China to build high-speed rail line in Indonesia joint venture

China and Indonesia signed a joint-venture agreement Friday on the construction and operation of a high-speed railway from Jakarta to Bandung, a historical breakthrough for the overseas expansion of Chinese high-speed railway technology.

Mr Sahala Lumban Gaol, the chairman of the joint venture and an adviser to the minister for state-owned enterprises, said work on the medium-speed railway line would begin on November 9, with the project expected to be finished by the end of 2018 and commuter services to commence in the first quarter of 2019.

The Indonesian state-owned companies forming the joint venture agreement are a construction company PT Wijaya Karya, railway operator PT Kereta Api Indonesia, toll-road builder PT Jasa Marga, and a plantation company PT Perkebunan Nusantara VIII.

Chinese bullet trains could soon be seen operating on Indonesia’s proposed high-speed rail network.

After much jostling between Beijing and Tokyo, the Indonesians ultimately awarded the contract to build a 150-kilometer (93-mile) railway between the capital Jakarta and the city of Bandung to China Railway global. The project is expected to start in November 2015 and will take three years to complete, according to the China Railway Corp.

President Joko Widodo has ambitious plans to improve Indonesia’s infrastructure, which could boost manufacturing and create hundreds of thousands of new jobs in Southeast Asia’s largest economy.

This is the first transport project in Indonesia that won’t carry an Indonesian state guarantee.

The competition between China and Japan for the rail project has been accompanied by many twists and turns as Indonesia weighed proposals and counterproposals.

State lenders China Development Bank has give a commitment to finance 75 per cent of the project cost with a tenure of 40 years-extendable by 10 years-at a fixed coupon rate 2 per cent.