HIGH-SPEED RAILWAY PROJECT TO BE DEVELOPED UNDER B2B FUNDING SCHEME by Fardah

   Jakarta, Sept 24, 2015 (Antara)- The Joko Widodo (Jokowi) administration has changed the financing scheme for the High-Speed Railway (HSR) project connecting Jakarta and Bandung in West Java from state budget (APBN) funding to a business-to-business (B2B) model. 
   The construction of the 150 kilometer (km)-long HSR, which is estimated to cost around Rp70-80 trillion, has so far been offered to two bidders -- Japan and China -- both of which have presented their proposals to the Indonesian government.  
   Initially, the government would construct the HSR similar to the Shinkansen train network, which could reduce the travelling time on the Jakarta-Bandung railway route to around half an hour.

        However, the Jokowi administration has changed its mind, affirming that the cost of the project is too high, and therefore, it would be offered to investors.

        "We would rather use the money from the APBN to finance the construction of dams, but if investors are interested, they are welcome," he added.   
   "There are alternatives such as a train operating at a speed of 350 km per hour, or one running at a speed of 250 km per hour. Besides this, (there is also) a political calculation," President Jokowi stated while elaborating on the change.

        State Enterprises Minister (BUMN) Rini Soemarno confirmed that the project has to be developed under a B2B scheme, while the government would only be involved as the regulator.

        The minister remarked that a consortium of state companies will implement the HSR project, earlier offered to Japan and China.

        The government has urged the BUMN ministry to build a medium-speed train network that has trains operating at 200-250 km per hour, instead of trains running at 300-350 km per hour, which are similar to Shinkansen.

        Minister Soemarno affirmed that the project is needed to boost industrial development, especially the textile industry in areas between Jakarta and Bandung
   She said the government especially wanted to highlight the fact that the project could be built without a government guarantee and no funding from the state budget.

        Soemarno noted that the funding is expected to come from investors.

        "We could not yet name the sources of funds, but it is a long-term investment, with a payback period of at least 30 years," she pointed out.

        Moreover, Finance Minister Bambang Brodjonegoro said the HSR project must not use the APBN.

       "The construction of the HSR project, if realized, must not be completed using APBN funds or have any dependence on APBN," he affirmed recently.

       Coordinating Minister for Economic Affairs Darmin Nasution said he had tendered explanations to the foreign bidders regarding the change in the HSR project.

        Nasution remarked that he had met Japanese Ambassador and asked if Japan was still interested under the new conditions, including the government's non-involvement in financing.

        He noted that Japanese Ambassador Yasuaki Tanizaki though "slightly" disappointed, could understand the reason provided by the government.    
   The minister stated that Japan and China should submit a new proposal if they still want to be involved in the construction of the HSR project that will connect Jakarta and Bandung.

        Earlier, several leading economists and NGOs criticized the government for planning to implement the HSR project, emphasizing that there was no urgency to go ahead with such a project amid the economic slowdown.

        Senior economist and former minister Emil Salim has criticized the HSR project, saying it is not in accordance with the efforts to address the social gap in the community.

        The HSR project should be given lesser priority than the sea toll development projects, Salim said during a seminar organized by the Indonesian Political Scientist Association (AIPI) recently.

        "I welcome the sea toll projects, but amid talks of a sea toll program, suddenly a HSR project in Java has emerged," Salim, a professor of economics at the University of Indonesia, remarked.

        The HSR project will not have a bigger impact than the sea toll program, which has a vast scope, he pointed out.

        Salim noted that foreign investors are eying the Jakarta-Surabaya HSR project; as once they secure the Jakarta-Bandung HSR projects, they will automatically bag the bigger project as their operational systems will be similar.

        "This investment will include the development of infrastructure, such as telecommunications, train coaches, railway lines, and others. Is this development high priority?" Salim questioned.

        The government should be giving priority to projects that address social inequality as 82 percent of the gross domestic income is contributed by regions outside Java, Sumatra, and Bali, while two percent comes from Papua, and 18 percent from other regions.

        "Where is the voice of the parties frequently urging for social justice?" the former population and environmental affairs minister questioned.

        In the meantime, Chairman of the Indonesian Transportation Community Danang Parikesit believes that the decision to have the HSR project is more in keeping with the donors' wish rather than Indonesia's need to invest in the project.  
   In a press conference on Sept. 3, Head of the Institute of Transportation Study Darmaningtyas stated that the Jakarta-Bandung route has been served by trains and good toll roads so far.

        Offering a 37-minute train journey would not be much beneficial due to the traffic jam problems in both Jakarta and Bandung. Passengers would have to encounter several problems to reach the railway stations be

ause of severe traffic congestion in the cities, he stated.

         Executive Director of the Indonesian Consumer Protection Foundation (YLKI) Tulus Abadi recently affirmed that the government should prioritize the development of proper public transportation facilities in big cities, such as Jakarta and Bandung, which are notorious for their traffic jams, rather than the Jakarta-Bandung HSR project.

         "Revitalizing the means of public transportation is more dignified than the HSR project, which would only indulge investors," he emphasized.

         Besides this, the HSR project would only widen the economic gap between Java and outside Java, he stressed. 
   "It would be better to develop railway networks in Kalimantan, Sulawesi, and Sumatra, or revitalize the trains in Java," he added. 
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