Indonesia: accelerating urban transportation development with public-private partnership

The country’s rapid urban transportation development is creating vast opportunities for collaboration and investments for the private sector. Indonesia’s steady economic growth in recent years has spurred rapid urbanization across the archipelago. According to the World Bank, the growth rate of cities in Indonesia is 4.1 per cent per year – faster than that in many Asian countries. Further, 68 per cent of Indonesia’s population are expected to live in cities by 2025. This rapid urbanization, like two sides of a coin, can bring higher economic growth from increased employment and labor productivity, but also puts a strain on existing infrastructure. Traffic congestion is one such issue as a result of under-capacity in infrastructure. Global SaaS and DaaS company INRIX reported that Jakartans spent 15 per cent more time in congestion in 2017 compared to the previous year. Not surprisingly, the Jakarta Provincial Government has turned to unconventional policies such as the three-in-one initiative, and the recent odd-even license plate regulation, to mitigate the issue. The urban transportation system in Indonesia consists of buses, trams, light rail, metro, rapid transit and ferries. Particularly, urban rail-based transportation, such as light rail and mass rapid transit (MRT), provides mobility for people and goods, and access to the urban area. On 24 March 2019, the President of Indonesia, Mr. Joko Widodo launched the first MRT system in Indonesia. The first phase of the planned MRT system spanning 16 km and serving 13 stations from Lebak Bulus to Bundaran HI, connecting South Jakarta to Central Jakarta. These are economical, energy-efficient, and require less space than private transportation. Thus, these are suited to support busy and high-density urban areas. The railway business in Indonesia is split into two main components: infrastructure (railway) and train (rolling stock). According to Indonesia’s Law No. 23/2007, the government is responsible for providing and maintaining the railway. The operator, currently PT Kereta Api Indonesia (KAI) – and the sole train operator in Indonesia – pays track access charge to the government for using the railways. For supporting the maintenance of the railway, KAI also receives infrastructure maintenance and operation fees from the government. Today, urban rail-based transportation is among the Indonesian government’s priority agenda for infrastructure development, and a number of projects have been started or announced. The government’s plans and strategies for urban transportation development are stipulated in the Ministry of Transportation’s strategic plans (Renstra), as well as development documents such as the National Medium Term Development Plan (RPJMN) and the government’s Workplan (RKP). The recurring themes are Transport Oriented Development (TOD), mass rapid transit development, and transportation demand management. In reviewing the Renstra, RPJMN, and RKP, urban transportation project pipelines have been started or announced by the government, with a focus on MRT and LRT in Indonesia’s largest and busiest cities. Source: Businesstimes