According to Financial Times News, Indonesia is negotiating with China over $7.3 billion in debt from the “Whoosh” bullet train project connecting Jakarta and Bandung. The high-speed railway, developed jointly by Indonesian and Chinese state-owned companies, was 75% funded by Chinese loans and has accumulated massive losses—Rp4.2 trillion ($253 million) in 2024 and another Rp1.6 trillion in the first half of 2025. Passenger traffic has reached only one-third of forecasts due to stations being far from city centers and ticket prices five times higher than slower alternatives. Investment minister Rosan Roeslani confirmed Jakarta is seeking “comprehensive” debt restructuring to avoid potential default, while negotiations focus on loan periods, interest rates, and currencies with a deal expected this year. This financial crisis reveals deeper structural problems in China’s infrastructure export model.
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The Belt and Road Reckoning Arrives
The Whoosh project represents a classic case study in Belt and Road Initiative financing challenges. While China initially offered terms that appeared favorable—not requiring state guarantees compared to Japan’s 0.1% interest offer—the reality proved more complex. As project costs ballooned from initial estimates, Indonesia was forced to provide state guarantees anyway, creating the exact scenario the government sought to avoid. This pattern of initial attractive terms followed by escalating costs and hidden liabilities has become a recurring theme across BRI projects from Pakistan to Sri Lanka to several African nations. The fundamental issue lies in the mismatch between ambitious infrastructure timelines and realistic economic viability assessments.
Technical Design and Market Reality Collide
The technical specifications of high-speed rail systems create inherent economic challenges in emerging markets. The Whoosh train covers 145km in 45 minutes, but this impressive speed comes with enormous operational costs that require high passenger volumes to break even. The station placement far from city centers—a common compromise to reduce land acquisition costs and construction complexity—fundamentally undermines the convenience advantage that justifies premium pricing. When combined with ticket prices exceeding $15 for the cheapest option, the value proposition collapses against conventional rail alternatives costing one-fifth as much. This demonstrates how technical excellence alone cannot overcome flawed economic modeling and poor integration with existing transportation networks.
Sovereign Debt and Strategic Leverage
Indonesia’s current negotiating position reflects the delicate balance many BRI partner countries now face. With President Prabowo Subianto’s ambitious growth targets requiring continued Chinese investment, Jakarta cannot afford to alienate Beijing. Yet the railway’s mounting losses threaten to create what Kereta Api Indonesia’s CEO called a “ticking time bomb” for state finances. The most likely outcome—payment suspensions and extended loan terms—would maintain China’s strategic foothold in Southeast Asia’s largest economy while providing Indonesia temporary relief. However, this approach merely kicks the fundamental viability questions down the road rather than addressing the project’s structural revenue shortcomings.
Broader Implications for Infrastructure Finance
This crisis arrives as China faces its own domestic economic challenges, including a construction and real estate crisis that limits Beijing’s capacity for bailouts. The pattern of BRI debt restructuring becoming increasingly common suggests China may need to fundamentally rethink its infrastructure export model. Future projects will likely require more realistic demand projections, better integration with local transportation networks, and clearer risk-sharing mechanisms. For emerging markets, the lesson is that infrastructure decisions must balance geopolitical considerations with rigorous economic analysis, particularly when dealing with debt-financed megaprojects that create long-term sovereign obligations.
Potential Resolution Scenarios
Several outcomes appear possible, each with different implications for both countries. China could take ownership and operate the railway directly, though this would represent a significant departure from BRI’s partnership model and create operational challenges in a foreign market. Alternatively, a debt-for-equity swap could give Chinese entities greater control while reducing Indonesia’s immediate debt burden. The most likely scenario involves extended payment terms and interest rate reductions that preserve the partnership while avoiding immediate default. Whatever the resolution, the Whoosh project will serve as a cautionary tale about the risks of infrastructure ambitions outpacing economic reality.
