The Indonesian government is in debt negotiations with China over its $7.3 billion “Whoosh” bullet train as the three-quarter Chinese-backed railway struggles to make a profit for shareholders to pay back the debt. The project is so far running at a loss, losing $253 million in 2024 and $96 million in H1 2025, and passenger numbers are about a third of what was expected. Chinese state-owned enterprises own 40% of the project, while an Indonesian sovereign wealth fund owns the other 60%.
There were a number of questions raised about the viability of the project prior to its development, and it would appear that the fundamental issue of this railway was that it was not conducted as a commercial project (I.e. planned with demand and financial viability in mind), rather it was approached with more of a “if we build it they will come” mindset, but that has not materialized.
Chinese involvement in the project comes through the Belt and Road Initiative (BRI) and there are similar BRI project-related debt problems elsewhere in the world, with Kenya a pertinent current example. And this has the potential to cast doubt on the efficacy of BRI megaprojects that are created without the surrounding systems that make them financially viable.
China’s domestic rail network does not bring in much, if any money, but it facilitates surrounding ecosystems and was developed in the context of the Chinese system, which guaranteed its completion and use. But similar types of system are not necessarily in place anywhere else, including in the Indonesian example.