Indonesia's government has decided to take over the controlling stake in the company operating the $7.3 billion China-funded high-speed railway, marking a major shift in the management of one of the country's biggest infrastructure projects. The decision places the government in charge of the majority stake in PT KCIC, the company that runs the high-speed rail service commercially known as "Whoosh."

Finance Minister Purbaya Yudhi Sadewa announced the decision during a joint press conference with Indonesia's sovereign wealth fund, Danantara, on Wednesday. He said an agency under the finance ministry will take over a 60% stake in PT KCIC. The value of the stake was not disclosed during the announcement.

The "Whoosh" high-speed railway connects Jakarta with Bandung, a city located southeast of the Indonesian capital. The railway stretches 142 kilometres (88 miles) and is one of Indonesia's most significant transport projects developed with Chinese funding.

Purbaya said the agency appointed by the finance ministry will also take responsibility for repaying the outstanding loan linked to the project. He clarified that the repayment will not come from the country's state budget. "The appointed agency will be responsible for repaying the project's outstanding loan, but will not use the state budget," Purbaya said.

The government expects to complete the transaction by the middle of September. Dony Oskaria, chief operating officer of Danantara, confirmed the timeline during the same press conference. "The transaction will be completed at the latest by mid-September," Dony said.

The latest move comes a few months after Indonesia concluded debt negotiations with China related to the railway project. In April, Dony had announced that the discussions had been completed. However, he did not share details of the agreement reached between the two sides.

The high-speed railway project has faced several challenges since construction began. It ran into land procurement issues during its early stages. The COVID-19 pandemic also delayed work on the railway. At the same time, the project's overall cost increased significantly, making it more expensive than initially planned.

At present, a consortium of Indonesian state-owned companies owns the 60% stake in PT KCIC. The group is led by state railway operator PT Kereta Api Indonesia. Construction company PT Wijaya Karya also holds a significant share in the consortium.

Once the transfer is completed, the finance ministry's appointed agency will replace the consortium as the majority stakeholder. This will give the Indonesian government direct control over the company operating the railway while also taking over responsibility for its remaining debt obligations.

Chinese state-owned firms will continue to own the remaining 40% stake in PT KCIC after the transaction. Their ownership in the railway project will remain unchanged even after the Indonesian government assumes control of the majority share.

Danantara, Indonesia's sovereign wealth fund, oversees all state-owned enterprises in the country. Its involvement in the transition reflects the government's broader effort to strengthen the management of strategic national assets while ensuring the long-term operation of the high-speed rail project.

The decision represents an important step in Indonesia's approach to managing the country's first high-speed railway. The government aims to streamline ownership, maintain operations and handle the project's financial commitments through a dedicated agency. The move also keeps Chinese state firms involved as minority stakeholders, preserving the partnership established during the railway's development.