October 18, 2023
JAKARTA – Commercial operations for the high-speed rail (HSR) service between Jakarta and Bandung kicked off on Tuesday with a launch ceremony that coincided with Jokowi’s visit to the Belt and Road Summit in Beijing.
After an initial period of free trials beginning early this month, PT Kereta Cepat Indonesia China (KCIC), the train operator, now charges passengers for the service, dubbed Whoosh, although a promotional fare of Rp 150,000 for a one-way ticket will apply until the end of November.
After that, the Indonesian-Chinese consortium is expected to hike prices, with the exact level to be determined by customer demand and other considerations.
“Some commercial [regular] trains and planes in Indonesia implement dynamic pricing, right? In the off season, the price will drop, and it will increase again during holiday seasons or weekends. It depends on the company’s strategy,” KCIC president director Dwiyana Slamet Riyadi told reporters on Tuesday.
The commercial opening took place on the day of a bilateral meeting between President Joko “Jokowi” Widodo and his Chinese counterpart Xi Jinping on the sidelines of the third Belt and Road Forum for International Cooperation in Beijing.
With trains running at operational speeds of up to 350 kilometers per hour, the 142-kilometer-long railway service is one of the flagship projects of China’s Belt and Road Initiative in Indonesia. The project was largely funded by loans from China.
According to interim Coordinating Maritime Affairs and Investment Minister Erick Thohir, one topic to be discussed during the meeting is the extension of the Whoosh service to Surabaya, which would extend the route by 700 kilometers.
A feasibility study on such investment was underway, the minister said on Saturday, as reported by Antara.
Some analysts have opined that such an extension is urgently needed, arguing that the relatively short distance between Jakarta and Bandung poses a challenge for the project’s profitability.
Faisal Basri, a senior economist, said the project would need more than 48 years to hit the break-even point with the current track.
That calculation assumes 36 trips a day with 600 people per trip and every passenger paying Rp 300,000 for the ride, though it does not take into account all operating costs, interest payments and nonfare revenue.
“The revenue from passengers [in the above scenario] would be around Rp 2.4 trillion every year,” Faisal said during a public discussion on Tuesday, as quoted by Tempo.
KCIC’s Dwiyana said farebox revenue, which comes from ticket sales, would be the bread and butter for Whoosh in its early days, based on the experience of HSR operators in other countries. However, once passenger numbers increased, non-farebox revenue would pick up.
“We’re currently in a beauty contest to find investors that can give the most added value to the company. Maybe [we can develop transit-oriented development] in the next five years,” he said.
President Jokowi inaugurated the Jakarta-Bandung HSR on Oct. 2, putting an end to years of delays partly caused by the COVID-19 pandemic, but analysts have also blamed overly optimistic planning.
It also racked up a cost overrun of more than $1.2 billion on its initial budget of $6.05 billion, funded with additional loans from China Development Bank, the project’s key financer.
The cost overrun prompted an extension of the project’s concession period from 50 years to 80 years at the request of KCIC, as the Transportation Ministry confirmed in October.
In the early years, Whoosh’s operations and maintenance are to be handled by Chinese staff from China Railway Group. However, the firm is to gradually replace foreign staff with local employees as they are trained up through internships.
Aside from the HSR, Indonesia and China also discussed other infrastructure projects at the Belt and Road Forum, such as the development of Kuala Tanjung Port in North Sumatra, the Kayan hydropower plant and Green Industrial Zone in North Kalimantan, as well as the Likupang tourism zone in North Sulawesi. All of those projects are still under negotiation, according to Kompas.
“There is also an agreement on Sanitation Inspection and Quarantine Protocol for Indonesian aquatic products […], so there will be more of our products that enter the Chinese market,” Foreign Minister Retno Marsudi said on Monday, as reported by the paper.
During his trip to China, President Jokowi also attended the Indonesia-China Business Forum, where 31 agreements were signed between Indonesian and Chinese companies for deals valued at a total of $13.7 billion.
The agreements include cooperation between Indonesia Battery Corporation and Chinese battery manufacturer CATL as well as between Indonesian state-owned electricity company PLN and several Chinese banks and firms.
“These are all that [have reached] agreements. There are more [potential investment deals] that could reach $29 billion,” minister Erick said on Monday, as quoted by Kompas.