JAKARTA: Amid reports that government-owned construction firms had suffered losses due to their involvement in Southeast Asia’s first high-speed rail project, Indonesia’s State-Owned Enterprises Minister Erick Thohir said that the Whoosh train has been able to save the government trillions of rupiahs in fuel savings since it began operations last year.
Not only does Whoosh cut the travelling time between Jakarta and Bandung, Mr Erick stressed that it also uses energy more efficiently.
“By using electricity, the Jakarta-Bandung high speed rail can save 3.2 trillion rupiah (US$197 million) per year in fuel (costs),” Mr Erick said in an Instagram post on Saturday (Jul 20), without elaborating on how the savings were calculated.
He made the statement when accompanying President Joko Widodo back to Jakarta from Bandung by using Whoosh, the first high-speed rail in Southeast Asia built in collaboration with China.
Mr Erick added that since its launch in October 2023, Whoosh has carried four million passengers until early July. It reached its daily record number of 24,135 passengers this month during the school holidays.
He stressed that the high-speed rail has boosted tourism numbers and increased economic growth in the region, adding that Whoosh has contributed 86.5 trillion rupiah to the gross domestic product (GDP) of Jakarta and West Java between 2019 and 2023.
Mr Erick’s statement came as local media reported that PT Wijaya Karya Tbk (WIKA) – one of the main contractors for the project – suffered losses due to the interest burden of loans to China.
Throughout 2023, the state-owned construction firm suffered a loss of 7.12 trillion rupiah, up significantly compared to the 59.59 billion rupiah it lost in 2022.
Two factors were cited by WIKA President Director Agung Budi Waskito on his firm’s rapid losses: Interest expenses as well as other payments related to the high-speed rail project.
According to local media, Mr Agung said that interest payments increased due to the company having to issue bonds to crowdfund for the Whoosh project.
Funded through loans by China, Whoosh is viewed as part of the superpower’s landmark Belt and Road Initiative (BRI) to connect Asia, Africa and Europe through land and maritime networks aimed at increasing economic growth.
It was awarded to China after a competitive bid against Japan, and when the project began in 2015, it was expected to cost about 66.76 trillion rupiah.
Whoosh, stretching over four stations, was initially scheduled to be launched in 2019. However, land acquisition problems and the COVID-19 pandemic movement restrictions delayed the project, resulting in a budget overrun of 18 trillion rupiah.
Financial experts have predicted that it will take a long time for Indonesia to reach the break-even point for the high-speed rail project.
The break-even point is the point at which total cost and total revenue are equal.
Mr Faisal Basri, Senior Economist of the Jakarta-based think tank Institute for Development of Economics and Finance (INDEF), had calculated in October last year that Whoosh would only reach its break-even point in 139 years, as quoted by Detik.
Mr Dwiyana Slamet Riyadi, President Director of PT Kereta Cepat Indonesia-China (KCIC) – the company operating Whoosh – disputed the calculation, saying the project would reach its break-even point in about 40 years, local media previously reported.
