Japan Provides $900 Million Loan to Indonesia for Jakarta Subway Line

Japan agrees to provide a $900 million loan to support the construction of Jakarta's 84.1-kilometer East-West subway line. The project aims to alleviate Jakarta's traffic congestion and air pollution, with construction set to begin by 2026.

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Nitish Verma
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Japan Provides $900 Million Loan to Indonesia for Jakarta Subway Line

Japan Provides $900 Million Loan to Indonesia for Jakarta Subway Line

The Japanese government has agreed to provide, yen, loan, rapid, project of up to $900 million (approximately 140.7 billion yen) to support the construction of the 84.1-kilometer East-West subway line in Jakarta, Indonesia, as part of the country's mass rapid transit system project. The loan, announced by the Japan International Cooperation Agency (JICA), brings the total Japanese financing for the Jakarta MRT project to 227 billion yen.

The East-West Line will connect West Jakarta's Tomang and Bekasi's Medansatria, with construction divided into two phases. The 24.5-kilometer first stage is set to begin by 2026 and is expected to be completed by 2031. The new train line will utilize Japanese technology for its vehicle and signaling systems, aiming to alleviate Jakarta's severe traffic congestion and air pollution, which have worsened due to the city's growth and population increase.

Why this matters: This loan agreement highlights the importance of international cooperation in addressing urbanization challenges and promoting sustainable development. The success of this project can serve as a model for other cities in the region, demonstrating the benefits of investing in modern transportation infrastructure to improve the quality of life for citizens and drive economic growth.

JICA Indonesia's chief representative, Yasui Takehiro, acknowledged that the revenue generated from MRT ridership would not be enough to cover the loans. "The revenue from the MRT is not enough. The construction, including the underground stations, takes a lot of money. This happens across the globe that an MRT project cannot generate enough returns," Yasui said. However, he emphasized that the construction of the MRT would improve people's lives, lead to more active industrial activities, and increase Indonesia's gross domestic product (GDP), ultimately enabling the country to confident, ability, loans.

The first loan agreement between JICA and Indonesia dates back to 2006, with a loan worth approximately 1.9 billion Japanese yen for engineering services. Since then, Japan has continued to provide official development assistance loans, including a 70.2 billion yen loan in 2018 for the project's second-phase construction. Yasui confirmed that Indonesia has begun returning the borrowed money, although the exact amount was not disclosed.

The Jakarta MRT has seen significant success since its opening, recording almost 33.5 million passengers in 2023, with over 91,000 people using the public transport system daily. This builds upon the success of the first phase of the North-South Line, which opened in 2019 with the help of a loan from Japan. The Indonesian economy grew 5.11% year-on-year in the first quarter of 2024, with a forecasted growth range of 4.7% to 5.5% for the entire year.

The $900 million loan from Japan for the construction of the 84.1-kilometer East-West subway line in Jakarta demonstrates the continued collaboration between the two countries in improving Indonesia's transportation infrastructure. With the project set to begin construction by 2026 and the first stage expected to be completed by 2031, the new train line aims to alleviate Jakarta's traffic congestion and air pollution while promoting economic growth and improved quality of life for its residents.

Key Takeaways

  • Japan provides $900m loan to Indonesia for Jakarta's East-West subway line.
  • Loan supports 84.1km line, connecting West Jakarta and Bekasi, to alleviate traffic congestion.
  • Project to begin construction by 2026, expected to be completed by 2031.
  • Japanese technology to be used for vehicle and signaling systems.
  • Total Japanese financing for Jakarta MRT project reaches 227 billion yen.