Parking rate policy needs 'sorting out'

The Jakarta city administration is involved in a dispute over parking fees with private parking operators, with the former threatening to close down the booths and equipment of defiant operators on May 22, allowing private vehicles to park for free. Senior lecturer in transport engineering at the Bandung Institute of Technology Willy Tumewu takes a closer look at the issue.

BANDUNG (JP): A vehicle is generally more often stationery than moving, either at home or one's destination. When a vehicle is parked at a destination other than the home, what services are we entitled to when we pay for parking?

Parking can be categorized as on-street or off-street. On- street parking fees are supposed to contribute to local government revenues; off-street parking is organized by the private sector, and, subsequently, should the revenues be taxable?

Basically, a parking fee covers the rent of a space in which to leave a vehicle for a certain period, either with or without the help of an attendant, and with various levels of attendant service. But, terminologies like valet parking and secure parking are supporting the misconception that a parking fee covers security.

As both on-street and off-street parking fees affect the general public, the local government may assume that it has the right to control both in the interest of the general public.

But, parking can also be regarded as an optional service for vehicle users for which they have to pay accordingly, when they decide to park there.

A parked car needs a stall of 2.5 meters by 5.0 meters. When alleys and ramps are added, then one car needs on average 25 square meters. Assuming that the cost of a multistory parking structure is about Rp 0.5 million per sqm, the cost of providing a standard parking space is about Rp 12.5 million, excluding the price of the land.

At a basic rate of Rp 1,000 per hour for cars, one parking space may generate some Rp 10,000 per day, or Rp 3.5 million per year. This would only cover the operational and maintenance costs, plus the cost of capital, but not any coverage for security.

Surface parking on available land needs less investment; also motorcycles are more space efficient and hence more cost effective, but these form a small part. So, parking on its own may not be a profitable enterprise at this basic rate.

When parking is provided as part of an establishment, the appraisal should be on an integrated basis. For example, parking as part of a shopping center is a necessary component without which it cannot operate.

The cost and benefit of providing parking facilities should thus not be appraised independently, and this applies to Jakarta, where almost all off-street parking is provided by an establishment.

The value of one parking space can be estimated from the additional profit the establishment makes from providing one additional parking space. With a profit margin of say 10 percent and total average spending of Rp 50,000 to Rp 100,000 per parked car, the profit or value of the parking space far exceeds the cost of providing it.

Not surprisingly, as an attraction, the establishment may give a parking voucher or some other token to its "preferred" customers to cover the parking fee, and still make a profit. By way of illustration, one downtown parking area requires a minimum Rp 100,000 cashier's slip to be eligible for a normal parking charge.

But, a nearby establishment can also benefit from the parking space. It can simply give a, say, Rp 2,000 "discount" in cash to customers who spend more than a certain amount to cover their parking fees, and still make a profit, but without having provided the parking facility.

Then there is free parking, which is sometimes used as an attraction by an establishment, but this can also be exploited by noncustomers, for example, as a transition stop before visiting a nearby destination.

However, would an establishment forego an opportunity to generate profits from its parking operation? When parking places are scarce, or when customers have no other option, parking rates can be raised without adverse effects on business. But is this in the interest of the general public, especially when no nearby on- street parking is available?

Furthermore, to charge parking for dropping off passengers is not a fair business; for example, compare parking systems at railway stations Gambir and Jatinegara, or airports Soekarno- Hatta and Halim Perdanakusuma. The secure parking system tries to overcome this by introducing a few minutes of grace period.

Parking fees can also be used as a traffic management tool. By applying high parking fees in a certain area, it is expected that visitors would convert to using public mass transport and hence cause an overall decrease in traffic flow.

But, for this purpose the traffic authorities must have full control over the number of available spaces for both on- and off- street parking, and also on the level of parking rates.

Applying parking fees on an hourly basis, or which increase progressively with duration of parking, is a means of discouraging parking by commuters, which hence cause a reduction in commuter trips by car, but without affecting business visits, which normally need only a short parking period. Here the authorities also need full control over the area.

An advance payment for parking, together with payment of the annual STNK vehicle registration, should not be considered as an option for Jakarta because of the limited supply of parking spaces. There would be no incentive for road users to control the demand for parking, and there would also be no incentive for parking attendants to provide a service.

Also, parking is a commodity which can not be stored, regardless of how many times a car has been parked before, when there is no vacant parking space at the time of demand, a vehicle will be refused the service, and the driver will feel cheated by the system.

The private sector, which controls the off-street parking, is arguing with the local government over legal matters and the level of parking rates. It is not clear what the real issues are. The public certainly prefers the lowest possible rates, but the policy behind the rates should first be sorted out.