Published on : Thursday, December 21, 2017
After being pushed out of the 142-kilometer Jakarta-Bandung fast-rail project for looking sovereign guarantees, the Japanese must be smiling behind their hands now China finds itself constrained by an issue it should have seen coming.
Chinese President Xi Jinping complains to Indonesian counterpart Joko Widodo about the slow progress, the US$5.9 billion venture will not be going anywhere until PT Kereta Cepat Indonesia-China (KCIC) acquires at least 210 hectares of prime industrial land on eastern outskirts of Jakarta.
Overall, the joint-venture developer needs at least 550 hectares spread across nine cities and districts along the route of the planned rail link. This was originally supposed to have been completed in time for the 2019 legislative and presidential elections.
Japanese developers Adaro Energy spent three years haggling over the price for a 10% stake in the site of a $4 billion, 2,000 megawatts coal-fired power station on Java’s northern coast.
The transport experts consider buying the land is crucial, not only to secure the right of way for the rail track, but more importantly for the sort of associated commercial and residential development that is necessary to make the project financially viable.
With fares unable to cover costs, so-called transit-orientated development has been incredibly successful in building Hong Kong’s Mass Transit Railway (MRT) network and other similar projects around the world, which otherwise could not have survived without state subsidies.