A tale of two systems in Jakarta's transport

A tale of two systems in Jakarta's transport

This is the first of two articles on transportation in Jakarta by
Heru Dewanto, who heads the Center for Technology and Industry
Development. He is also CEO of the Jakarta-based Rekainfra
International company which is among the consultants for the
city's mass transit project.

JAKARTA (JP): Those who have visited the Indonesian capital
and have been trapped in the battlefield of Jakarta's traffic
would agree: This city -- with a projected population of over 12
million by the year 2015 -- is heading for total gridlock in a
few years if measures are not taken to address its urban
transportation management.

For years, extremely severe congestion and low levels of
services have been taken for granted by Jakartans. Part of the
solution is the introduction of efficient, cost effective and
affordable public transportation systems which will encourage the
move of the commuting workforce from roads to rail, thus easing
the burden on the existing road system.

This can further be assisted by, among other things, added
capacity and a comprehensive traffic management system.

The provision of mass transit in our developing cities has
been our main concern for many years -- the provision of a safe,
reliable, quick and comfortable means of transportation combining
the convenience of private cars and the compact movement of
public transit.

The basis of the development for Jakarta's mass transit was
the Consolidated Jakarta Mass Transit Network -- based on three
studies that prepared alternative forecasts of mass transit
passenger demand in Greater Jakarta. These were the studies of
the Integrated Transport System Improvement by Railway and Feeder
Services in 1990, the Jakarta Mass Transit System Study and the
Transport Network Planning and Regulation project both in 1992.

The studies differed in their emphasis but resulted in
slightly different networks for Jakarta's mass transit.

Though the network has been prepared since 1994, the question
lies in the ways of providing it. Financial constraints of the
government have led to a major shift toward private provision.

Private infrastructure is mostly being financed through
limited or nonrecourse project finance techniques in which the
lenders do not have recourse to the parent company but instead
rely primarily on the cash flow generated by the project.

This results in the project-company asking the government to
help mitigate both the commercial and sovereign risks. Compared
to other infrastructure, mass transit is associated with an even
more complex risk structure. The state would thus need to provide
direct or indirect financial support to maintain financial
viability and to attract the private sector.

The private sector's reluctance to fund this sector is caused
by critical issues -- higher market risks, extremely huge initial
capital costs, long-term investment, complex operation and high
operating costs.

Also, there is reliance on operating subsidy, complex
relations between the rail system and civil works, the low level
of willingness of the user to pay, a long payback period and huge
land requirement. Mass transit would be dependent upon related
infrastructure development, and would moreover have to face
unequal competition with highways.

The mass transit project thus needs new approaches. Private
investment in mass transit needs to become financially viable
with either at least some budget support, significant increase in
fares or a government subsidy.

Just before the onset of the economic crisis Jakarta had two
competing developments for mass transit in which both would share
the north-south corridor of Jakarta city: the subway and the
Jakarta Integrated Toll Road and light rapid transit (LRT),
widely known as the triple-decker.

The development of each appeared surprisingly stimulating, as
if the two were highly profitable investments that could attract
two private groups of companies. Given the lack of legal and
regulatory framework for private participation in this area, that
situation could only be explained by the fact that the
competition was not based on a solid fundamental structure of
private provision on mass transit, but more on competing
political powers, reflecting the situation at that time.

However, efforts of the two groups of companies in promoting
mass transportation for Jakartans should be appreciated.

The next concern was the Jakarta railway network. If two lines
of the network were to be developed, they should have represented
the two most prioritized lines. The urban rail master plan ought
to have been the basis for any development and it should have
been the government who decided which lines were most needed. The
city should not allow any private initiatives to simply pick
routes or make their own routes.

The original idea of the triple-decker was to provide a mass
transit system that was as far as possible independent of any
direct or indirect government funding and/or subsidies. This
would be partly achieved by internal subsidy from toll road to
LRT. It was expected to be a solution to the age-old problem of
road versus rail, and capital/operating costs of public
transportation versus revenue.

This would be achieved by the combination of an LRT system and
a toll road, both forming a common transportation corridor.
However, the minimum requirement for initiating this concept
would be that both means of transportation should be designed for
a common route as the bottom line. The concept could not be
developed simply by attaching a toll road route to the planned
mass transit route.

As the name triple-decker suggests, it was to be a structure
which, in part, consisted of levels, of which the topmost was a
six-lane toll road. The next level was a double tracked LRT. This
combination would result in minimized land requisition, optimized
structure form and eventually reduced cost compared to if each
system were to stand separately.

The combination concept would require integration of legal
aspects as in the past, regulations not available to accommodate
private investment in two different means of transportation.