Business

Plan to upgrade Indonesian railway moves forward

Kyodo

Progress has been made in talks between Indonesia and Japan on a railway project to link its two largest business hubs.

Officials hope talks can be finalized by the end of next month, a close aide to Indonesian President Joko “Jokowi” Widodo said Thursday.

The project will be part of efforts to revitalize a 725-km railway between Jakarta and Surabaya.

The railway will be upgraded to achieve a top speed of 160 kph and an end-to-end duration of five hours, down from nine hours, with fares between 500,000 rupiah (about ¥4,300) and 600,000 rupiah, officials said.

“It’s good, we made progress … (but) of course, we can’t complete everything at one time,” Coordinating Minister for Maritime Affairs Luhut Pandjaitan told reporters after a working luncheon with visiting transport minister Keiichi Ishii.

The talks, he said, are expected to be completed by “mid-January or the end of January.”

For the project, Japan has offered a financing plan in the form of a soft loan that must be paid back in 40 years with a 10-year grace period and a 0.25 percent interest rate. Pandjaitan said, however, that “we prefer it to be longer than 40 years.”

According to Pandjaitan, a feasibility study on the railway project will start “anytime in January.”

“When it (the project) is completed, it will be a very big investment from Japan,” Pandjaitan said.

Earlier in the day, after holding the meeting with Ishii, Indonesian Transportation Minister Budi Karya Sumadi told reporters that the Jakarta-Surabaya medium-speed railway network, as well as other projects to be jointly developed by Indonesia and Japan, “will mark a better relationship” between the two countries.

The Indonesian government, in its proposal to Japan submitted during Pandjaitan’s visit to Tokyo last week, also picked a public-private partnership to finance the project because the project “will be costly.”

Last week, Pandjaitan said that, based on Japan’s calculations, the project will cost 102 trillion rupiah, while Jakarta calculated that it may cost less than 80 trillion rupiah.

The railway network will be integrated with some dry ports, where goods arriving from Jakarta’s Tanjung Priok Port will be cleared by customs and quarantined before being transported onward.

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