In a move with huge implications and challenges Indonesia has announced plans to massively expand its railway network specifically to promote exports and economic development. Costs are huge as are the problems of building infrastructure in the Southeast Asian nation, which is an archipelago spread over four time zones. But the political will is clear.
“We estimate that if we want to add around 14,000 km in the coming years, the cost is about Rp1,200 trillion (58,4 billion euros) until 2045,” said Minister for Infrastructure and Regional Development, Agus Harimurti Yudhoyono, via Antara, the national news agency. Yudhoyono is following orders from Indonesia’s President Prabowo Subianto who has made it clear railways are needed to help Indonesia tap its mineral wealth and natural resources.
“Railways are not only for passengers but primarily for goods and logistics,” Prabowo highlighted last November. He underlined the importance of connecting hinterland production sites of palm oil, rubber, coffee, and mining products to the ports, announcing plans to expand the rail network in Sumatra, Kalimantan, Java and Sulawesi.
Funding sources outlined but not detailed
The plan forms part of Indonesia’s broader Vision 2045 strategy and will require phased execution with sustained financing from multiple sources, including public and private investment. Indonesia is Southeast Asia’s largest economy and has long been open to foreign investment as well as support from international financial institutions and donor agencies.
Yudhoyono said annual funding needs could reach Rp60 to Rp65 trillion (2.9 to 3.9 billion euros) over roughly 20 years, though the figures remain preliminary and subject to further refinement. “This calculation is not final. Infrastructure development depends heavily on geographic conditions, but at least this is an initial estimate for discussion,” he added.
Thousands of kilometres needed
The government is prominently involved as it believes new railways, especially outside of Java, which is Indonesia’s economic and political capital, will help spread growth throughout the country and support industrial expansion and upgrading. However, many of the projects still remain under detailed study, with no confirmed construction timeline or finalised routes, as inter-agency discussions continue, Antara added. A lot of lines and networks are needed particularly outside of Java.
Sumatra to its east currently has about 1,871 kilometers of track but needs an additional 7,837 kilometers to meet connectivity demand. Kalimantan, which is usually described as resource-rich, has no railway network and requires at least 2,772 kilometers of new lines, while Sulawesi, known to have huge nickel deposits, has only 109 kilometers and needs an additional 3,284 kilometers to improve regional mobility.
What is likely to get moved
“The railway development plan in Kalimantan is still being carefully calculated and planned,” Yudhoyono pointed out. One reason for the stress on Kalimantan is one of the commodities Indonesia already moves in large volumes – coal. There are huge reserves on the Kalimantan but moving them is impossible due to the lack of trains and ports with suitable handling facilities.
Indonesia is already the world’s largest exporter of coal, moving 508 million metric tonnes overseas in 2023, in a trade that was last year priced at USD34.4 billion. Much of this, just under half or 215.7 million metric tonnes went to China with India taking 108.4 million metric tonnes.
A possible precedent?
The other commodity likely to be a big gainer is nickel. Indonesia’s reserves of this metal, needed for stainless steel and electronic vehicles, put at 62 million metric tonnes, many of them on Sulawesi, suggesting a new, more prominent role for its major port, Makassar. The Indonesian Chamber of Commerce and Industry (Kadin) last week announced cooperation to strengthen critical mineral supply chains under the Indonesia-Philippines Nickel Corridor which it expects to become a new model for economic partnerships.
Under the MoU signed by the Indonesian Nickel Miners Association and the Philippine Nickel Industry Association, collaboration will include the exchange of nickel data and information, policy and regulatory dialogue, cross-border investment promotion, development of ESG methodologies and human resource capacity building. The project includes a minimum monthly nickel supply of 200,000 metric tons starting in June 2026 to bolster regional manufacturing.
