Jakarta Subway Operator Mulls First Bond Sale to Expand Network

Indonesia’s first subway operator is weighing a bond sale to finance a part of the $40 billion network expansion plan as the coronavirus pandemic shrinks passenger traffic and government funding is redirected to fight the outbreak.

PT MRT Jakarta is considering various fund raising options and has yet to decide on the denomination or size of the bond issue, President Director William Sabandar said. The operator is also open to roping in strategic partners for its second phase of expansion, he said.

MRT Jakarta is seeking to add six more lines to the first one that partially opened in the capital last year, which on completion could rival Hong Kong and Singapore in terms of length. The subway expansion is part of President Joko Widodo’s plan to ease traffic congestion that causes the nation an estimated$7 billion in economic losses annually. With the pandemic battering the economy, the government is facing a slump in revenue and wider fiscal deficit as it extends billions of dollars in stimulus.

“If we continue to depend on government funding, we will suffer, we have to be creative in finding new sources of funding,” Sabandar said in an interview Thursday. “We may also team up with strategic partners, especially in the development of the second phase. We will provide the assets and they will support the required investments.”

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The subway operator plans to expand the network to 230 kilometers by 2030 and theJapan International Cooperation Agency may soon sign an agreement to back the construction of the second phase, stretching from the east to the west of the capital, Sabandar said. MRT Jakarta is still working on a detailed financing plan and expects to complete it after the final feasibility study is done by the end of the year, he said.

MRT Jakarta saw the passenger traffic on its 16-kilometer route plunge as much as 97% from an average 100,000 a day during a partial lockdown to fight the pandemic, Sabandar said. The ridership has improved to 19,000 per day after the city eased curbs but Sabandar said it is unlikely the figure will return to the pre-pandemic level because of the new health protocols.

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