The new regulation is aimed at clarifying how the costs of high-speed railway development in the country will be split among the state budget, state-owned enterprises (SOEs) and the private sector.

It will cover aspects ranging from land clearing and electricity transmission to signaling systems and transportation to and from railway stations, among others.

Some of these aspects have pushed the overall costs of the Jakarta-Bandung high-speed railway project, currently being developed by an Indonesian-Chinese consortium, far above initial projections.

Deliberations on the regulation began on Oct. 3 at a meeting led by Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan, who is also heading a committee to address the cost overrun issues in the ongoing project.

“The hope is that if there is another high-speed railway project in the future, or an extension of the current project to Surabaya, there will be a solid legal and operational basis, including for land acquisition,” Deputy State-Owned Enterprises (SOEs) Minister Kartika Wirjoatmodjo told lawmakers on Wednesday.

Read also: As Xi visit draws near, delays haunt Jakarta-Bandung rail project

Dwiyana Slamet Riyadi, CEO of KCIC, the consortium responsible for the Jakarta-Bandung project, told reporters on Wednesday that the company had no choice but to cover all costs incurred in the course of the development solely from its own coffers, depleting it of capital to keep the project up and running.

Those costs include payments to telecommunications firm Telkomsel for frequency clearance to accommodate the project’s signaling system and payments to state-owned electricity company PLN to set up electricity transmission lines for the railway.

Kartika said that only if tasks and responsibilities were clearly divided would KCIC be able to distribute the financial burden to other entities, which is what the regulation would address.

The new regulation is also aimed at addressing delays in land procurement, which have set some infrastructure projects in Indonesia back by years as speculators seize the opportunity to buy plots needed for development, thereby inflating prices and causing serious cost overruns.

“There should be a budget for land procurement beforehand. If we announce [a project] first, and then buy [the land] later, the price is guaranteed to soar. We will fix this,” Kartika said.

Furthermore, the regulation will provide a means to tackle the inaccessibility issue plaguing the KCIC project, where many of the stations are located far from regional population centers.

The government is seeking to bring in private firms and SOEs to develop train and bus feeder services for inbound and outbound passengers.

Informed by the challenges of the Jakarta-Bandung railway project, the regulation appears aimed at avoiding repeat mistakes in future high-speed railway development.

It follows a 2021 presidential regulation that enabled the government use funds from the state budget to save the KCIC project amid extensive cost overruns, even though the government had initially vowed there would be no direct state funding.

Read also: Govt to inject funds into Jakarta-Bandung railway next month

Haris Eko Faruddin, air, sea and land transportation analyst at state-owned lender Bank Mandiri, told The Jakarta Post on Friday that extending the Jakarta-Bandung high-speed line to Surabaya was possible, as was the addition of other lines, but that high-speed railway development would remain a costly undertaking and the planned regulation would not change that fact.

“We will still need to assess whether a particular region is promising or not for building a high-speed railway line. It is certainly not necessary that just any region has one,” Haris said.

He added that many regions outside Java needed to improve their basic transportation before considering more sophisticated alternatives.

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