In the second half of 2023, as a key project of China's Belt and Road Initiative, Southeast Asia's first high-speed railway --- the Jakarta-Bandung high-speed railway in Indonesia, will be completed and opened to traffic. As the first high-speed railway in Southeast Asia, the route carrying the expectations of the outside world has always attracted everyone's attention from bidding to construction to opening to traffic. However, many experts say it will take decades for the Jakarta-Bandung high-speed railway to recoup its costs.
The Jakarta-Bandung high-speed railway connects Jakarta, the capital of Indonesia, with the Duhui district of Bandung, with a total length of 142 kilometers and a total of only 4 stops. The high-speed rail costs $7.3 billion and is designed for speeds of 350 kilometers per hour. Before the opening of the high-speed railway, it took more than three hours for people to travel between the two cities. Now it only takes 40 minutes to take the high-speed train.
Indonesia's construction of high-speed rail is not a whim, the country's land is made up of islands, known as the country of ten thousand islands. There are more than 10,000 islands with a population of more than 270 million, most of which are concentrated in Kuawa. The terrain is long and narrow, and the traffic congestion between the cities is just like the high-speed rail connection, although the two cities are only more than 100 kilometers, it takes at least more than 3 hours for cars to pass.
As a result, around 2,008, there was a wave of high-speed rail construction in Indonesia**, and Japan initially hoped to cooperate with Indonesia, and in Indonesia**'s planning, the initial plan was to build a high-speed rail line about 730 kilometers long. However, the Japanese side has proposed the initial construction of a route from Jakarta to Bandung with a distance of only 140 kilometers. This would allow for a significant reduction in investment, and the two cities have significant population sizes. It is easy to create the economic benefits of high-speed rail.
In order to convince Indonesia** to accept its proposal, Japan only offered a concession of $5 billion** and offered an interest rate of 08 of ultra-low loans. Japan considers theirs to be foolproof, well-planned, technologically robust, and with such high-quality financing, Indonesia will not refuse in any case.
However, to the miscalculation of the Japanese side, Indonesia did not think that the high-speed rail would be invested by ** from the beginning, and they hoped that it would be built by enterprises. In other words, Indonesia does not want to use the national budget to build high-speed rail, and the Japanese side finally proposed to contribute 25% of the start-up capital, and the rest of the funds will be provided by Japan as a loan, and Indonesia will be guaranteed. In 2013, China proposed the Belt and Road Initiative, which consists of two major routes, starting from China through Central Asia and ending in Europe. The second is the Maritime Silk Road, which also starts from China and travels by sea to Southeast Asia, South Asia, Middle East and North Africa and Europe. The goal of the Belt and Road Initiative as a whole is to strengthen economic and trade cooperation between China and countries along the route.
As an important station on the Maritime Silk Road, Indonesia believes that the Jakarta-Bandung high-speed rail plan is expected to become the flagship project of the Belt and Road Initiative. So to participate in the competition, at that time the total cost of the Chinese program was about 5.5 billion US dollars, the loan interest rate was about two points, although the figure given by Japan is better, but China is willing to make concessions on the financial premise, Indonesia ** does not need to provide a guaranteed loan, and the overall funding is invited by China Railway International Corporation and Chinese enterprises and Indonesian business consortium to cooperate, to adopt a joint venture B2B model, India and China 64 shares jointly established Indonesia-China high-speed rail *** This joint venture company is responsible for raising a quarter of the down payment. The remainder will be financed by the China Development Bank.
Seeing that ** does not need to pay a penny, and there is no need to provide loan guarantee for subsequent construction. Indonesia was overjoyed and immediately signed a contract with China to hand over all the Jakarta-Bandung high-speed railway to China for construction. The Japanese side is helpless, and can only complain that Indonesia's choice is puzzling, because Indonesia clearly does not want to bear the risk and budget of high-speed rail construction, and Japan, which is conservative and cautious, naturally cannot win against China, which relaxes risk assessment.
Despite the announcement of the partnership, the expensive project has often been hampered, with construction of the high-speed rail initially scheduled to begin in 2016 and open in 2019. However, the final opening time has been delayed all the way to 2023 for many reasons: the land rights along the Jakarta-Bandung high-speed railway are quite complex, there are many owners, and the land disputes are very cumbersome. Many landlords are still offering sky-high prices, and Indonesia has been unable to effectively deal with such problems. Anti-China sentiment has persisted in Indonesia, which has also made land acquisition more difficult. The planned route of the high-speed rail also passes through important air bases, which has led the Indonesian parliament to constantly demand that the high-speed rail be realigned. The geological environment along the high-speed rail line is quite complex, and the construction team must collect a large amount of geological data in order to reduce the risk, and at the same time, it must spend extra time to build an early warning system. Coupled with the unexpected sudden outbreak of the new crown epidemic, it eventually led to the repeated postponement of high-speed rail.
According to the original plan, the total investment of the Jakarta-Bandung high-speed rail was only 5.5 billion US dollars, and the budget was raised to more than 6 billion yuan not long after the start of construction, plus the expenses and costs caused by the continuous delay, the total cost of the high-speed rail after opening in 2023 reached 7.3 billion US dollars. The reality behind the cost overrun is the outside world's concern about the difficulty of recovering costs, and there are currently different estimates of how long it will take for this high-speed rail to cost. In addition, we know that in 2019, Indonesia announced that the capital will be moved from Jakarta in the next few years, so that the passenger traffic of the Jakarta-Bandung high-speed railway will inevitably decline.
Although the return on investment is far away, for both India and China, the value of this high-speed rail is not only a ticket profit, but from the perspective of Indonesia, they value the ability of the high-speed rail to drive the economy along the route, and the Chinese plan to make it a flagship project of the Belt and Road Initiative, as a model for China's technology export.