Indonesia's "Whoosh" Problem

Indonesia's first high-speed rail line connecting Jakarta with Bandung in West Java has become a cautionary business tale about infrastructure megaprojects and exactly how they are funded.

Despite cutting travel time dramatically and carrying over 12 million passengers in its first two years, the Javanese railway known as "Whoosh" is drowning in debt and losing billions of rupiah annually.

The 142-kilometre line has reduced the journey from three hours to just 40 minutes, and at speeds of 350 kilometres per hour, it's one of the world's fastest railways.

But these impressive statistics mask a financial disaster that threatens to burden Indonesian taxpayers for generations.

A Debt Crisis Unfolding

The project's total debt has ballooned to NZ$11.3 billion (116 trillion rupiah), far exceeding the original estimate of NZ$9.8 billion. About 75 percent of the funding came from the China Development Bank, with interest rates of 2 percent on the principal loan and 3.4 percent on cost overruns.

PT Kereta Cepat Indonesia China (KCIC), the joint venture operating Whoosh, reported losses of approximately NZ$420 million in 2024, with another NZ$160 million lost in the first half of 2025. The burden falls hardest on PT Kereta Api Indonesia (KAI), the state-owned railway operator that holds the largest stake in the project's parent company.

"This is a time bomb," KAI's president director, Bobby Rasyidin, told Indonesia's lawmakers in August. "We could have been profitable. But because of the Whoosh debt, we are in deficit."

The financial crisis has only intensified in recent months.

In October 2025, newly appointed Finance Minister Purbaya Yudhi Sadewa publicly rejected using the state budget to cover Whoosh's debts, insisting that Danantara, Indonesia's new sovereign wealth fund, should shoulder the responsibility.

Sadewa noted that the railway generates only about NZ$1 billion in annual revenue while owing approximately NZ$3.2 billion in debt payments each year to China – a massive difference which has a significant impact on the Indonesian economy.

However Indonesian President Prabowo Subianto instructed his ministers in late October to find an answer to the debt issue, including potentially extending loan terms. He's urged Indonesians not to worry about the financial burden, insisting the government will take responsibility. But his reassurances have done little to calm concerns about the project's viability.

Adding to the controversy, Indonesia's Corruption Eradication Commission (KPK) launched a preliminary investigation into alleged corruption in the project in early 2025. The probe centres on allegations that the per-kilometre construction cost reached NZ$85 million – roughly three times higher than similar projects in China.

In November, KPK investigators revealed they had found indications that state-owned land was resold to the state as part of land acquisition for the railway, with inflated prices potentially causing substantial losses. The investigation continues.

Anti-corruption activists have called for questioning of former Indonesian President Joko Widodo and some of the senior officials from his administration who oversaw the project.

Controversy & Broken Promises

The Jakarta-Bandung High-Speed Rail was launched during Jokowi's presidency, with commercial operations beginning on 17 October 2023. But the project faced fierce opposition even before construction began.

Ignasius Jonan, who served as transport minister from 2014 to 2016, strongly opposed the plan – a stance that ultimately cost him his cabinet position. As a former head of KAI, Jonan argued the project was commercially, technically and operationally flawed.

He believed building a high-speed line for such a short route was wasteful, particularly when Indonesia had more pressing infrastructure needs. High-speed rail, he argued, was better suited for longer corridors like the Jakarta-Surabaya line, a journey between two of the biggest cities on Java, that can take more than 10 hours - even on a good day. Jonan also warned against over-concentration of development on Java, while other parts of Indonesia lagged behind.

When Jokowi launched the project in 2016, he promised it would not burden taxpayers, claiming it would be financed through a business-to-business arrangement between Indonesian and Chinese state-owned enterprises. The government, he said, would not provide guarantees even if the project ran into trouble.

That promise quickly vaporised, and the government was forced to underwrite Whoosh's debts .

Whoosh has also become a focus over concerns about China's Belt and Road Initiative (BRI). A report by Australia's Lowy Institute found that the world's 75 poorest nations owed China a combined NZ$36 billion in debt repayments, largely from BRI projects. China is expected to collect NZ$57 billion on BRI projects around the world this year alone.

The BRI typically begins with Beijing co-financing a project. But as repayment becomes unmanageable, debtor nations are often forced to hand over assets to China. Analysts call this "hidden debt" – seemingly friendly partnerships that become heavy burdens stripping countries of leverage and resources.

What Happens Next?

Danantara is now looking at a couple of options: allowing the government to take over the infrastructure, or injecting new capital into KAI. No final decision has been reached, while intense negotiations continue with Chinese partners over debt restructuring.

Finance Minister Sadewa is expected to join a high-level delegation travelling to China very shortly for debt renegotiation talks, seeking more favourable terms including extended repayment periods (possibly out to 60 years) and potentially different interest rates.

Meanwhile, President Prabowo has expressed ambitious plans to extend Whoosh beyond Surabaya for 220 kilometres to Banyuwangi – on the far eastern coast of Java some 1,000 kilometres from Jakarta – though he provided no details on routing, construction or timeline. Given the current financial position, many in Indonesia doubt such an expansion will eventuate.

Lessons Learned

The whole debacle offers other countries in the region some sobering lessons in the management of infrastructure projects involving foreign investment :

Due diligence matters: Proper feasibility studies and transparent cost-benefit analyses are essential before committing to massive infrastructure projects.

Beware optimistic projections: Whoosh's passenger numbers, while growing, fell far short of original projections needed to cover costs.

Hidden costs of cheap loans: Chinese financing may appear attractive initially, but terms can prove onerous when projects underperform.

Political pressure can override expertise: Jonan's technical expertise was dismissed, and he lost his job for opposing the project. Good governance requires listening to expert advice, even when politically inconvenient.

Transparency prevents corruption: The lack of published financial reports from KCIC, combined with the allegedly inflated construction costs, created conditions for potential corruption.

As Indonesia grapples with this NZ$11 billion problem, the Whoosh high-speed rail stands as a warning: big infrastructure projects require more than political will and foreign money – they need sound economics, transparent governance, and realistic expectations. Without these, today's symbol of modernisation can become tomorrow's financial hole in the ground.

Banner Image: Halim Station, East Jakarta/ Dwifa Bagaskoro

Asia Media Centre