China to Develop Indonesia Rail System in a Joint Venture

China to Develop Indonesia Rail System in a Joint VentureChinese and Indonesian officials together have signed an agreement to construct the first high speed rail line in Indonesia after Japan lost the bidding last month. The built is estimated to cost US$5.5 billion the high profile railway deal signed by Yang Zhongmin the chairman for China Railway International Co. and the president director of a consortium of Indonesian State companies Dwi Windarto. China has long been expected to secure the project in Southeast Asia after Indonesian officials rejected Japan’s requirements of a guarantee of loans from the government.

The Indonesian state owned companies that formed the joint venture are PT Wijaya Karya a construction company, toll road builder PT Jasa Marga, railway operator PT Kereta Api Indonesia and PT Perkebunan Nusantara VIII a plantation company. It chairman Sahala Lumban Gaol stated that the construction will begin early of next year and is set to be completed by 2018 and rail operations to start early 2019 with eight stops and top speed of 250 kilometers and hour.  China will have a 40 percent stake in the venture and State owned China development Bank would finance 75 percent of the project.

China is ready to work with its Indonesian counterparts to ensure the quality and safety of the project. The project with Indonesia especially in the transportation sector will further boost the economic activities in the area along the corridor that will be served by the high speed trains and eventually will contribute to the country’s economic growth. The railway will be the first transportation project in the country that is solely on a business basis without getting any funding from the government. The China Indonesia joint project will further expand its service to similar projects in several areas in the future.

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