Indonesia’s China-backed high-speed railway unlikely to be profitable, say observers

Indonesia's China-backed high-speed railway unlikely to be profitable, say observers

“While initially a lot of people are sceptical that this project will be completed, eventually even with some delays, it has been completed. So I think this is a good sign for both countries to further their bilateral cooperation,” said Dr Negara. 

“But I think Indonesia also needs to diversify its infrastructure investment source, not just rely on China, and also look at other alternatives, given that there are so many big projects.”

The rail deal was signed in October 2015 after Indonesia selected China over Japan in a fierce bidding.

“China did not require a state guarantee, Japan did. So China gave a more attractive option,” said Mr Achmad, adding that while Indonesia is sliding towards Chinese investment, it is not entirely dependent on China. 

“Why is Indonesia welcoming Chinese investment? Because China delivers, when others do not. But at the same time, there are healthy checks within Indonesia to avoid falling into overdependence or having the economy being dominated by a country.”