Indonesia’s high-speed rail hits a money crunch — can it pull through?

Indonesia’s 142 km Jakarta-Bandung High-Speed Rail (Whoosh), launched in October 2023 as a flagship Belt and Road Initiative (BRI) project, has been on a fast track. By 17 October 2025, on its second anniversary, Whoosh carried 12 million passengers on 36,747 train runs cumulatively, with an on-time rate of over 95%. It has averaged 16,000-18,000 passengers on weekdays and around 21,000 on weekends, with a record daily number of 26,700 passengers. 

This volume of ridership, unfortunately, has so far fallen below the predicted 50,000 passengers per day. Whoosh thus lost 4.19 trillion rupiah (~US$260 million) in 2024 and an additional 1.6 trillion rupiah in early 2025, creating a growing financial burden on paying back the original loan of around US$4.5 billion from China, as annual interest payments have reached an estimated 1.2 trillion rupiah. The financial strain has become a big headache for the Indonesian government and Whoosh’s stakeholders.

This article takes a look at developments related to Whoosh’s financial burden and its possible solutions, with lessons drawn from major China-financed rail projects in Kenya and Malaysia under the BRI. 

The HSR was initially costed at US$6.07 billion, financed through a structure thought to minimise sovereign exposure: 75% through loans from the China Development Bank (CDB) and the remaining 25% through equity injections from Indonesian state-owned enterprises (SOEs) under PT Kereta Cepat Indonesia China (KCIC), a joint venture between PT Pilar Sinergi BUMN Indonesia (PSBI) and their Chinese partners, principally Beijing Yawan HSR Co. The agreement was hailed as a model of business-to-business collaboration, with no direct government guarantee and no financial risk, at least on paper. 

In early 2023, both Indonesia and China recognised a cost overrun of around US$1.2 billion, due to a pandemic-induced delay in construction, which called for the Indonesian government to add an extra US$1.2 billion to cover the total cost of US$7.2 billion. This makes Whoosh the BRI’s most expensive completed rail project through 2023.

The original loan had a 40-year term with a ten-year grace period ending in 2028, meaning Indonesia is not required to begin repaying the principal until then. The added debt increased interest repayment, putting PSBI and its Indonesian shareholders in financial distress.

With three-quarters of financing borrowed, shortfalls in ridership revenues, coupled with even small fluctuations in interest payments, ripple into the balance sheets of these Indonesian SOEs. Therefore, debt repayment has recently surfaced as a major challenge to Whoosh’s operation and threatens its long-term financial viability while complicating Indonesia’s infrastructure plans, including the extension of Whoosh to Surabaya or beyond.

Whoosh’s financial strain manifests itself through a complex organisational and equity structure. Responsible for a quarter of the borrowing cost via equity, KCIC also operates Whoosh as a joint venture between PSBI (60%) and Beijing Yawan HSR Co. (40%).

PSBI consists of Kereta Api Indonesia (58.53%), PT Wijaya Karya (33.36%), PT Jasa Marga (7.08%), and PT Perkebunan Nusantara VIII (1.03%), all Indonesian SOEs. Beijing Yawan HSR Co. is a joint venture, formed by Chinese SOEs including China Railway Group Limited (CREC) (42.88%), Sinohydro Corporation Limited (30%), CRRC Corporation Limited (CRRC) (12%), China Railway Signal and Communication Corp (CRSC) (10.12%), and China Railway International Co., Ltd.(CRIC) (5%). 

Kereta Api Indonesia (KAI), the main state-owned railway operator, has indirect control of Whoosh through its ownership of a majority of shares in PSBI. KAI has absorbed close to 951 billion rupiah in losses — prompting its executives to warn that without intervention, KCIC’s financial deterioration strains PSBI, which in turn puts pressure on its state-owned shareholders, reducing their budgetary flexibility for core operations. 

Among them, Wijaya Karya (WIKA) faces an especially precarious position. Both an investor in PSBI and the sole domestic contractor in the High-Speed Railway Contractor Consortium (HSRCC), WIKA has collaborated with Chinese firms on the high-speed rail project. Having injected approximately 6.1 trillion rupiah into the project, a stake that has reversed into a loss, WIKA has suffered negative quarterly and annual earnings.

Whoosh’s operational deficits have rippled across multiple SOEs’ balance sheets. A combined minority owner with 40% of KCIC’s equity, the Chinese SOEs face less or little financial strain due to much stronger financial backing by the Chinese government.

The Indonesian government has yet to announce a plan to stabilise Whoosh’s finances, leaving the project’s future uncertain. Luhut Binsar Pandjaitan, chairman of the National Economic Council (DEN) and formerly the coordinating minister for maritime affairs and investment (2019-2024), has openly advocated for debt restructuring with China, citing renegotiation as a necessary condition for future HSR extension to Surabaya.

Finance Minister Purbaya Yudhi Sadewa, on the other hand, believes that public funds should not be utilised to pay project debt, noting that Indonesia’s sovereign wealth management structure for state-owned enterprises — now consolidated under Danantara — should assume financial responsibility for these obligations.

Danantara has admitted that it is conducting ongoing restructuring talks with Chinese banking regulators. These discussions are centred on loan terms, interest rate modifications and the possibility of switching to multi-currency payments, including in Chinese RMB, a move aimed at optimising cash flow and aligning obligations with long-term operational goals. Meanwhile, KCIC, the joint operator, continues coordination with Indonesian ministries, Danantara, and Chinese shareholders to design a durable sustainability plan. 

Whoosh’s financial fortune may benefit from future expansion. President Prabowo Subianto has expressed an extension of Whoosh to Surabaya, and potentially eastward to Banyuwangi as a gateway to Bali. Supporters argue that a longer corridor, connecting more dense populations and economic zones, would improve ridership and shorten break-even times. Yet this optimism is contingent upon addressing the financial structure of the first phase. Extending the line without stabilising Jakarta-Bandung risks exacerbating the current financial woes.

National sentiment reflects this controversy. To some Indonesians, Whoosh demonstrates technological progress and smart mobility. To others, it evokes caution, particularly regarding the possibility of indirect public bailouts. Although the debt is formally corporate rather than sovereign, the heavy involvement of state-owned firms creates a grey zone of responsibility. If SOEs fail to repay, the cost may eventually shift to the state budget, notwithstanding initial promises of minimal fiscal vulnerability.

This apprehension harkens back to a tired narrative about BRI financing as “debt trap diplomacy”, tied to a single instance of Hambantota Port in Sri Lanka. The port was leased to the Chinese SOE of China Merchants Group for 99 years after Sri Lanka failed to service a loan from China. The case, however, was debunked as a myth by careful research showing that Chinese banks are willing to restructure the terms of loans and have not seized an asset from any country, as claimed by some groundless coverage by Western media.

Indonesia may draw lessons from two major rail products in Malaysia and Kenya. Regarding the East Coast Rail Link (ECRL) in Malaysia, also touted as a BRI flagship project, the government renegotiated its original cost of US$15.7 billion down to US$12 billion, which means that it would eclipse Whoosh as the most expensive BRI-enabled rail project.

Moreover, the Malaysian government has negotiated favourable terms regarding a 50-50% joint-venture company to operate ECRL upon its scheduled launch in 2027. Both sides will be equally responsible for any operating losses. If ECRL turns out profitable, the Chinese side will take 20% profit, leaving 80% to the Malaysian side.

As the largest and most expensive ever infrastructure project in Malaysia, and partly due to ECRL’s long run through small and underdeveloped cities and towns along Malaysia’s east coast, ECRL’s expected return on investment through operation and related benefits may not materialise as quickly as Whoosh. On the other hand, Whoosh is unlikely to renegotiate for the highly favourable split of operational profit as ECRL. 

Kenya’s Standard Gauge Railway (SGR), another BRI flagship infrastructure project built with a loan of around US$5 billion from China, offers a different but relevant lesson for Whoosh, in terms of post-operation loan restructuring.

Since its launch in June 2017 and through June 2025, the Madaraka Express, the passenger side of SGA, has safely transported over 15 million passengers. Its freight service moved nearly 40 million tons of cargo in the same period, cutting the trip between Mombasa and Nairobi and then Naivasha from over 48 hours by road to eight hours.

Due to its below expected passenger and freight shipping, SGA has been operating behind schedule in repaying the loan. As a compromise, the Kenyan and Chinese governments recently agreed on a debt swap to restructure the remaining US$3.5 billion in RMB, which would save Kenya US$215 million in interest payments.

Similar to Whoosh’s planned extension to east Java, the extension of SGR from Naivasha to Malaba on the Uganda border, scheduled to begin in early 2026, aims to generate more potential revenues for long-run financial sustainability.

To sustain its long-term financial health, Whoosh may need a multi-pronged strategy. Loan restructuring with the CDB remains pivotal, whether via tenure extension, blended or reduced interest rates, or partly RMB-denominated payments to lessen currency risk. Danantara, tasked with negotiations, may pursue a hybrid approach, combining gradual recapitalisation with asset-backed debt restructuring that focuses on infrastructure components rather than relying on Whoosh’s ticket sales or daily operations to service the debt.

Transit-oriented development (ToD) — building urban hubs around key stations like Halim, Padalarang, and Tegalluar to boost ridership and generate revenue — remains a long-term revenue source, but only if it is accompanied by zoning alignment, land value capture, and integrated last-mile connectivity that transforms the high-speed line from a premium rail into a metropolitan mobility backbone. 

Moreover, if a regulatory split-financing model — in which the government assumes infrastructure debt, and operators handle rolling stocks and operations — can be obtained via renegotiation, it can alleviate balance-sheet pressure on the multiple SOEs, but only if it is accompanied by transparent settlement of outstanding vendor claims and strict performance metrics to avoid moral hazard.

Ultimately, the key to sustainability is a series of interventions: restructure debt, rebuild ridership channels, unlock non-fare income and manage the project with discipline rather than symbolism. If most or all of these measures are implemented, Whoosh will continue to stand as a shining example of successful and sustainable cooperation between Indonesia and China.

Related: BRI’s Jakarta-Bandung high-speed railway: High costs but high returns | How China helped build Indonesia’s high-speed rail