Is this idea on the right track or off the rails?
The government on Wednesday said that it would need an investment of Rp 36 trillion ($3.6 billion) to revitalize the country’s troubled railway system over the next five years.
It also expects to issue a detailed regulation next week to encourage privatization in the sector and end the monopoly of state railway operator PT Kereta Api Indonesia.
“The government has agreed to set aside Rp 20 trillion [for railway expenditure] over the next five years from the national budget,” said Tunjung Inderawan, the Transportation Ministry’s director general of railways.
“The money will be used to revitalize all railways across the nation as we’re ready to open up the industry to the private sector.”
The government also hopes to source some Rp 16 trillion from international agencies, like the Japan International Cooperation Agency and the World Bank.
“The current budget is much too small for a comprehensive revitalization program as it will actually take up to Rp 15 trillion a year, or Rp 150 trillion for 10 years,” Tunjung said.
“Private firms will need to step in and fill the gap.”
He added that the implementing regulation had been on the desk of the state secretariat for almost two weeks and that he was expecting it to be issued next week.
“It will explain the railway operation business and include rules for private companies participating in the sector as operators, together with new local, provincial and national regulations,” he said.
Tunjung said the plans to deregulate the sector were not expected to hurt KAI. Despite having a monopoly, KAI has been beset by corruption, inefficiency and underfunding and has failed to post profits or properly maintain the country’s railway infrastructure.
Tunjung said that it was planned to set up a new company to specialize in the development and maintenance of railways to replace existing KAI subsidiaries.
Taufik Hidayat, the executive director of Indonesia Railway Watch, a nongovernmental organization, said he welcomed the move to deregulate the sector.
“The regulation should assess future competition, the commercial and monetary aspects, and the political costs of deregulation,” Taufik said.
“If all is well, than the private sector will start investing in the system.”
It also expects to issue a detailed regulation next week to encourage privatization in the sector and end the monopoly of state railway operator PT Kereta Api Indonesia.
“The government has agreed to set aside Rp 20 trillion [for railway expenditure] over the next five years from the national budget,” said Tunjung Inderawan, the Transportation Ministry’s director general of railways.
“The money will be used to revitalize all railways across the nation as we’re ready to open up the industry to the private sector.”
The government also hopes to source some Rp 16 trillion from international agencies, like the Japan International Cooperation Agency and the World Bank.
“The current budget is much too small for a comprehensive revitalization program as it will actually take up to Rp 15 trillion a year, or Rp 150 trillion for 10 years,” Tunjung said.
“Private firms will need to step in and fill the gap.”
He added that the implementing regulation had been on the desk of the state secretariat for almost two weeks and that he was expecting it to be issued next week.
“It will explain the railway operation business and include rules for private companies participating in the sector as operators, together with new local, provincial and national regulations,” he said.
Tunjung said the plans to deregulate the sector were not expected to hurt KAI. Despite having a monopoly, KAI has been beset by corruption, inefficiency and underfunding and has failed to post profits or properly maintain the country’s railway infrastructure.
Tunjung said that it was planned to set up a new company to specialize in the development and maintenance of railways to replace existing KAI subsidiaries.
Taufik Hidayat, the executive director of Indonesia Railway Watch, a nongovernmental organization, said he welcomed the move to deregulate the sector.
“The regulation should assess future competition, the commercial and monetary aspects, and the political costs of deregulation,” Taufik said.
“If all is well, than the private sector will start investing in the system.”