Tenggara Strategics – The plan to extend the Whoosh! high-speed rail (HSR) to Surabaya is entering its early stages. The route extension, which currently only connects Jakarta and Bandung, is necessary to increase the high-speed public transport utilization from its current state. However, there are concerns regarding the possible downsides from continued partnership with China to develop the project, as well as calls for a more thorough feasibility study on the extension plan.
China's National Development and Reform Commission (NDRC) has agreed with Indonesia to start a joint study to appraise the cost and commercial feasibility of Whoosh! extention to Surabaya. State-Owned Enterprises (SOEs) Deputy Minister Kartika Wirjoatmodjo said the funding and cooperation schemes for the project's funding have not yet been agreed upon, which contradicted Maritime and Investment Affairs Coordinating Minister Luhut Binsar Pandjaitan who said that a loan with favorable terms has been attained.
Indonesia has aimed to eventually extend Whoosh! to Surabaya since they began developing the Jakarta-Bandung HSR. Transportation Minister Budi Karya Sumadi said the extended HSR line is predicted to cut down train travel time from Jakarta to Surabaya by five hours to only four hours. The Whoosh! Jakarta to Surabaya line will go through southern part of Java, namely from Bandung to Kertajati, Purwokerto, Yogyakarta, Solo, Madiun, and finally Surabaya.
Previously, Universitas Indonesia Transportation Professor Sutanto Soehodho said a route through the northern part of Java is more feasible due to the flat terrain, while the south corridor mountainous, costing more to build a railway. However, the southern corridor goes through popular cities such as Yogyakarta and Solo, making it potentially more profitable.
Experts have expressed the urgency of extending the HSR's line to Surabaya because the current 142-kilometer (km) route poses a challenge to the public transport's efforts in achieving profitability, with it having a relatively short distance compared to other HSRs that tend to run over 400 km.
The cost and feasibility study for the extension of Whoosh! involves China Railway, which holds a 40 percent stake in the Sino-Indonesian consortium KCIC, with the remaining shares held by Indonesian SOEs led by Kereta Api Indonesia (KAI).
A thorough execution of the study for extending Whoosh! to 690 km is of particular concern after the Jakarta-Bandung line resulted in a cost overrun of US$7.5 billion (about Rp118.8 trillion), or around Rp834.9 per km, from its projected cost of US$5.5 billion (about Rp87.1 trillion). The cost overrun caused the need for assistance from the state budget. There are concerns that the extension could lead to a bigger cost overrun since the extension costs more, forecasted to be at least Rp576 trillion based on the Jakarta-Bandung line's cost per km.
Indonesia may need another loan from China for the massive amount of capital needed to extend the HSR. Center of Economic and Law Studies (CELIOS) director Bhima Yudhistira noted that the 3.7 to 3.8 percent interest rate of the Chinese loan for the Jakarta-Bandung line was much higher than the 0.1 percent interest rate once offered by Japan, cautioning that similarly high interest rate for the extension to Surabaya could threaten Indonesia into a "debt trap", and the extension would overly burden SOEs involved if it is carried out like the way it did with the Jakarta-Bandung HSR.
The promotional ticket price of Rp150,000 per ticket for Whoosh has positively affected its public transport occupancy rate (PTO). As of Nov. 1, there were 165,000 Whoosh! tickets sold for trips that spans Oct. 17 to Nov. 4, with the average PTO rate of each trip ranging from 85 to 99 percent and the number of passengers peaking at 14,200 per day. But Indonesian Transportation Society (MTI) railway forum head Aditya Dwi Laksana expects the HSR's PTO rate to fall as public enthusiasm wanes and standard ticket price takes effect.
Improvements on the current state of feeder transport services to Whoosh! is also needed. Transportation Study Institute (INSTRAN) executive director noted that the state of inter-transport service integration would decide the HSR's PTO rate after its promotional period ends. The Jakarta Light Rail Transit which fed into Whoosh! drew complaints after its delays reached up to 40 minutes. Due to the delay issue, KAI halved the time between routine checkups for the HSR's feeder train to Padalarang station from previously every after 5,000 km travel to every after 3,500 km.
What we've heard
Some sources within the government mention that the plan to extend the high-speed train from Bandung to Surabaya is the result of a meeting between President Jokowi and Xi Jinping in China last October. Since that meeting, China Railway, in collaboration with KAI, immediately conducted a feasibility study. The order to prepare the feasibility study came directly from Jokowi. This project would be part of the Belt and Road Initiative.
Sources within the government say that this project is not actually new. The plan for a Jakarta-Surabaya train project has existed since the era of President Susilo Bambang Yudhoyono. The initial concept began in 2008 as semi-high-speed train. At that time, Bappenas partnered with JICA for planning and feasibility studies. The semi-high-speed train project in the northern corridor was even initially included in the national strategic project list, it wasn't until this year that it was officially removed from the list.
JICA also conducted a feasibility study for the Jakarta-Bandung high-speed train project. However, the government chose to partner with China in the end to construct the Jakarta-Bandung high-speed train project.
To alleviate Japan's disappointment, the government invited the country to continue the project from Bandung to Surabaya. However, Japan declined the offer, as they found the project concept unclear.
Maintaining their stance from then, Japan does not want to be involved in this project, despite the fact that they had conducted a feasibility study for it. Furthermore, Japan also wanted this project to be funded through loans.
Japan declined to join the Chinese consortium as early as 2015. At the time, Indonesia's offer to Japan to participate in the Bandung-Surabaya project did not specify the role Japan would play, such as whether they would join to jointly construct the high-speed train infrastructure or to become the operator once the train is in operation.
Unlike the JICA feasibility study, which planned for a semi-fast train from Jakarta to Surabaya through the northern corridor of Java, the newly coined high-speed train project from Bandung to Surabaya is planned to proceed through the southern corridor of Java. According to sources within Bappenas, the route through the northern corridor of Java is cheaper because the government would not need to go through the complexities of land acquisition, especially compared to the southern route. The topography in the northern route is also relatively flat compared to the coastal terrain of south Java.
[This content is provided by Tenggara Strategics in collaboration with The Jakarta Post to serve the latest comprehensive and reliable analysis on Indonesia's political and business landscape.]