Whoosh-Whoosh-Whoosh… YES!
Is Indonesia’s bullet train initiative moving too fast?
The idea was brilliant: make a train so fast that wealthy Jakartans can whoosh to Bandung faster than they can say “Ni hao ma!”
For about two years now, Indonesia’s China-backed bullet train has been delighting customers with great service, smooth rides, and an even smoother slogan. Grandparents and grandchildren alike can’t help but join in when the lady at the PA system finally yells: “Whoosh-Whoosh-Whoosh… YES!!”
But behind all the smooth rides, the journey of maintaining Southeast Asia’s first high-speed railway proves to be a lot bumpier than expected.
On the financing side, the company responsible for Whoosh is struggling to pay back its debt to the Chinese. On the demand side, not enough customers are buying tickets for the project to turn profitable.
Is China taking Us for a Ride?
Before I lose my train of thought, it’s important to note how big of a role Xi Jinping is playing in financing this project.
Whoosh is owned by a joint venture company called KCIC: Kereta Cepat Indonesia China. 60% of KCIC is owned by a group of Indonesian state-owned enterprises, namely PT Kereta Api Indonesia, PT Wijaya Karya, PT Jasa Marga, and PT Perkebunan Nusantara; while the other 40% is owned by Chinese state-owned enterprises in the infrastructure industry.
The initial cost of the project was $6 billion, 75% of which was paid for by a loan from China Development Bank.
Unfortunately, there was a huge cost overrun of $1.2 billion— making the final cost closer to $7.3 billion. And who paid for these extra costs? Well, about $213 million of the $1.2 billion (18%) was paid by the Indonesian government, while the rest were yet again covered by loans from China, including a $560 million loan from China Development Bank.
Do you see a pattern here? I don’t think anyone’s uttered the word “China” this many times since Donald Trump’s second presidential campaign (the Chyna virus! We’re gonna tax Chyna! We’re gonna bring back our jobs from Chyna! Chyna! Chyna! Chyna!)
Here is what’s concerning about these pie charts: in terms of ownership structure, Indonesia holds the majority (60–40 split). But in terms of financing, China holds the overwhelming majority in the form of loans.
This is what has been often described as ‘debt-trap diplomacy’: China’s alleged strategy to expand their political and financial influence across the globe through the soft power of financing.
By investing in large-scale infrastructure projects across the globe (a lot of them in poor developing nations like Pakistan, Cambodia, Indonesia, and many parts of Africa), China is essentially buying their way towards political influence and allyship.
Some have called these “Debt-trap deals” a form of modern colonization. No longer are the days of nuclear intimidation — such tactics are too aggressive for today. Modern colonization involves debt instead of detonators, funding instead of firepower, and loans instead of launchers.
Get Econ For Introverts’s stories in your inbox
Join Medium for free to get updates from this writer.
By filling up the pockets of developing nations with debt, China may be in fact co-opting them whilst saying: “I have you in my pocket now.”
China’s Belt Road Initiative
Indonesia is far from the only country being financially supported by China. Today, China is the ‘sugar daddy’ of many nations across the world through Xi Jinping’s Belt Road Initiative introduced in 2013.
Broadly speaking, the Belt Road Initiative (BRI) is China’s flagship global investment program aimed at building infrastructure, expanding trade routes, and strengthening political influence across the world.
According to the State Council of The People’s Republic of China, the country “…has signed more than 200 BRI cooperation agreements with more than 150 countries and 30 international organizations across five continents”. It has financed all sorts of projects: from roads, to highways, pipelines, and yes, high-speed trains.
The World Bank has estimated that the BRI includes one-third of world trade and GDP and over 60% of the world’s population. The exact figure is difficult to pin down, but the Center for Strategic and International Studies estimates that China has invested over $1 trillion under this initiative.
Compared to $1 trillion, their $4.5 billion investment in Indonesia’s Whoosh is merely a drop in the bucket. But it is not a drop in the bucket for the recipient. As of today, KCIC (the entity responsible for Whoosh) is struggling to service the debt.
Are We on The Right Track?
The initial $4.5 billion loan from China Development Bank carries a modest interest rate of 2% with a 10-year grace period. The grace period means that for the first 10 years, Whoosh doesn’t have to make payments on the $4.5 billion principal— they just have to pay the 2% interest. Sounds pretty good, right?
You would think so. But given the lower-than-expected ticket sales, KCIC is struggling to pay back even the 2% interest — never mind the principal.
As of today, ticket sales have yet to cover the operating and financing costs of Whoosh. According to the Straits Times, the number of current daily passengers sits at 17,000, well below the daily target of 30,000.
In the first half of 2025, KCIC reported a loss of Rp. 1.6 trillion, while in 2024, the four Indonesian SOEs invested in Whoosh absorbed a collective loss of Rp. 4.2 trillion.
KAI’s (Kereta Api Indonesia) CEO Bobby Rasyidin recently called Whoosh a “time bomb” — and why wouldn’t he? Unless revenues accelerate significantly in the short term, the idea of servicing both the interest and principal of the debt seems highly unlikely.
Indeed, KCIC is currently in negotiations with China Development Bank to renegotiate the terms of the debt, while state officials are also in talks of injecting more state funds to rescue them from their financial hole.
Choo-Choo-Choose Wisely
Indonesia stands at a crossroads. On the one hand, the country is eager to modernize its infrastructure. On the other, it takes pride in its nationalism and national identity.
Whoosh has revealed that these two roads cannot yet be fully aligned. Until Indonesia is financially and technologically self-sufficient, we will continue to be indebted to foreign sugar daddies to fuel our growth.
Jokowi’s focus on infrastructure intersected perfectly with Xi Jinping’s Belt Road Initiative. And it seems that Prabowo is eager to continue this relationship through talks of extending Whoosh to Surabaya — another major Indonesian city.
Given how much the existing Jakarta-Bandung line is financially struggling, one wonders if this relationship is whooshing a little bit too quickly for our own good.
*Head to @econ_forintroverts on Instagram for the insta version of this article.
