China won the rights to build a US$5.5 billion high-speed rail (HSR) line in Indonesia as the Southeast Asian nation tries to upgrade its infrastructure to drive growth.
China Railway International Co Ltd (中國中鐵) and a consortium of Indonesian state companies will build the rail line from Jakarta to Bandung, and plan to compete for other projects in the region, Sahala Lumban Gaol, chairman of the joint venture, said yesterday in Jakarta.
Three-quarters of the funding will come from China Development Bank, and the project will not carry an Indonesian state guarantee, he said.
Indonesia’s first high-speed train project comes after the government last month rejected bids from China and Japan, and decided to scrap plans for a state-funded bullet train, leaving only China interested in a business-to-business deal.
Indonesian President Joko Widodo is planning to revive flagging growth in Southeast Asia’s largest economy by building infrastructure, though budget revenues are falling short of targets.
“This is a new episode that means in the future Indonesia’s infrastructure development won’t burden the government and state budget,” Gaol said. “We hope this new company will compete outside Indonesia for high-speed railway projects.”
The Indonesian companies forming the joint venture, PT Pilar Sinergi BUMN Indonesia, include state construction company PTWijaya Karya, railway operator PT Kereta Api and toll-road builder PTJasa Marga. Jasa Marga shares were up 4.3 percent to 5,450 rupiah as of 12:07pm local time, while Wijaya Karya fell 1.3 percent to 2,965 rupiah in a steady Jakarta market.
Construction can begin early next year and end in 2018, with the line to start operating in the first half of 2019, Wijaya Karya chief executive Bintang Perbowo said.
Wijaya Karya is considering a global bond issue as the Indonesian companies need to fund the remaining 25 percent of the project, he said.
The line’s US$5.5 billion value could ultimately be lower depending on the speed of the trains used, he added.
Trains are expected to run at 250kph, with eight stops and a fare of about US$16. An existing train run by Kereta Api costs about US$8 and takes more than three hours, winding its way through rice paddies and mountains to a city popular with local tourists for shopping and cooler air.
Indonesia decided not to pursue an even faster train, disappointing Japan, because it wanted extra stops so it could develop more places along the route, Indonesian Coordinating Minister for Maritime Affairs Rizal Ramli, the minister coordinating transport policy, told Bloomberg News last month.
Widodo has been more open to Chinese investment than his predecessor to build railways, power stations and dams.
The project’s use of Indonesian state companies means it can buy land for the route using a law that sets time frames for land acquisition, which until now has been the major obstacle for most infrastructure projects in the country and has scuppered previous plans to build railways on Sumatra and Borneo islands.
The project can use land from an existing toll road to Bandung, Perbowo said.
China will hold 40 percent of the venture, which will use as much Indonesian material, machinery and workers as possible, Chinese Ambassador to Indonesia Xie Feng (謝鋒) said.
However, the project may face resistance over the use of Chinese workers.
Local media have expressed concerns about an “invasion” of foreign labor as the country’s unemployment rises during an economic slowdown.
“There is a push against the Chinese workers that is led mainly by the trade union movement,” said Christopher Manning, an adjunct fellow at the Australian National University, who has researched labor issues in Indonesia. “Many of the Chinese are working on construction projects, and a large number hold jobs that could be done by Indonesians. They come as part of the package. That’s the issue.”
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS