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Ministry pitches Bandung, Nusantara urban railway to Chinese investors

Jakarta Post - June 13, 2024

Ruth Dea Juwita, Jakarta – The government is courting Chinese investment in a bid to ramp up development of the country's railway sector, touting three major railway projects at a rail expo in Shanghai, China, last week.

The three were an urban railway in Bandung, West Java, an airport line in the future capital city of Nusantara and an urban railway connecting Nusantara and neighboring cities.

The Transportation Ministry Railways Director General Risal Wasal said these projects were part of the ministry's strategic plans for 2024-2029, making them highly attractive to investors.

"To achieve our targets, we are opening opportunities for you to help maximize the development of Indonesia's railway sector, including these three high-potential economic projects," Risal said in a statement on Monday.

"This is a good opportunity for us to learn and develop the Indonesian railway sector so that it can become a new force built on railways," he added.

The Bandung urban railway will be positioned as a key strategic project for foreign investment, according to Risal, aiming to accommodate the mobility connecting Indonesia's first high-speed rail link Whoosh with metropolitan economic hubs in the West Java capital.

This Bandung railway is projected to have an investment return rate (IRR) of 11.9 percent and the government will support it with a viability gap fund (VGF) covering 49 percent of the costs.

"With such potential, we invite you to participate in the Bandung Urban Railway project through a public-private partnership (PPP) scheme with a concession period of up to 30 years," Risal explained.

The urban railway project in the country's planned capital city Nusantara would pass through key economic hubs of East Kalimantan, Risal emphasized, potentially spurring growth across the region.

Meanwhile, the line connected to Sepinggan Airport would help slash travel times between the airport and Nusantara's city center to a mere 30 minutes from over an hour by roads for the 46.04-kilometer distance, serving an estimated 5.2 million passengers annually by 2030.

The government pledged to support land acquisition and provide a VGF covering 49 percent of the total investment.

The government brought some state-owned enterprises (SOEs) to work on these initiatives, including state-owned construction firms PT Adhi Karya and PT Wijaya Karya Beton as well as PT Kereta Cepat Indonesia China (KCIC), the sino-Indonesia consortium responsible for Whoosh, and other state-majority owned railway companies like PT Kereta Commuter Indonesia, PT Celebes Railway Indonesia and PT Len Railway Systems.

China is Indonesia's second-largest source of foreign direct investment (FDI), after Singapore. According to Statistics Indonesia (BPS), China has also become the country's largest trading partner, contributing the most trade value in both exports and imports.

Source: https://asianews.network/ministry-pitches-bandung-nusantara-urban-railway-to-chinese-investors