Govt to spin off KAI's Jakarta unit

Govt to spin off KAI's Jakarta unit

Rendi A. Witular, The Jakarta Post, Jakarta

In a move to help revitalize the operations of state train
operator PT Kereta Api Indonesia (KAI) and improve railway
services to the public, the government plans to sell off the
firm's Greater Jakarta unit.

The government and the Jakarta administration were exploring
ways to hand over the management of the KAI railway system and
services in Greater Jakarta to the private sector, State Minister
of State Enterprises Sugiharto said.

"Based on input from lawmakers and the fact that KAI is no
longer able to provide proper services to the public, it's time
to consider selling the unit," he said at the State Palace on
Tuesday.

Sugiharto said trains serving the Greater Jakarta area should
be managed either by a combination of private and state operators
or completely by the private sector. He said KAI was not
operating the trains effectively or safely, pointing to the
dangerously overloaded trains, where extra passengers were
allowed to climb on the roofs, as examples of mismanagement.

"There are about 4.5 million commuters using the railway
services each year in the Greater Jakarta area alone. Because of
KAI's lack of funds, it would be better to invite the private
sector to take over the services there," he said.

The plan to sell off the Greater Jakarta unit came after two
recent train accidents in which 10 people died.

The latest accident took place last week on last Thursday in
Pasar Minggu, South Jakarta, when a commuter train hit another
stationary train from behind at peak hour, killing three people
and injuring 600 others.

After the accidents, the government pledged to disburse Rp 500
billion (US$51.5 million) in emergency funds for the maintenance
of the railway system in the short term.

The government has estimated that it would need about Rp 11.2
trillion to sufficiently improve the system and services in the
long term.

However, Sugiharto said the government was unsure where it
would take this emergency money from as there were no extra funds
left in the state budget.

"With the lack of funds and a lot of accidents, the government
realized that it should try to free up the country's railway
system and invite the private sector into the business," he said.

For decades, KAI has enjoyed a monopoly managing the country's
railway system and services.

However, critics say widepread corruption in the company, from
management level down to the ticket collectors on trains who
pocket money from passengers, has led to chronic inefficiencies
in its operations.