US$ 13 billion for new toll roads
At present, around 1,200 km of toll roads are being built in Indonesia – most of them on Java. The market researcher Data Consult estimates the total investment sum at almost US$ 15 billion. In addition, 660 km of toll roads with an investment value of US$ 13 billion are being tendered or prepared for tender by the toll road regulatory authority BPJT.
The deficits are considerable, as the archipelago has only 1,500 km of highways. About one-third of these have been built in the past four years, mainly as toll roads.
The longest toll roads are on the island of Java, where two-thirds of Indonesians live. The Trans-Java Toll Road, which has recently been completed, cut the traveling time from the western tip of Java to the eastern city of Surabaya from 14 to 9 hours. The Trans-Sumatra Toll Road is a mega-project that has been around for decades. With a total length of 2,800 km, it has 17 sections, most of which are still in the planning stages.
Indonesia: Planned toll road projects
| Route | Length (km) | Investment (US$ billion*) | Status |
| Gedebage-Tasikmalaya-Cilacap (West Java-Central Java) | 184.1 | 3.8 | Tender in preparation |
| Kamal-Tekulnaga-Rajeg (Banten/Java) | 38.6 | 1.6 | Tender in preparation |
| Solo-Airport Yogyakarta-Kulonprogo (Central Java) | 91.9 | 1.6 | Tender in preparation |
| Probolinggo-Banyuwanggi (East Java) | 172.9 | 1.5 | Tender |
| Jakarta Cikampek 2 Selatan (Jakarta-West Java) | 64.0 | 1.3 | Tender |
| Bridge Panajam-Passer Utara (Eastern Kalimantan) | 7.6 | 1.2 | Tender in preparation |
| Balaraja-Semanan (Banten/Java-Jakarta) | 31.9 | 1.1 | Tender in preparation |
| Access to Port Patimban (West Java) | 37.7 | 0.45 | Tender in preparation |
| Serang-Panimbang (Banten/Java) | 33.7 | 0.37 | Tender |
| Total | 662.4 | 12.8 |
*Conversion according to February 2019 exchange rate: 1 US$ = 14,100 Rupiah
Source: Toll Road Regulator BPJT
Public companies have had to provide most financing so far
The expansion of the highway network puts pressure on the Indonesian public budget. In the past, financing was provided primarily by state-owned companies. The government wants to increase involvement by the private sector, but interest so far has been meager.
In recent years, when private companies participated in tenders and were awarded with projects, they often withdrew before signing the contract. The companies are mainly deterred by the long financing periods. Unresolved land issues also are an obstacle. And toll refinancing can take several decades, as concessions for the operation of toll roads are awarded over periods of 35 to 50 years.
Additionally, the government reserves the right to intervene in calculating the road toll, which can make long-term calculations obsolete. In 2018, for example, the toll was to be reduced by 23%, from US$ 0.92 to US$ 0.71 per kilometer. The plan was rejected for the time being.
Private companies financing the construction of highways are concentrating primarily on the Jakarta metropolitan area, where projects are implemented more quickly and yields generated more reliably.
Indonesia: Toll road projects under construction (selection)
| Route | Length (km) | Investment (US$ million*) | Investor | Status |
| Pekanbaru-Kandis-Dumai (Riau/Sumatra) | 135 | 1,200 | Hutama Karya | Land clearance/ construction |
| Cileunyi-Sumedang-Dawuan (West Java) | 58.5 | 875 | Central government | Land clearance/ construction |
| Cimanggis-Cibitung (West Java) | 26.3 | 500 | Waskita Toll Road | Under construction |
| Serpong-Balaraja (Banten/Java) | 30.0 | 370 | Consortium | Start of construction |
| Depok-Antasari (West Java) | 21.5 | 340 | Citra Wassphutowa | Land clearance/ construction |
| Cibitung-Cilincing (West Java-Jakarta) | 34.0 | 300 | MTD CTP-Expressway | Land clearance/ construction |
| Cengkareng-Batuceper-Kunciran (Jakarta-Banten) | 14.2 | 250 | Marga Kunciran-Cengkareng | Land clearance/ construction |
*Conversion according to February 2019 exchange rate: 1 US$ = 14,100 Rupiah
Sources: Data Consult, Toll Road Regulator BPJT
Indonesia builds first high-speed train
Indonesia’s current rail projects include prestige projects, such as the construction of the first metro in Jakarta (which opened for trials in March 2019, with construction and financing by Japan), the first high-speed train between Jakarta and Bandung (scheduled for completion in 2021, with construction and financing by China) and the airport transfer link in Jakarta, the initial portion of which is currently operating. There are also plans to build a 1,700 km railway connection in Sulawesi.
The total length of the rail network in the huge archipelago is just 8,000 km, including intra-city and industrial lines. Some of them date back to Dutch colonial times and must be shut down due to age. 6,400 km of track is on the main island of Java, but only half of this is currently operating.
Cautious private investors make financing difficult
The construction of railway lines is expensive and tedious. Due to the uneven terrain, bridges and tunnels are often necessary. The Ministry of Transport promotes public-private partnerships (PPP), and the government is assisting with the often complicated acquisition of land. There is also the option of 100% private ownership. Nevertheless, involvement by the private sector remains low. Therefore, meager state enterprises must continue to provide financing, resulting in slow expansion of the rail network.
Indonesia: Railway projects
| Project | Company | Investment (US$ million*) |
| High-speed train Jakarta-Bandung | Kereta Cepat Indonesia Cina (KCIC) | 5,100 |
| LRT Jakarta-Bogor-Depok-Bekasi | Adhi Karya | 1,600 |
| MRT Phase II between Bundaraan HI and Kampung Bandan | MRT Jakarta | 1,600 |
| LRT Jakarta Corridor I, Phase I: Velodrome, Rawamangun-Kelapa Gading | Jakarta Propertindo | 480 |
| Train to Airport Adi Sumarmo | Kereta Api Indonesia,Angkasa Pura I, Pembangunan Perumahan | 65 |
| Makassar-Parepare | Kereta Api Indonesia | 60 |
| Bireun-Lhokseumawe, segment Krueng Geukue-Paloh Batee (8.3 km) | Kereta Api Indonesia | Not specified |
| Besitang-Langsa, segment Besitang-Sei Liput (35 km) | Kereta Api Indonesia | Not specified |
| Rantauprapat-Kota Pinang, segment Rantauprapat-Pondok S2 (33 km) | Kereta Api Indonesia | Not specified |
| Dual track: Purwokerto-Kutoarjo-Solo-Kedung Banteng-Jombang-Wonokromo | Kereta Api Indonesia | Not specified |
*Conversion according to February 2019 exchange rate: 1 US$ = 14,100 Rupiah
Source: Data Consult
Signal technology must be revamped
Indonesia is heavily reliant on technology imports for its rail infrastructure. Although trains are manufactured within the country, they are not built to run at faster speeds.
Signal technology has the greatest need for modernization. The signaling systems in the country are 20 to 30 years old and can no longer be modernized, but require complete overhaul. The market analyst Data Consult estimates the investment requirements for signal technology in Java and Sumatra at US$ 350 million and in the Jakarta area at US$ 150 million.
Indonesia’s imports in the railway sector amounted to almost US$ 160 million in 2017. Signal technology accounted for 80% of that. The most important suppliers are China, the USA, Japan and Germany, although large individual projects lead to statistical fluctuations.
Second subway line in Jakarta
The largest and most expensive upcoming rail project (after the high-speed line between Jakarta and Bandung) will be the second section of the subway in Jakarta. It will run from the city center via seven stations over a distance of 8 km to the north of the city. It will run deeper into the ground than the first section, which is twice as long, and could therefore become more expensive.