The State Budget Disbursement for the High-Speed ​​Train Project is a Signal This Business Is Not Profitable For Investors?

The State Budget Disbursement for the High-Speed ​​Train Project is a Signal This Business Is Not Profitable For Investors?

 

JAKARTA – (12/10/2021) BUMN observer from the University of Indonesia (UI), Toto Pranoto, presented his views regarding the government’s decision to provide capital injections for the completion of the construction of the Jakarta-Bandung high-speed train. According to Toto, this is an initiative to complete the work on time.

“I think the state has finally decided to provide additional PMN (state equity participation) to PT KAI as the lead consortium so that work on this project can be completed on time in 2022.” he said through the virtual Profit channel, CNBC Indonesia, Tuesday, October 12.

Toto added that this project has different characteristics from several other infrastructure projects. He also disagrees with the notion that the government’s capital injection indicates that this project is less attractive to investors.

“This is an infrastructure project, so the investment model is long term one. Therefore, we need investors who also have a long term horizon for their investments.” he said.

Furthermore, the professional, who is also listed as an academic, also explained that investors who invest into the Jakarta-Bandung high-speed train have certainly taken into account all the positive aspects and risks that will follow in the future.

“If we get investors who are interested and agree that they will invest into this project, of course they are doing it on the basis of a mature calculation that this project will be economically visible to work on.” he said.

In detail, Toto explained that the high-speed rail project is a part of the national priority program and has begun to be worked on several years ago.

“We have started this project in 2015 until 2019, then also in early 2020 until COVID-19 hit. So it is necessary to make adjustments that may lead to cost overruns.” he said.

To that end, Toto suggested to the government and the consortium involved in this national strategic project to redefine the concept of cooperation so that it can be aligned with the existing challenges and can provide economic benefits.

“I think it is very important to see how to make a new model that will later allow this railway project to be really visible, both in terms of workmanship and future operation.” said Toto.

As previously reported, President Joko Widodo (Jokowi) has approved the use of the APBN as a source of funding for the Jakarta-Bandung high-speed train project, which is experiencing cost overruns.

It is known that the investment needs of this project jumped from US$ 6.07 billion or around Rp 86.67 trillion (exchange rate of Rp 14,280) to US$ 8 billion or equivalent to Rp 114.24 trillion.

Meanwhile, decision  is contained in the Presidential Regulation (Perpres) Number 93 of 2021 which was only signed on October 6, 2021. The regulation is an amendment to Presidential Regulation Number 107 of 2015, concerning the Acceleration of Implementation of Infrastructure and Facilities for the Jakarta-Bandung high-speed train.

 

Source: https://voi.id/ekonomi/93678/kucuran-apbn-ke-project-kereta-cepat-jadi-signal-bisnis-ini-tak-menguntungkan-bagi-investor

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