The Indonesian government is in debt negotiations with China over its $7.3bn “Whoosh” bullet train, as the Beijing-backed high-speed railway racks up losses and risks creating an unmanageable debt burden for Jakarta.
The rail link connecting the capital Jakarta with the third-most populous city of Bandung was developed jointly by Indonesian and Chinese state-owned companies under Chinese President Xi Jinping and former Indonesian president Joko Widodo. Three-quarters of the project was funded by Chinese loans.
But just two years since commercial operations began, shareholders are struggling to make a profit and pay back debt. The much-vaunted project could strain Jakarta’s finances, which are already under pressure from President Prabowo Subianto’s spending plans, as the debt comes with state guarantees.