Operational, funding plan considered ideal for other nations

Indonesia's first high-speed railroad project, which started construction on Thursday, could become a financial and operational model for other headline infrastructure projects in the region, according to rail industry and funding experts.

Scheduled for completion in 2019, the $5.5 billion line from Jakarta to Bandung is being developed by PT Kereta Cepat Indonesia-China - a consortium involving Indonesian state-owned companies and China Railway International Co Ltd, a subsidiary of China Railway Corp.

It is being 75-percent financed through a loan provided by China Development Bank, with the remainder of the funding from the JV partners themselves.

Zhou Qinghe, president of CRRC Zhuzhou Electric Locomotive Co, which is part of the country's largest train manufacturer China Railway Rolling Stock Corp, said such enhanced regional cooperation, especially in rail transportation, could become the norm in the future, will help stimulate trade, and attract further investment.

The Chinese trainmaker has a manufacturing base in Malaysia involved in production, assembly, testing, maintenance and refurbishment, with an annual production capacity of 100 electric trains and light railway engines.

The 150-kilometer Jakarta-Bandung link, given its length and complexity, is expected to create more than 41,000 jobs a year during construction, he said. It will carry 44,000 passengers daily, and travel time between the two central hubs will be reduced to under 40 minutes from the current 3-5 hours.

"The line will provide a boost to local industries such as power generation, logistics, smelting, parts manufacturing, infrastructure, electronics, and even food and beverage supply - it represents balanced growth, in a number of sectors."

The stations and their surrounding areas will also be able to feed off the project, resulting in rich opportunities for real estate and other associated sectors.

Across the Association of Southeast Asian Nations region, CRRC is already targeting projects in Malaysia, Indonesia, Singapore and Thailand, with rising demand for both electric locomotives and commuter trains for city and suburban lines.

"Ongoing plans by Singapore, Indonesia and Malaysia to build high-speed rail links will further fuel the hope that Southeast Asia could one day have a similar European-style railway system," said Zhang Xiaojing, director of the Institute of Economic Research for China and ASEAN at Beijing-based University of International Business and Economics.

Zhang said that because most Southeast Asian nations have only just begun to build new railway lines or buy new trains, they are keen to acquire technological support from China, too, to assist in daily operations, maintenance, staff training and other services.

China Railway Corp, the country's railway operator, has also said it plans to accelerate the pace of its building, both of high-speed and regular railways, in countries including Indonesia, Malaysia, Russia and the United States, to compete with rivals from Japan, Germany and France.