Government Will Inject PSO Capital Into Whoosh, Economist: China Must Also Increase

JAKARTA - The government's plan to inject Public Service Obligation (PSO) funds to support the operations of the Whoosh high-speed train is considered a potential way to ease the financial burden on PT Kereta Cepat Indonesia China (KCIC).

However, this step needs to be balanced with a commitment from China, the project's partner.

Next Indonesia Center Director, Herry Gunawan, believes the PSO scheme is the most realistic option to cover some of KCIC's operational costs through the state budget. However, it should not be used to cover the project's debt.

"Using PSO is actually the most feasible way to cover operational costs with the state budget. So, it takes some of KCIC's burden so Whoosh can make a profit and pay its debt. It shouldn't be used to cover the debt," Herry told VOI on Wednesday, November 12.

Furthermore, according to Herry, if the government intends to help pay off the project's debt, the funds should be disbursed in the form of additional capital, not PSO.

"If you want to cover the debt, the injection of funds should be for capital," he said.

Herry also reminded the government not to bear the financial burden of this strategic project alone.

This is because KCIC is a joint venture between a consortium of Indonesian state-owned enterprises (SOEs) holding 60 percent of the shares and a Chinese state-owned enterprise (SOE) holding 40 percent of the shares.

"If this is done, the Chinese SOE holding 40 percent of KCIC's shares will benefit. Therefore, the allocation of funds disbursed from the state budget for KCIC must be clear," he said.

If the government's capital injection is categorized as additional capital, Herry continued, then China must also contribute capital in proportion to its ownership.

"If they don't add capital, their shares could be diluted," Herry said.

Previously, Minister of Investment and Downstreaming and CEO of Danantara Rosan Perkasa Roeslani explained that the government and Danantara are currently reviewing plans to inject public service obligation (PSO) funds from the state budget to help finance the future operation of the Jakarta-Bandung Whoosh high-speed train.

Discussions regarding the use of PSO funds for Whoosh were discussed in a limited meeting chaired by President Prabowo Subianto at the Presidential Palace in Jakarta on Wednesday, November 5.

The meeting was attended by Rosan, Finance Minister Purbaya Yudhi Sadewa, Coordinating Minister for Economic Affairs Airlangga Hartarto, State Secretary Prasetyo Hadi, and Cabinet Secretary Teddy Indra Wijaya.

"We've already coordinated. Regarding Whoosh, there will be a portion of the public service obligation that will be covered by the government, and there will also be a portion of the infrastructure that will be shared," Rosan said in response to reporters' questions after the meeting at the Presidential Palace in Jakarta on Wednesday afternoon, as quoted by Antara.

When asked further about the scheme for using the PSO funds, Rosan could not elaborate.

"We're finalizing this, but as previously stated, the government will definitely be involved. There's a law for infrastructure, and mass transportation is the government's responsibility," said Danantara CEO Rosan P. Roeslani.