Indonesia is concerned about falling into a debt trap, similar to Sri Lanka, as the country sees complaints about going with China over Japan to build a high-speed railway. Kereta Cepat Indonesia China, which is 40% owned by Chinese concerns, has proposed adding another 30 years to its 50-year concession of a high-speed railway under construction in Java. If the Indonesian government cannot turn down the proposal, the railway would be under China’s influence until early in the 22nd century. In 2015, Indonesian President Joko Widodo chose China over Japan to build the railway because the date of completion was set for as early as 2018, with trains to start rolling a year later. The delay has raised total construction costs by about 40%, forcing the Indonesian government to raid state coffers for 7 trillion rupiahs (USD 468 million). Jakarta’s fears of a possible 80-year concession are not unfounded. To find a precedent, it need only look across the Indian Ocean, to Sri Lanka. There, the Hambantota Port was leased to China for 99 years after the Sri Lankan government began having difficulty repaying the construction loans. This episode is referred to as “debt trap diplomacy.” It refers to when a creditor nation extends an excessive amount of loans, and then extracts economic or political concessions when the debtor country becomes unable to meet its repayment obligations. In this case, China won the use of a geostrategically important port.
