Indonesia’s US$20 billion Bali LRT raises eyebrows over heavy China reliance

The project has also prompted concerns over its funding source and possible traffic jams

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Peak hour traffic in Bali. Photo: Dave Smith

Published: 10:00am, 12 Sep 2024Updated: 12:03pm, 12 Sep 2024

A US$20 billion underground light rail project in Bali promises to be a boost for its tourism, but analysts say Indonesia’s reliance on Chinese contractors and the resort island’s cultural and spatial regulations could pose significant hurdles.

Dubbed the Bali Urban Subway, the project is overseen by PT Sarana Bali Dwipa Jaya (SBDJ) and will be built by local firm Indotek and the China Railway Construction Corporation (CRCC), the project’s main contractors, and PT Sinar Bali Bina Karya.

“We chose CRCC because it has a reputation as a global rail transport contractor, which has experience building 200,000km in more than 100 countries,” SBDJ President Director Ari Askhara told reporters during the groundbreaking on September 4 involving a ngeruwak, a Hindu ritual to cleanse a construction area before the project’s first stone was laid.

The LRT marks another milestone for state-owned companies from China, strengthening their grip on Indonesia’s infrastructure market, particularly in public transport. CRCC was one of the contractors that launched the US$7.2 billion Jakarta-Bandung high-speed railway, a flagship Belt and Road Initiative project in Indonesia, for commercial operations last year.

“This shows the closeness between Indonesia and China, between government to government and government to businesses,” said Bhima Yudhistira, executive director at Jakarta-based economic and policy research think-tank Center of Economic and Law Studies.

“But why was it given to China? It should be done by those who do the feasibility study. It’s more likely because that is [Indonesia’s] preference, that China will be a priority [partner], especially in the development of public transport in the future.”