Indonesia rail project back on track

The high-speed railway linking Jakarta to Bandung is on the cards once again after years of mismanagement. Indonesia’s investment chief Thomas Lembong is confident that the problems plaguing the project can be fixed.

JAKARTA: Indonesia’s investment chief Thomas Lembong (pic) is optimistic that the Jakarta-Bandung high speed rail project is back on track after years of mismanagement, but the concern over how long it will take to recoup the costs of the joint venture still remains.

“What has plagued the project over the last three years is just mismanagement, plain and simple. We had not even the B team in there. Possibly not even the C team, but the D team,” he said at a Jakarta Foreign Correspondents Club dialogue yesterday.

“It’s not geopolitics or politics or policy or ideology. It’s just good, old-fashioned mismanagement and incompetence,” added Lembong, who has been vocal about his frustrations with the difficulty of getting information from parties involved in the project.

But there has been a shake-up in recent months, with State-owned Enterprises Minister Rini Soemarno putting “more competent” people at the helm of the joint project with China.

“The project has been in difficulty but I’m confident it’s now being fixed,” he said.

The US$6bil high-speed rail project linking the capital Jakarta with textile hub Bandung some 140km away is expected to slash travel time from more than three hours by train to just about 40 minutes.

But it has been dogged by delays and controversy, with critics noting that while the project is funded mainly by a loan from China, Indonesia’s state-owned entreprises will eventually have to bear the cost.

The payback period weighs on Lembong’s mind. The chairman of the Indonesia Investment Coordinating Board, which oversees foreign direct investment, said: “The longerterm concern for me is that, with the price tag of US$6bil (RM25bil) for a short 140km, what is the payback going to be? How long will it take this project to make its money back?”

The business case for the rail currently rests on some “very heroic assumptions”, including the volume of demand for tickets – priced at about 200,000 rupiah (RM58) for a one-way trip, compared to 110,000 rupiah (RM32) for economy class by train.

Another is the amount of real estate profits from the transformation of the Walini tea plantation, which the rail line will pass through, into a new city.

The rail project is part of Beijing’s multi-billion dollar Belt and Road initiative (BRI) to connect China with Asia, Europe and beyond.

While there has been much enthusiasm for the BRI, it has also received its share of criticism.

An S. Rajaratnam School of International Studies commentary noted that some countries see it as a cover for debt-trap diplomacy, through which China traps borrowing countries in unrepayable debts to gain political leverage.

There have been a raft of problems in implementing the projects, said writers Pradumna B. Rana and Ji Xianbai.

And several countries like Pakistan and Malaysia have recently sought to review, renegotiate, cancel or scale down some of their commitments, citing concerns over costs, erosion of sovereignty, and corruption.

But Lembong takes an optimistic view of the BRI, noting that the Chinese leadership has been “open-minded” to criticism, and is taking steps to address problems.

Among other things, China is cracking down on corruption in Belt and Road projects, and looking to make them more sustainable and environmentally friendly, he said.

“For the past year, I’ve been predicting that the Belt and Road will become more open, more inclusive, more transparent, more professionalised, and more collaborative,” he said, adding: “I’m very happy because it’s going in the right direction.”