Indonesia announces start date for $1.9bn Vietnam–Laos rail link

[Indos]

Indonesia announces start date for $1.9bn Vietnam–Laos rail link
22 October 2019 | By GCR Staff | 0 Comments

The Indonesia Railway Development Consortium has announced plans to begin work in 2021 on a 400km rail line between Vietnam and Laos for a price of $1.9bn

The consortium is made up of INKA, Indonesia’s state-owned train maker, and Indonesian Railways Company, its main operating company. It also includes electronics company Len Industri and contractor Waskita Karya.

The consortium has signed a cooperation agreement with Vietnam’s HT Construction company and Laos’ PetroTrade.

The deal was first proposed during a 2017 bilateral meeting between Indonesian President Joko Widodo and Lao Prime Minister Thongloun Sisoulith in 2017. The project is now scheduled to begin on site by the end of 2021 and to be complete in 2024.

One of the main investors will be INKA, which plans to raise $640m for the scheme. Budi Noviantoro, the chief executive of INKA, said his company was waiting for PetroTrade to complete its survey of the route before announcing more definite plans.

The partners aim to run trains at up to 120km/h between Thakhek in south-central Laos and Vung Ang Port in Vietnam’s central province of Ha Tinh.

In March, Vietnam and Laos announced an agreement to build a 555km rail link between Vientiane, the capital of Laos, and Vung Ang. The two countries are carrying out a feasibility study for the project with support from the Korea International Cooperation Agency.

Meanwhile, China is building a $7bn north–south rail line through Laos. This a 414km link, which is more than half finished, runs between the Yunnan provincial capital of Kunming and Vientiane. It is due to enter service in December 2021.

Image: The town of Thakhek in Laos, where the line will have its eastern terminus (Tango/CC BY-SA 4.0)

http://www.globalconstructionreview.com/news/indonesia-announces-start-date-19bn-vietnamlaos-ra/

 

[Indos]

I will try to update the progress on this project using this thread. And as the project will be started in 2021 inshaAllah so related news about this project maybe doesnt exist yet until that year.

The project is a showcase of cooperation among Indonesian state owned enterprises in a foreign country to win a tender. As far as I know, any previous foreign project conducted by Indonesian state owned company is usually executed alone, without bringing other state owned companies to join in.

Another similar concept will likely be done in Bangladesh to build power plan which involve PT Pertamina and PT PLN. Two biggest state owned companies that also become biggest companies in Indonesia. SOE minister has stated the plan. Potentially the project also can bring several state owned companies to join force like constructor and heavy industry company.

 

[Viet]

Indonesia announces start date for $1.9bn Vietnam–Laos rail link
22 October 2019 | By GCR Staff | 0 Comments

The Indonesia Railway Development Consortium has announced plans to begin work in 2021 on a 400km rail line between Vietnam and Laos for a price of $1.9bn

The consortium is made up of INKA, Indonesia’s state-owned train maker, and Indonesian Railways Company, its main operating company. It also includes electronics company Len Industri and contractor Waskita Karya.

The consortium has signed a cooperation agreement with Vietnam’s HT Construction company and Laos’ PetroTrade.

The deal was first proposed during a 2017 bilateral meeting between Indonesian President Joko Widodo and Lao Prime Minister Thongloun Sisoulith in 2017. The project is now scheduled to begin on site by the end of 2021 and to be complete in 2024.

One of the main investors will be INKA, which plans to raise $640m for the scheme. Budi Noviantoro, the chief executive of INKA, said his company was waiting for PetroTrade to complete its survey of the route before announcing more definite plans.

The partners aim to run trains at up to 120km/h between Thakhek in south-central Laos and Vung Ang Port in Vietnam’s central province of Ha Tinh.

In March, Vietnam and Laos announced an agreement to build a 555km rail link between Vientiane, the capital of Laos, and Vung Ang. The two countries are carrying out a feasibility study for the project with support from the Korea International Cooperation Agency.

Meanwhile, China is building a $7bn north–south rail line through Laos. This a 414km link, which is more than half finished, runs between the Yunnan provincial capital of Kunming and Vientiane. It is due to enter service in December 2021.

Image: The town of Thakhek in Laos, where the line will have its eastern terminus (Tango/CC BY-SA 4.0)

http://www.globalconstructionreview.com/news/indonesia-announces-start-date-19bn-vietnamlaos-ra/

It’s good that Indonesia won this $2 billion contract not a chinese company.

The rail will connect Laos to the sea via Vietnam. A chinese company controlling the rail would pose a security risk. Vietnam would veto.

Vung Ang Port in Vietnam will end the isolation of landlocked Laos.

While the $7 billion north–south rail line through Laos would bring little economic benefits except high debt burden.

 

[Indos]

It’s good that Indonesia won the contract not a chinese company.

The rail will connect Laos to the sea via Vietnam. A chinese company controlling the rail would pose a security risk. Vietnam would veto.

Vung Ang Port in Vietnam will end the isolation of landlocked Laos.

While the $7 billion north–south rail line through Laos would bring little economic benefits except high debt burden.

Yup. The rail link that will be worked by Indonesian consortium is indeed more strategic than other rail link tender that is won by Chinese since it has direct link to the port.

That 7 billion rail line that will be build by Chinese seems to look overprice since the length is not too different compared to Indonesian rail link project but the project value is 3 times more expensive. It sounds fishy and might happen due to large kick back.

 

[Viet]

Yup. The rail link that will be worked by Indonesian consortium is indeed more strategic than other rail link tender that is won by Chinese since it has direct link to the port.

That 7 billion rail line that will be build by Chinese seems to look overprice since the length is not too different compared to Indonesian rail link project but the project value is 3 times more expensive. It sounds fishy and might happen due to large kick back.

Chinese engineering is expensive.

They suck Laos dry.

 

[Indos]

Indonesia’s Burgeoning Railway Diplomacy
The Indonesian rail sector has demonstrated value as a diplomatic tool, despite having some restrictions.

By Shang-su Wu
February 27, 2020

Credit: Pixabay

As in other Southeast Asian coutries, the Indonesian rail sector is a colonial legacy established with some dependence on external technologies. However, Indonesia has moved on to an independent approach, with the intent of developing its indigenous rail industry. To be fair, other regional countries, such as Thailand and Vietnam, have a certain level of industrial capacity for maintaining their rail networks and building coaches, but none of them has stepped into manufacturing locomotives or diesel and electric multiple units (DMUs and EMUs), not to mention handling rail projects overseas.

Based on a railway workshop from the Dutch colonial era, Jakarta established PT Industri Kereta Api (Railway Industry Limited Stock Company, known as PT INKA) in 1981 for building rolling stock. Since then, the company has gradually expanded its list of products from passenger and freight carriages to diesel-electric and diesel-hydraulic locomotives as well as EMUs and DMUs. Due to the 1.067 meter narrow gauge used in Indonesia, the company has focused on building narrow gauged trains. PT INKA is also attempting to increase the top speed of trains on the narrow gauge from the current 120 km/h to 160 km/h, which will be valuable for the upcoming Jakarta-Surabaya upgrade.

Understandably, PT INKA has technological cooperation with several foreign rail companies, such as Canada’s Bombardier for EMUs, the United States’ General Electric for diesel locomotives, and Switzerland’s Stadler for passenger coaches. In the last cooperation, the factory is located in Banyuwangi, East Java, for the adjacent port facility with an aim at export.

Besides domestic demand from the Indonesian Railway Company (PT Kereta Api Indonesia), PT INKA has exported freight wagons to Australia, Malaysia, and Thailand; passenger coaches to Bangladesh; and locomotives and DMUs to the Philippines — all mostly narrow gauged customers. The latest overseas deal, comprised of 34 DMUs and three diesel-hydraulic locomotives, will become the backbone fleet of the Philippine National Railway until larger upgrades are completed.

In 2019, the Indonesia Railway Development Consortium (IRDC), a joint venture invested by PT INKA and other Indonesian national companies, was formed to provide overall planning, construction, and operation of rail projects overseas. Although the IRDC is planning for some African projects, it has already obtained one contract for a railway between Laos and Vietnam. As a landlocked country, improving land transportation is crucial for Laos’ economy. Most media attention is on the high-speed rail (HSR) between China and Thailand, running via Laos. However, the HSR does not directly lead to any port according to the current project form. The only available rail link is the freight services operated by the State Railway of Thailand (SRT) from Vientiane to the Thai ports. In contrast, the conventional line from Thakhaek in Laos to Vung Ang port in middle Vietnam – to be undertaken by the IRDC — would create a shortcut to the Pacific, serving as an alternative route to the Mekong River. This line could further pave the way for an east-west corridor mentioned in several plans of Mekong regional development.

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For Hanoi, a major concern is that such a project could result in security concerns if a Chinese contractor won the bid given obvious geopolitical potential. In particular, if a Chinese company was involved, there would inevitably be linkage with the Belt and Road Initiative (BRI). The IRDC represents an alternative, regional option. Certainly, Indonesia’s influence on mainland Southeast Asia would subsequently increase through the new railway, but Jakarta has not shown any ambition of challenging or reshaping the status quo in the Mekong basin. Since all three countries involved in the the project are members of the Association of Southeast Nations (ASEAN), they have embraced the ASEAN way of respecting the sovereignty of all others.

In other words, amid the furor over the BRI, Southeast Asian countries now have a regional alternative to improve their rail connections in the form of the IRDC. For Jakarta, this project would be a milestone for its transformation from a receiver to a provider in terms of railways. Furthermore, conducting such a project would strengthen Indonesia’s bilateral and multilateral relations with the host countries of Laos and Vietnam, indirectly promoting the Jakarta’s goal of being a regional leader.

Before the bright future of the Indonesian rail sector is realized, however, several challenges are waiting ahead. The Lao-Vietnam rail project, with a length of 400 km, would be a huge, if not unprecedented, task for the Indonesian engineers. The major domestic projects of the conventional railway are mainly upgrading from a single track to double tracks rather than building new lines. In addition, building this 400 km line passing through the Annamite Range dividing Laos and Vietnam is likely to face some technological challenges, given the expected high numbers of bridges and tunnels. Next, working in two foreign countries may result in some coordination problems. For example, the HSR project between Jakarta and Bandung was delayed over difficult land acquisition, which was not considered in the Chinese contractor’s plan. Therefore, how to plan and execute the project without major flaws or delays will be a severe test for the IRDC’s capability.

Regarding further deals in Southeast Asia, whether the export of rolling stock or handling whole projects, the Indonesian rail sector will face serious international competition. On the one hand, PT INKA lacks advanced technologies such as HSR and it thus will not compete for those customers at the high end. Although international cooperation may lead to access to rail technologies, it takes years or even decades for such progress to mature. On the other hand, the China Railway Rolling Stock Corporation (CRRC), thanks to its massive scale, supplies various cheap products that present stiff competition even in the Indonesian domestic market, as evidenced in the recent deal with the CRRC on wagons. More than trains and tracks, Beijing’s rail diplomacy is also about financial affairs that Jakarta cannot match. Undeniably, PT INKA, being a governmental company, will still enjoy some advantages along with the growth of domestic rail demand, but it would need some time to find a niche to allow it to survive in the international market.

All in all, the conditions for Indonesian railway diplomacy are available. If the Laos-Vietnam project goes well, along with additional projects and more trains exports, the role of the rail sector in Jakarta’s foreign policy will become more substantial.

Shang-su Wu is a research fellow of the Regional Security Architecture Programme at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University in Singapore.

https://thediplomat.com/2020/02/indonesias-burgeoning-railway-diplomacy/

 

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I don’t expect the Laos people to like it since it connects with Vietnam which trash their country during the Vietnam war, politics is why this railroad is being build not economic reasons. Vietnam must have paid most of it. The main railroad for Laos would be the one linking China and Thailand.

 

[Menthol]

It's good news for Indonesia.

I always doubt and anger with the lack of ambition of our railway industry.

But this news changes it.


I read the news about our railway industry improvement reform years ago.

But since then, I didn't follow the news.

And it's good that it finally is showing a great result.