May 15, 2017 10:09 pm JST

China agrees to lend $4.5bn for Jakarta-Bandung railway

Indonesian consortium executive says minor documents yet to be submitted

WATARU SUZUKI, Nikkei staff writer

President Joko Widodo, center, at the January 2016 groundbreaking ceremony in Walini, West Java, for the Jakarta-Bandung rail link. © Reuters

JAKARTA -- China Development Bank (CDB) has agreed to lend $4.5 billion to a consortium of state-owned companies from Indonesia and China building the 140km Jakarta-Bandung railway as Beijing steps up efforts to move the delayed project forward.

The agreement was signed during President Joko Widodo's visit to a Belt and Road Initiative forum in Beijing on Sunday that included bilateral talks with China's President Xi Jinping.

The loan will cover 75% of the project's estimated cost, with the consortium taking on the balance. The project was agreed last year, but the signing reaffirms CDB's commitment after estimated costs swelled from $5.1 billion to $6 billion.

An Indonesian executive in the consortium said the loans will be disbursed from as early as June subject to relevant documentation being completed. "Conditions have been met but some minor documents have not been submitted," Bintang Perbowo, president of state-owned construction company Wijaya Karya, told the Nikkei Asian Review.

Perbowo added that the loan terms are unchanged from the initial agreement, with 60% in U.S. dollars and the rest in Chinese yuan.

Bidding for a rail link that will connect the Indonesian capital to the capital of West Java in 45 minutes was won by China in 2015 against strong competition from Japan. Observers see the project as evidence of China's growing role in addressing Asia's enormous infrastructure needs.

Although ground was broken on construction in January 2016, the project has been dogged by difficulties acquiring land and permits. The consortium still aims to complete the project by 2019, when Widodo's five-year term ends.

Nikkei staff writer Erwida Maulia contributed to this story

Asia300

PT Wijaya Karya Tbk

Indonesia

Market(Ticker): JKT(WIKA)
Sector:
Industry:
Industrial Services
Engineering & Construction
Market cap(USD): 1,604.84M
Shares: 8,969.95M

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access (5 articles per month without subscription)
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access (5 articles per month without subscription)
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.