Report on the challenges faced after the opening of the Jakarta-Bandung high-speed railway in Indonesia
Abstract:
This paper aims to analyze the challenges after the opening of Jakarta-Bandung high-speed rail in Indonesia. Discussions will be held on economic challenges, people's acceptance, political transition, and the impact of China-Indonesia relations, with a view to providing targeted recommendations to the Indonesian government and relevant stakeholders.
1.1 Background of high-speed rail project
The Jakarta-Bandung high-speed Rail is Indonesia's first high-speed railway, linking Jakarta, Indonesia's capital, with Bandung, the country's fourth largest city. The project, jointly developed by China Railway International Group and an Indonesian state-owned enterprise, is part of China's Belt and Road Initiative. The construction of this route is not only conducive to Indonesia's domestic economic development, but also helps deepen economic cooperation between China and Indonesia.
1.2 Importance of the high-speed rail project
The Jakarta-Bandung high-speed rail project is of great strategic significance to both Indonesia and China. For Indonesia, it will not only significantly improve connectivity between cities and shorten travel times, but also stimulate the development of the local economy, especially tourism and real estate. For China, the project is an important part of its Belt and Road Initiative, helping to boost its influence in Southeast Asia.
1.3 Research purpose and significance
After the Jakarta-Bandung high-speed rail is opened, it is likely to face many challenges, including economic pressure, people's acceptance, and uncertainty brought about by the political transition. This paper aims to analyze these challenges and explore ways to overcome them in order to provide references for cooperation between Indonesia and China in the future. In addition, the study also helps to understand how China-Indonesia relations affect large-scale infrastructure projects in Indonesia.
2.1 Economic challenges - Operating costs and profit margins of high-speed rail
The Jakarta-Bandung high-speed rail project is currently facing the challenge of insufficient funding, which is an issue that needs to be addressed as soon as possible. Didiek Hartantyo, president of PT Kereta Api Indonesia, recently revealed this during a working session with the Sixth Committee of the Indonesian Parliament. He pointed out that the construction cost of the project had unexpectedly ballooned, resulting in a shortage of funds.
To address this, one solution is to push for additional state capital injections (PMN). Didiek Hartantyo proposed the need for additional funding of 3.2 trillion rupiah. He hopes the funding will be approved and appropriated by the end of the year to ensure the project stays on track. In addition, the funding gap for the project will be shared by state-owned enterprises in Indonesia and China. According to the plan, the Indonesian side will be responsible for 25% of the funding, while the remaining 75% will be settled by applying for a loan from the China Development Bank (CDB).
The impact of the HSR project will be felt in the long term and connectivity between the regions will be improved. Although the direct benefits of the project from an economic perspective may not be felt during the first five years of operation, it will have a positive impact over the next 10 to 30 years. This is not so different from what happens when you build a highway, airport or port, the benefits of which are only felt after years of operation. In the process, the government needs to ensure that the use of funds in this project is transparent and efficient, and strict monitoring is carried out to prevent costs from getting out of control.
The Jakarta-Bandung high-speed rail project has great potential to bring long-term positive impact to Indonesia. Strong collaboration between government, society and the private sector is necessary to address financial challenges and ensure project success. With strong commitment and good cooperation, the Jakarta-Bandung high-speed rail project is expected to become one of the important milestones in Indonesia's infrastructure and transportation development. The project is expected to provide long-term benefits such as reducing traffic congestion, improving mobility of residents, increasing connectivity between Jakarta and Bandung and boosting economic growth in both cities
The project is also expected to boost tourism in the area. Due to the shortened travel time between Jakarta and Bandung, tourists will be able to visit the two cities more easily, thus increasing the number of domestic and international tourists. This will have a positive impact on regional income, employment and tourism growth.
During the operation process, the operating costs of the high-speed rail project will involve train maintenance, personnel salaries, fuel consumption, power supply and infrastructure maintenance. These costs need to be invested continuously over the course of the operation, and for a large high-speed rail project, this can be a considerable expense. However, the high-speed rail project also has some profit potential. The fast, efficient and comfortable service of high-speed rail can attract more passengers. By increasing the number of passengers, high-speed rail operations can be profitable through ticket sales revenue. In addition, the HSR project has the potential to attract commercial partners, such as sponsors and advertisers, which will generate additional revenue for the operator. For example, it will stimulate the development of the construction and construction industry, create jobs, and boost local economic growth. Business activities and tourism between the two cities connected by the high-speed rail are also likely to be boosted, further increasing the potential profits of the project.
The sustainability and payback time of high-speed rail projects require more comprehensive research and analysis. This requires a combination of factors such as fare setting, passenger demand, market competition, additional services and surrounding economic activity. Only after a thorough assessment can we draw a more accurate conclusion. Although some people doubt the feasibility of the high-speed rail project, we cannot ignore the huge potential of high-speed rail as a modern means of transportation. High-speed rail can provide a more efficient and environmentally friendly way to travel, reduce traffic congestion, and promote economic development and connectivity between cities. Therefore, while proceeding with the high-speed rail project, a comprehensive study and evaluation must be carried out to ensure the feasibility and long-term profitability of the project. The government and relevant stakeholders should work closely together to ensure the effective management and operation of the project to maximize social and economic benefits. At the same time, transparent and sustainable financing models should be established to ensure the effective use and return of funds. Overall consideration of the problem, we need to find a balance point in the implementation of high-speed rail projects. Despite the doubts, we cannot completely deny the potential benefits and opportunities brought by the high-speed rail project.
2.2 People's acceptance
2.2.1 High-speed rail ticket price and public burden
Indonesia's high-speed rail projects, especially the Jakarta-Bandung high-speed rail line, have aroused much discussion. The success of the high-speed rail project depends on how well people accept it.
At present, for the first three years of operation, long-distance fares between Jakarta and Bandung are expected to be IDR 250,000 per journey, while short-haul fares will be IDR 125,000 per journey. These fares were determined based on studies conducted by various consulting firms working with PT KCIC. Research shows that people are willing to pay up to IDR 350,000 for longer distance fares. Therefore, it is expected that in three years, the long-distance ticket price of high-speed rail may reach this level.
The high-speed rail will operate from 05:30 a.m. to 22:00 p.m., with 68 trains per day and a maximum passenger capacity of 601. In addition, to improve transport connectivity between the regions, PT KAI plans to provide a shuttle train service to connect the HSR stations with residents in Bandung and Simasi. This will help further improve the convenience and practicality of high-speed rail. The class of seats on the high-speed rail includes VIP, first class and second class. Although these seating classes don't differ much in function, they differ in design and interior.
The challenges of similar projects in the past, such as Palembang's light rail project, were faced with insufficient passenger numbers in the initial phase. To avoid a repeat of the past, the government will work to build a complete ecosystem to promote the good connection between high-speed rail and other modes of transportation, and increase people's willingness to use high-speed rail. A toll road built in Bali, for example, ran into similar problems. Although people have the ability to pay for highways, they are reluctant to use them because they think they can choose ordinary roads. Therefore, the government needs to increase people's acceptance of high-speed rail in various ways, including offering attractive fares and improving the quality of public transport services.
However, it will not be easy to realize the success of high-speed rail. In addition to fare and public transport improvements, other challenges need to be addressed. For example, the current public transport system in Bandung region is not yet perfect and needs further investment and improvement. At the same time, people's acceptance and habits of new modes of transportation also need to be gradually cultivated and changed.
2.2.2 Impact on the environment and ecology
The Jakarta-Bandung high-speed railway has attracted attention because it is considered an environmentally friendly means of transportation. This is due to the use of electricity resources in its operations. To reduce carbon emissions, the Jakarta-Bandung high-speed rail uses electricity from cleaner sources, which is more environmentally friendly compared to the fossil fuels used by conventional trains.
The Jakarta-Bandung high-speed rail line uses electricity to reduce carbon emissions along the route from Jakarta to Bandung. Compared with conventional trains that run on diesel, electric trains produce zero or almost zero pollution. According to the Department for Transport, electric trains have 35% lower carbon emissions per passenger mile than diesel trains. This shows that by using electricity, the Jakarta-Bandung high-speed rail can make a substantial contribution to reducing negative environmental impacts.
In the operation of the Jakarta-Bandung HSR, all equipment installed on the platforms and lines relies on 246.3 MVA of electricity. This power will be transmitted via an overhead wire (OCS) system. The installation of OCS has reached more than 80 percent progress from Halim station to Tegalluar station and even 100 percent on the section from Padalarang to Tegalluar station. KCIC continues to monitor the OCS installation process to ensure compliance with safety standards and coordinates with all interested parties.
Overall, the Jakarta-Bandung high-speed rail, properly implemented, has the potential to be an environmentally friendly means of transport. Through the use of clean energy, improved energy efficiency, good waste management and proper habitat protection, the Jakarta-Bandung high-speed Rail can make a substantial contribution to maintaining environmental sustainability and reducing the negative impact of transport on climate change.
2.3 Political Risk
2.3.1 Influence of political change on project policies
The change of president after 2024 is not expected to affect the sustainability of infrastructure development in Indonesia's National Strategic Project (PSN). The construction of the PSN must continue to realize the vision of Indonesia's national infrastructure development. This demonstrates the Government's commitment to ensuring the sustainability of infrastructure development as part of the social, cultural, economic, socio-ecological and national governance transformation.
For Chokovi's successors in government, it will be crucial to proceed with the projects already listed on the PSN, but issues regarding the planning and funding of the Jakartabandung high-speed rail project will still need to be resolved through lobbying and ensuring clear calculations and political support.
For the Jakarta-Bandung High-speed Rail (Jakarta-Bandung High-speed Rail) project, the project has entered the trial operation phase and has received significant support from the government and international partners. The project is expected to play an important role in speeding up connectivity between Jakarta and Bandung and reducing road traffic congestion. Therefore, it is crucial for the presidential candidate and the next administration to continue and ensure the sustainability of the Jakarta-Bandung HSR. One of the important factors affecting the sustainability of the Jakarta-Bandung high-speed rail is financing. The project requires substantial investment, both from the public and private sectors. Therefore, the new government must ensure the continuity of financing for the project and ensure clarity in planning and budget management.
In addition, the new government will need to ensure that there is good coordination among the various stakeholders, including the Ministry of Transport, the Ministry of Public Works and Housing, the Indonesia Japan High Speed Railway Company Limited (PT KCIC), and the private sector involved in the project. These synergies will accelerate the construction of the Jakarta-Bandung high-speed railway and ensure its smooth operation. In terms of regulations and permits, the new government can also speed up procedures related to the project and simplify relevant regulations. This will speed up the construction progress and the operation of the Jakarta-Bandung high-speed railway. On the political front, the new government needs to maintain its commitment to the project and maintain strong political support. The project has already involved significant investment and has strategic significance for Indonesia's transport and connectivity development. By maintaining policy consistency and political support, the Jakarta-Bandung high-speed rail project can proceed smoothly.
2.3.2 Inter-governmental cooperation and contradiction
Clashes between political parties in Indonesia, especially those opposed to the government, such as the Democratic Party of Indonesia, whose lawmakers said in parliament that the future government will face major challenges related to the sustainability of the ongoing Jakarta-to-Bandung high-speed rail project. Willem Wandik, deputy chairman of the Democratic Party, pointed out that the project has the potential to become a burden that the next leader will have to bear after the term of the next president (Joko Widodo). William explained that the government will bear this burden for the next 80 years, with the possibility that the burden will increase if anomalies arise.
Among them, one of the reasons why the high-speed rail project is considered a burden is that the actual expenditure has exceeded the planned budget. At present, the project's financial position has increased by 210 trillion Indonesian rupiah. This has forced Indonesia to borrow 16 trillion rupiah from the China Development Bank, which accounts for 75 percent of the total budget now needed to bridge this financial gap.
Wilhelm also mentioned pressure from Chinese investors through the high-speed rail operator KCIC (Indonesia-China High-speed Rail) to extend the franchise of the high-speed train from 50 years to 80 years. This becomes the reason to realize the interests of investors and maintain the financial balance of the project. Another challenge is financial management that is more complex than going into debt to the International Monetary Fund. This is due to nearly 100 years of monopolistic provisions in the management of high-speed rail routes. The mounting financial burden has intensified the pressure on project executors to meet the target of using high-speed trains by 2023, in order to accelerate the purpose of gaining political benefits before the end of the president's term in 2024.
To achieve this goal, technical standards and safety considerations were sacrificed. Engineers were forced to work against schedule, ignoring important aspects of technical standards and safety. However, the use of high-speed trains involves millions of transport users in the Jabar-DKI Jakarta area. Neglect of technical standards and safety aspects may become a time bomb and a serious threat to the future of transportation. The Jakarta-Bandung high-speed Rail (Jakarta-Bandung High-speed Rail) project has caused controversy and political debate in Indonesia. One of the problems is rising debt, the consequence of which is the burden on Indonesia. Some have accused it of being one of China's scams in the Jakarta-Bandung high-speed rail construction negotiations.
The political conflict related to the Jakarta-Bandung HSR reflects the different views and interests among stakeholders. Some are concerned about the long-term economic and financial impact of the project, while others believe that the Jakarta-Bandung high-speed rail will bring long-term benefits to Indonesia in terms of connectivity and economic growth. The political conflict related to the Jakarta-Bandung HSR can also be an opportunity for the next leader to make better improvements and changes. With in-depth research, the government can undertake a restructuring and renegotiation that benefits Indonesia. For example, through more effective auditing and financial management, and increased transparency in infrastructure development. This will help ensure that infrastructure projects like the Jakarta-Bandung HSR bring maximum benefits to the country and society.
Political conflict over projects like the Jakarta-Bandung high-speed rail link is the norm in the infrastructure sector. However, the most important thing is that national interests and the well-being of the people are always the top priority. Successful infrastructure projects require collaboration between governments, communities, and the private sector, as well as a commitment to risk-taking, transparency, and inclusive participation.
3.1 China's response to Jakarta-Bandung high-speed rail
3.1.1 The 10th Anniversary of the Belt and Road Initiative will strengthen cooperation and exchanges between China and Indonesia
Over the past decade, the implementation of the Belt and Road Initiative has brought about significant changes in areas such as infrastructure, investment and energy, especially in terms of cooperation between Indonesia and China. In order to maintain Indonesia's image and relationship with China, China must continuously increase its attention to Indonesia. Some measures that can be taken include:
Strengthening investment: China needs to continue to invest resources and capital in Indonesia, including financial and technical support for projects in infrastructure and other sectors that meet Indonesia's needs. By ensuring the smooth and quality of the project, China can build trust and a positive image in the eyes of the Indonesian government and society.
Transparency and accountability: China must ensure transparency and accountability in the project procurement process. This will minimize the doubts and controversies that may arise in connection with these projects. By involving relevant parties fairly and providing clear information, China can build an image of transparency and trustworthiness.
Local empowerment: China can increase the empowerment of local populations through technology transfer, training, and capacity building. By engaging the local workforce and forging partnerships with local businesses, China can strengthen bilateral ties and provide broader benefits to Indonesian society.
Fair Partnership: China must adhere to the principle of equality, mutual benefit and fair partnership. The Chinese side can ensure that projects in Indonesia generate balanced benefits between the two countries. By avoiding practices that are detrimental to both sides. Social responsibility: China can enhance its social responsibility by contributing to Indonesia's social and environmental development. This includes taking steps to minimize the negative impact of projects on the environment and surrounding communities. Support in the form of social programs, community development, and environmental protection will help create a lasting positive impact.
Public diplomacy: China can strengthen public diplomacy efforts to strengthen relations with Indonesia. This includes effective and open communication with Indonesian society, the media and other stakeholders. Through continued dialogue, China can explain the benefits of bilateral cooperation and promote a better understanding of the Belt and Road Initiative and related projects. Relations between Indonesia and China and China's image in Indonesia may be under threat. The success of the Jakarta-Bandung high-speed rail project and other projects involving the Belt and Road Initiative will be a mark of success for the entire cooperation. Therefore, China must constantly strive to maintain trust, transparency and a healthy partnership with Indonesia.
3.1.2 Enhance Indonesia's high-speed rail brand image
The successful first trial operation of the Jakarta-Bandung high-speed railway marks important progress in this major project of China-Indonesia cooperation. The construction of the Jakarta-Bandung high-speed railway is the result of joint efforts of China and Indonesia, and also a new record of practical cooperation between China and Indonesia. As one of the important projects of the Belt and Road Initiative, the Jakarta-Bandung high-speed railway demonstrates the spirit of cooperation between China and Indonesia under the principle of extensive consultation, joint contribution and shared benefits. This project is not only a model of China's high-speed rail's first overseas construction of the whole system, all elements, and the whole industrial chain, but also a successful case of China's high-speed rail "going out".
The opening and operation of the Jakarto-Bandung high-speed railway will promote the improvement of the basic manufacturing level of Indonesia's national rail transit, provide a fast and convenient way for the Indonesian people to travel, and promote the flow and aggregation of production factors between Indonesian cities. This is also one of the powerful demonstrations of countries along the "Belt and Road" to enjoy the huge economic and livelihood dividends brought by high-speed rail. At the same time, under the severe and complex international situation, the construction of the Jakarta-Bandung high-speed railway shows China's responsibility as a responsible major country, promoting the construction of an open world economy and benefiting people of all countries.
3.2 Indonesia's demand for China after the operation
3.2.1 China needs to strengthen project management and risk control
In large-scale infrastructure projects like the Jakarta-Bandung high-speed rail line, project management and risk control are very important. According to a study by the Asian Development Bank (ADB) on infrastructure projects in Asia, many projects are often delayed and over budget due to lack of effective project management and inadequate risk control.
In this regard, China should implement best project management practices and an effective risk control system to avoid unnecessary delays and additional costs in the operational phase of high-speed rail projects. In a large infrastructure project like the Jakarta-Bandung high-speed rail, various risks arise that can affect the success and efficiency of the project. Here are some of the main risks and what China can do about them:
Technical risk: issues related to technology, design and project implementation. In order to reduce technical risks, China must ensure that they have competent and experienced technical teams to deal with possible technical problems. At this stage, there are already many Chinese technicians on the Jakarta-Bandung high-speed Rail line, which will play a key role in the sustainable operation of the railway.
Financial risk: It relates to cost uncertainty, exchange rate fluctuations and the availability of financing. To address this risk, China must implement effective financial management strategies, which may include hedging against exchange rate fluctuations and the use of financial instruments to control costs.
Legal and regulatory risks: including changes in laws and regulations that may affect the project. China must work closely with the Indonesian government to understand and comply with all relevant laws and regulations.
Social and environmental risks: relate to the negative impact the project may have on the local community and the environment. China must commit to respecting the rights of local communities and protecting the environment, and communicate effectively with local communities to inform them of the pros and cons of the project.
Political risk: This includes a change of government or policy that may affect the project. To mitigate this risk, China needs to build strong and enduring relationships with the Indonesian government and other stakeholders, and be prepared to adapt to political change, which is an important factor that must be considered in any transnational investment project. In Indonesia, for example, past political shifts have had an impact on foreign investment. For example, in the early 2000s, Indonesia underwent a major political change, moving from a totalitarian regime to a more democratic and transparent political system. This change has brought many new regulations and policies that have had a profound impact on foreign companies operating in Indonesia. As for China's investment in Indonesia, for example, if Indonesia's policy environment changes, it may affect China's investment policies, such as trade agreements, tariff policies, and environmental regulations. This can affect the cost of the project, the feasibility of the project, and may even affect the ongoing operation of the project.
In this article, we provide an in-depth analysis of the challenges that the Jakarta-Bandung high-speed Rail may face after its opening and explore possible solutions to these problems. We also discussed how the political transition in Indonesia might affect the project and the threat of Chinese projects in Indonesia.
From the perspective of economic challenges, the Jakarta-Bandung high-speed rail project requires significant operating and maintenance costs, while fare positioning and passenger flow are key to its economic benefits. The Indonesian government may need to find a balance between maintaining operational efficiency and public acceptance. As for the acceptability of the people, the government and operators need to carry out active publicity and education to ensure that the public understands and accepts this new means of transportation.
The political transition may bring policy uncertainty, but given the importance of Jakarta-Bandung, the new administration is likely to continue to support the project. However, any change in policy can have an impact on the project and therefore requires ongoing attention.
The relationship between China and Indonesia is crucial to the success of this project. China's Belt and Road Initiative has brought financial and technical support to Indonesia, but it may also bring some political pressure. The Indonesian government needs to find a balance between protecting its domestic interests and maintaining good relations with China.
Overall, the Jakarta-Bandung high-speed rail project is an important driver of Indonesia's economic development and an important part of China's Belt and Road Initiative. Despite the challenges, with effective strategy and management, both Indonesia and China have the capacity to ensure the success of this project.