Two consortia of Chinese and Indonesian state-owned companies have signed an agreement to build a joint venture (JV) for a high-speed railway which connects Jakarta to Bandung, Indonesia’s fourth-largest city.
The Chinese consortium is led by China Railway Corporation, while the Indonesian consortium, dubbed PT Pillar Sinergi BUMN Indonesia, includes state construction company PT Wijaya Karya, railway operator PT Kereta Api and toll road builder PT Jasa Marga.
The Indonesian consortium has a 60 percent stake of the JV while the Chinese partner owns the remaining 40 percent holding, according to Chinese news agency Xinhua.
Expected to run at a speed of 200 to 250 kilometre per hour, the $5.5 billion railway project is the first of its kind conducted solely on a business-to-business basis. Three quarters of the funding will come from China Development Bank. The project will not carry an Indonesian state guarantee.
Bintang Perbowo, chief executive of Wijaya Karya, said that the construction can begin early next year and end in 2018, with the line to start operating in the first half of 2019. The company is considering a global bond issue as the Indonesian companies need to fund the remaining 25 percent of the project.
The scheme is expected to further boost economic activities in areas along the corridor served by the high-speed train that eventually contribute to national economic growth.
Sahala Lumban Gaol, chairman of the JV, expects the group to explore similar opportunities in Southeast Asia and the Middle East in the future.