under renewed scrutiny as state railway operator Kereta Api Indonesia (KAI) struggles with losses from the joint venture with China. Luhut said he had coordinated with Rosan Roeslani, CEO of sovereign wealth fund Danantara, to manage the debt in stages. “I’ve spoken with Mr. Rosan so we can handle this together. We will settle it step by step,” he said.

Critics, however, argue the project’s financial woes stem from poor decision-making during former President Joko "Jokowi" Widodo’s administration. Former senior minister Mahfud MD in his official YouTube channel, said the project was “forced” through despite earlier warnings, adding that Indonesia abandoned Japan’s initial low-interest offer of 0.1 percent for China’s 2 percent proposal, which later rose to 3.4 percent due to cost overruns.

Newly-appointed Finance Minister Purbaya Yudhi Sadewa has asked Danantara to allocate Rp 2 trillion annually to help service the debt, which he said generates about Rp 2 trillion in interest costs each year, higher than the project’s estimated Rp 1.5 trillion in annual revenue. “The government will not spend a dime to clear the China loan,” Purbaya said, insisting Danantara’s Rp 80 trillion annual dividend stream is sufficient to cover repayments.

Indonesia financed 75 percent of the project through a China Development Bank loan, with a fixed interest rate of 2 percent over 40 years. Pandemic delays and land disputes pushed total costs up by $1.2 billion, effectively raising the rate to 3.4 percent.

The Kereta Cepat Indonesia China (KCIC) consortium --led by Indonesian state-owned firms and Beijing Yawan HSR-- launched commercial operations in 2023. Despite carrying 20,000–30,000 passengers daily, KCIC remains unprofitable, reporting a Rp 1.6 trillion loss in the first half of 2025.

Jakarta is now in talks with Beijing to restructure the project’s Chinese loan, as financial strains from Whoosh test the limits of Indonesia’s infrastructure ambitions.