Privatization, clear rules key to getting railway on track<\/p>\n
Abdul Khalik, The Jakarta Post, Jakarta<\/p>\n
Due to the huge investment needed to build or upgrade railways
\nand improve train services, experts have urged the government to speed
\nup the involvement of the private sector in the railway business
\nand revise current railway legislation.<\/p>\n
Railway Society chairman Moch. Hendrowijono said that although
\nLaw No. 13\/1992 stipulated that the government had the obligation
\nto provide railway infrastructure, including tracks, stations and
\nsignaling, it had no money to do so.<\/p>\n
"Railways need huge investments. The government simply has no
\nmoney to improve the current railway system as it must also
\nprovide subsidies to PT KAI. Imagine, it takes between Rp 600
\nmillion and 700 million just to buy one railway car," he told The
\nJakarta Post.<\/p>\n
Hendrowijono said that many firms were eager to invest in toll
\nroads, which enabled them to obtain a return on investment within
\nbetween eight and 10 years, but were reluctant to invest in the
\nrailways as they would need up to 75 years to reach break-even
\npoint.<\/p>\n
"So, the government should make it clear that it will build
\nand own the infrastructure, including tracks, stations, and
\nsignaling, while the private sector can buy the rolling stock and
\noperate it on the railway system in return for a fee," he said.<\/p>\n
Under such an arrangement, the government would be free to
\nconcentrate on maintaining and developing railway infrastructure,
\nHendrowijono said.<\/p>\n
He expressed optimism that many private firms, both local and
\nforeign, would be happy to invest in the railways as they would
\nprove to be quite profitable.<\/p>\n
A South Korean company, Sam An, has already expressed interest
\nin investing in suburban rail routes. An official with the
\ntransportation ministry said on Wednesday that the company would
\ninvest around US$200 to become a part owner of the Greater
\nJakarta suburban rail system.<\/p>\n
Despite the many advantages that trains offer to the traveling
\npublic and society in general, including reduced road congestion,
\ngreater energy efficiency and reduced pollution, Indonesia's
\nrailway system is in bad shape with frequent accidents and
\nfalling passenger numbers.<\/p>\n
While agreeing that privatization was fundamental to a better
\nrailway system, a railway expert at the Indonesian Institute of
\nSciences (LIPI) said that the government should revise the
\nlegislation first to attract more investors.<\/p>\n
"The government must decide on the role to be played by PT KAI
\n-- whether the company is to be just the owner of the
\ninfrastructure or whether it will be one of the operators. If PT
\nKAI is an operator, then it must be treated the same as new
\noperators to avoid unfairness," he told the Post.<\/p>\n
Currently, Taufik said, the government subsidized PT KAI's
\noperating costs to the tune of Rp 1.7 trillion a year, but the
\ncompany had to pay Rp 600 billion each year in track-leasing
\ncharges (TAC) to the government.<\/p>\n
Taufik, who is also executive director of Indonesia Railway
\nWatch (IRW), said that as long as Law No. 13\/1992 remained
\nunchanged, privatization would not work.<\/p>\n
"Who is going to invest given the current lack of clarity?
\nLook at PT KAI. Any foreign company would naturally be afraid of
\nbig losses if it invested in the railways given current
\nconditions," Taufik said.<\/p>",
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