Jakarta. President Prabowo Subianto said Tuesday that he would take responsibility for the mounting Chinese debt that had derailed the Jakarta-Bandung high-speed train.

According to Prabowo’s estimates, Indonesia has to pay Rp 1.2 trillion ($71.8 million) annually to Beijing for the multibillion-dollar loan that the country had taken out to build the rail line better known as Whoosh. 

The retired army general even assured the state railway operator Kereta Api Indonesia (KAI) -- the biggest bearer of the debt -- “not to worry”.

“I have studied the issue, and there is no problem here. I will take responsibility for Whoosh, everything related to it,” Prabowo said in a rare comment on the debt crisis that had been making international headlines.

Prabowo claimed that Indonesia had enough cash at its disposal to settle the debt, mainly thanks to budget austerity measures and corruption prevention.

"That's why we must not give any room for corruptors. This way, we will have an abundance of cash," he explained.

Prabowo boasted how Whoosh had significantly reduced traffic congestion, pollution, and travel time. He said that Whoosh not only became a "symbol" of Indonesia-China ties, but could also ignite some technology transfers.

The sovereign wealth fund Danantara has floated two alternatives to deal with the debt problem, one being a possible equity injection. The investment agency considers handing over the bullet train’s infrastructure to the government.

Danantara has repeatedly insisted that the fund is still weighing in on the best possible option. Its chief executive officer Rosan Roeslani aims to make the final decision by the end of the year. Danantara has also entered talks with China about restructuring the debt.

Finance Minister Purbaya Yudhi Sadewa has scrapped the possibility of tapping the state budget to repay the loans, citing that Danantara has enough dividends to settle the debt. 

The government-run China Development Bank had lent some money to cover 75 percent of the $7.3 billion Whoosh costs. KCIC, the Chinese-Indonesian joint venture that spearheaded the project, took care of the remaining 25 percent of the bill. Pandemic-related delays, coupled with land acquisition troubles, caused the initial price tag to swell by $1.2 billion.

China has slapped a 2 percent annual interest rate on the principal. The interest rates soar to 3.4 percent per annum on the cost overruns. 

KAI is bearing the brunt of the financial stress, being the majority shareholder in Pilar Sinergi BUMN Indonesia (PSBI). This is a local consortium of four state enterprises that holds a 60 percent stake within the KCIC. Like all other state-owned enterprises, KAI is now under Danantara’s command.

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