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Analysis: Jokowi insists on extending Jakarta-Bandung HSR to Surabaya

Jakarta Post - November 7, 2022

Tenggara Strategics, Jakarta – President Joko "Jokowi" Widodo has insisted on proceeding with the Jakarta-Surabaya high-speed railway (HSR) project by extending the Jakarta-Bandung HSR to Surabaya in East Java, likely with the same Chinese investors, despite the financial challenge of completing the Jakarta-Bandung project, which has been bogged down with delays and massive cost overruns.

It was Transportation Minister Budi Karya Sumadi who recently revealed Jokowi's insistence on extending the existing Jakarta-Bandung HSR to Surabaya via Kertajati, Purwokerto, Yogyakarta, Surakarta and Madiun to improve connectivity on Java Island, which contributes more than 55 percent of Indonesia's gross domestic product. The southern extension of the Jakarta-Bandung HSR to Surabaya would cut on-land travel time from Jakarta to Surabaya, which is around 800 kilometers, from between nine and 12 hours now to four hours only.

"Pak President as a visionary leader laid the foundations of the MRT, we are currently safeguarding it. Next, he lay the foundation of the high-speed railway. The plan is for Jakarta-Surabaya," Budi Karya said recently. The Transportation Ministry spokesperson Adita Irawati noted that the Jakarta-Surabaya HSR "had been seriously discussed" by a number of ministries and state institutions led by the Coordinating Maritime Affairs and Investment Ministry.

The discussion of the extension of the Jakarta-Bandung HSR to Surabaya happens at a time when the Jakarta-Bandung HSR is facing various challenges, including a massive cost overrun of US$1.4 billion, that have delayed the projects several times. The Indonesian investors have not yet come to an agreement with Chinese investors over the size of the cost overrun and how to finance it. (See what's more)

The southern extension of the Jakarta-Bandung HSR to Surabaya would likely be given to the same Chinese investors that are currently involved in the Jakarta-Bandung HSR. Our sources from the State-Owned Enterprises (SOE) Ministry and the Coordinating Maritime Affairs and Investment Ministry said last year the Chinese consortium would conduct a feasibility study to extend the Jakarta-Bandung HSR to Surabaya.

President Jokowi's right-hand man Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan revealed last year when he met visiting Chinese Foreign Minister Wang Yi that Jokowi had asked Chinese President Xi Jinping to support Indonesia's proposal to extend the Jakarta-Bandung railway project to Surabaya.

When recently asked again about the involvement of Chinese investors in the Jakarta-Surabaya HSR, Luhut simply said, "Well, we'll see. If we're comfortable with these [investors in the Jakarta-Bandung HSR], why change? We don't want to change wives either."

The government's involvement of Chinese investors in the extension of the Jakarta-Bandung HSR to Surabaya has practically killed the government's talks with Japan over the latter's involvement in building the Jakarta-Surabaya HSR. The government initially offered the Jakarta-Surabaya HSR project to Japan to compensate for Japan's loss during the Jakarta-Bandung HSR tender. But Japan could still be involved in the revitalization of the existing Jakarta-Surabaya northern railway line along the northern coast of Java.

What's more

The Indonesian and Chinese investors in the Jakarta-Bandung HSR are still in different positions over the size of the cost overrun and how to finance it. According to the calculation by the Development Finance Comptroller (BPKP) the total cost of the project now stands at US$7.5 billion, thus a cost offshoot of $1.45 billion from an initial budget of $6 billion. The Chinese investors, however, regard the cost overrun as too big. The unresolved cost overrun could delay further the project.

The Jakarta-Bandung HSR has been delayed several times due to multiple reasons. After its inception in 2016, the $6 billion project was initially expected to be completed in 2019, but it was delayed mainly because of land-acquisition problems. The pandemic caused further delays. Then, a new deadline was set that the project had to be operational in 2022 to coincide with the G20 Summit. But the unresolved cost overrun has further delayed the project. Now, it is expected that the HSR will be fully operational by June 2023.

According to Deputy SOEs Minister Kartika Wirjoatmodjo, the Jakarta-Bandung HSR is 80 percent complete, with all physical construction for the track base of the 142-kilometer railway line from Halim in Jakarta to Tegalluar in Bandung completed and connected. The next task will be track-laying, which will be completed in January 2023. On Nov. 16, the operator, KCIC, will conduct a dynamic test on one section of the Jakarta Bandung HSR which President Jokowi and Chinese President Xi Jinping are expected to witness.

What we've heard

A source in the government informed us that Transportation Minister Budi Karya requested PT Kereta Cepat Indonesia China (KCIC) to exercise caution when performing the testing and commissioning of the Jakarta-Bandung high speed railway (HSR). He made this request not long after the minister received recommendations from the United Kingdom-based consultant, Crossrail.

Several sources said that Crossrail advised the KCIC to extend the testing period of the HSR. "Do not let the testing period be cut for the sake of chasing the target operational date," said one of the sources. According to Crossrail, the testing period was too short and could potentially lead to undiscovered safety risks when the HSR is operational.If Crossrail's recommendation was followed, the operational date for the Jakarta-Bandung HSR would be delayed past the targeted date of June next year. However, a different source close to the KCIC said that the company hired its own consultant to draft a new master schedule. "Crossrail's recommendation is considered old news," said a source in the government.

On the other hand, the Indonesian parties are still trying to negotiate the amount of cost overrun using calculations by the Development Finance Comptroller (BPKP). The government is targeting the issue of the cost overrun to be solved before the end of November this year. Without an agreed amount for the cost overrun, the Chinese parties through the China Development Bank (CDB) is refusing to provide funds for the KCIC. The size of the cost overrun is supposedly also preventing the Indonesian House of Representatives from passing the state capital injection (PMN) that was requested by PT Kereta Api Indonesia (KAI).

Another issue that could potentially delay the operational date of the Jakarta-Bandung HSR is difficulties with the construction of Padalarang station. Although the Chinese consortium agreed to build the Padalarang station, Wijaya Karya is refusing to take part in the construction project. According to Wijaya Karya, the construction time frame is insufficient. It is rumored that they want at least two years for the station's construction, whereas the Chinese consultant said that they should be able to finish the station within six months.

Source: https://www.thejakartapost.com/opinion/2022/11/07/analysis-jokowi-insists-on-extending-jakarta-bandung-hsr-to-surabaya.htm