China-backed Indonesian High-Speed Rail Could Take 40 years to Generate Profits | Reuters

 2/8 A Chinese-funded consortium to build Indonesia’s high-speed rail is expected to take 40 years for the investment to make a profit due to plans to relocate the country’s capital.Photo workers standing in front of the high-speed rail exhibition hall.2019 Year 2 month shooting in West Java, Indonesia (2022 Archyde.com / Willy Kurniawan)

Jakarta, Jan 8 (Archyde.com) – A Chinese-funded consortium building Indonesia’s high-speed rail said on tuesday it expected 40 years for the investment to be profitable because of plans to relocate the country’s capital.This is 2 times the initial estimate.

KCIC President Duyana Slamet Riyadi said at a congressional hearing on May 7 that the Belt and Road project, China’s broad economic area initiative, is also facing cost overruns of about $20 billion, with an estimated cost of 113 trillion rupiah ($785,000).

KCIC is a consortium of Chinese and Indonesian companies building a 142-kilometer railway line between the capital Jakarta and Bandung in West Java.

Riyadi said that due to plans to move the capital from Jakarta to Borneo in 2024, the number of passengers on trains connecting the two cities will decrease by 1 million to 3,1215, from the previous forecast of 6,1157.

“Looking at the amount of investment, the number of passengers and ticket prices, it is very difficult to follow the previous feasibility study (feasibility study), which assumed that we would get an investment return within 20 years,” he said, noting that under the ticket price proposal of 15 million to 35 million rupiah, it will be 40 years before we reach the breakeven point.

The president explained to lawmakers that KCIC was trying to keep costs down, but that additional costs were needed due to further land development, higher worker salaries and higher raw materials.

According to KCIC data, the construction progress rate at the end of 21 years has reached 79.9%.Commissioning of some of the railway lines will begin by the end of 22 years, and the project will be completed by 23 years 6 months.

KCIC is owned by Indonesian state・owned companies such as Wijaya Kalya and KAI, with 60% of the remaining shares held by Chinese companies.

The project, funded by China’s State Development Bank, was commissioned by KCIC in 15 years and started in 18 years, but in addition to delays due to land ownership disputes, the impact on the environment and others has been questioned.In the early days of the new coronavirus outbreak, construction was delayed due to labor shortages.

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