Perumka makes train ride more comfortable

Perumka makes train ride more comfortable

BANDUNG, West Java (JP): Traveling by train used to mean
queuing in long lines for tickets, flocking to dirty coaches,
delays and discomfort.

That was years ago, when trains were looked upon as an
inferior mode of transportation designed for people in low income
brackets.

Today, the depressing scene is changing. Smartly dressed
celebrities and chic executives carrying handphones are part of
the standard scenery, at least on certain trains.

A return to trains is in vogue all around the world. In
European and Asian countries the use of trains as an alternative
means of transportation is on the rise. The high-speed train, the
TGV, links all the other cities in France to Paris. Japan's
bullet train, Shinkansen, plies the Tokyo to Osaka route in three
hours and has helped in preventing gridlock on the road.
Shinkansen also serves the estimated 30 million to 35 million
people who live in the suburbs and commute to work in central
Tokyo.

However, transportation expert Eko Budihardjo commented,
"Traveling by train is not yet a custom among Indonesians."

Public transportation is always associated with inferiority
and chaos. "If a businessman takes a train to work, people may
think he is broke," Eko says.

The railway industry in Indonesia, and in neighboring
countries, has been allowed to fall into disrepute over the last
20 years because people were more interested in traveling on
glamorous jet planes, he added.

The development of road transportation facilities still
dominates Indonesia's current public transportation policy. In
the period between l939 and l989, the total length of highways
and roads constructed, for example, was 19 times that of railway
tracks.

Another transportation expert, Roos Diatmoko, said railways
are well suited to serve the mass transportation system and
should be considered as the best solution to prevent traffic
bottlenecks on the roads in big cities. Congestion on city roads
could make railroad travel singularly attractive, he says.

Diatmoko adds that trains are better for the environment.
"They emit a mere one tenth to one third of the pollutants
emitted by cars."

Problems remain, though. Can the state railway company
maximize its services to meet the increasing demand for
punctuality and comfort? It seems that Perumka should make a real
effort to upgrade its dismal image in the eyes of its customers.

The Indonesian Railway Company has been going through tough
periods filled with challenges and obstacles, and customers still
lodge complaints over the company's inability and limited
resources to instantly respond to their demands.

Even after its 49 years of existence, it must be said that the
company still has a long way to go before it will really become a
viable transportation alternative.

Long-term

"Everything must go through a process. We are now in the
process of improving our internal conditions and our public image
as well," Perumka's president Anwar Supriyadi told The Jakarta
Post in an interview at the company's headquarters in Bandung
recently.

Up to now Perumka faces difficulties, including financial
constraints, limited human resources and an inadequate management
system. All of which affect its services.

"We have tried very hard to limit our shortcomings to the
lowest point possible in order to increase the company's
efficiency and improve its public services," Supriyadi said.

After years of struggling, Perumka's efforts seem to have
yielded positive results. The year l993 was a stepping stone
towards becoming a more successful and profitable enterprise.
Despite its long-standing reputation as a money-losing endeavor,
Perumka's ability to improve its earnings should not be
underestimated.

Losses

Since its establishment in l945, the railway company was
plagued by financial losses, a bad image and disheartening
managerial conditions.

The company suffered a deficit of Rp 79 billion (US$37
million) in l990 and Rp 27 billion in l991, although it was able
to reduce it to Rp 1 billion in l993.

"For us, it was quite a big success. We were able to take a
breath. However, it is still far from our objective," Anwar said.

This year, l994, the company has made it a target to reach a
break-event point for the very first time in its 49 years of
existence.

The company's status, meanwhile, has changed four times since
1945. Started as the Djawatan Kereta Api Republik Indonesia, it
became the Perusahaan Nasional Kereta Api (PNKA) in l963. PNKA
was changed to Perusahaan Jasa Kereta Api in l971 and finally the
government turned it into a state company, the Perusahaan Umum
Kereta Api (Perumka), in l990 with the aim of improving its
performance.

Finance

Healthier finances obviously affect the welfare of Perumka's
employees. Quite recently, the company's employees received their
first substantial wage increase, nearly 20 percent of their basic
salary. Special remunerations will also be given to employees in
high risk jobs, including train engineers and field workers.

Perumka will also, for the first time, give bonuses to its
employees. "We expect that this little improvement will motivate
our staff to work harder," Anwar said.

Overstaffing, however, remains a burden for the company.
At present 38,000 employees are on the company's payroll.
Ideally, according to a World Bank study, a railway company such
as Perumka should have no more than 32,000 employees.

However, trimming the size of the manpower resources on
Perumka's payroll will not be easy without carrying out extensive
layoffs.

"There will be no mass layoffs. We are still in a transition
period, going from a manual to a mechanical system. Therefore we
still need the present work force," Anwar said.

A reduction in the company's work force will occur, but only
through attribution and voluntary retirements, he stressed.

Innovative

Perumka's accomplishment in trimming its financial losses was
due to the implementation of some innovative and profitable
programs. Since l990, it has been operating executive and
business class trains on the Jakarta to Bandung, Jakarta to
Surabaya and Jakarta to Yogyakarta routes.

The introduction of these clean and roomy coaches has
drastically boosted Perumka's revenues. In l990, the company
generated Rp 238.4 billion in revenues. Still, due to expenses
totaling Rp 305 billion the company incurred a Rp 67.3 billion
deficit. In l993, its income surged to Rp 460 billion with
expenses totaling Rp 461 billion.

The huge losses were previously incurred because 90 percent of
the company's total expenses went to subsidizing the operation of
the economy class trains which accommodate almost 90 percent of
the 69.5 million passengers using Perumka's services. The
executive and business class passengers comprise only 12.5
percent of the total.

"The cost of operation is the basic problem that should be
addressed," said Anwar.

Agus Salim, a transportation expert from the Bandung Institute
of Technology, remarked: "Perumka is like a fat man. A fat man
embodies prosperity but also a lack of productivity."

In terms of assets, Perumka may be one of the country's
biggest state-owned companies. The company, for example, controls
more than 6,000 kilometers of railway tracks, on about 7,200
hectares of land, not including the land used for its employee
housing complexes, railway stations and the company's fleet of
trains.

Crucial to the new strategy are proposals to convert the
company's land assets into lucrative projects to improve the
company's balance sheets.

Diversification

"Diversification is essential for Perumka if it wants to
increase its earnings," Anwar said.

Perumka plans to add executive and business class coaches to
its commercial fleet to meet the increased demand.

"We admit that the commercial services have multiplied our
income, but that does not mean that we will ignore the economy
class trains. They are still our first priority because Perumka
is a public service company," Anwar said.

Perumka is now preparing to upgrade the condition of its
economy class trains to "economy class plus", without raising the
fares. For its commercial services, however, the company will
consider increasing the ticket prices.

"The target market of our commercial services fare is the
middle and upper class groups who can afford and are willing to
pay higher ticket prices as long as we offer convenience."

Perumka will also apply a new marketing system, including a
new ticket delivery system.

New Projects

Perumka, which operates services only in Java and Sumatra, is
at present pursuing several improvement projects, including the
replacement of more than half of the existing 6,441 kms of
railroad track, most vestiges from the Dutch colonial period.

Other projects on tap for this year and next include an
increase in the frequency of the Parahyangan services on the
Jakarta to Bandung route, from six to ten trips a day. The
introduction of the Bengawan train service between Jakarta and
Surakarta and the Purwojaya between Jakarta and Purwokerto are
also planned.

The company intends to improve the condition of both those
tracks as well as supporting facilities in North and West
Sumatra.

But, the company's most ambitious project currently underway
is the development of the new JS-950 and JB-250 executive
services, scheduled to be inaugurated on August 17 next year to
coincide with the 50th anniversary of Indonesia's independence.

The completion of JS-950 project will enable passengers to
traveling between the Jakarta and Surabaya in nine hours,
compared to 14 hours at present.

The construction of double-tracks along some sections of the
Jakarta to Surabaya route, such as between Surakarta and Madiun,
will allow trains to travel at a maximum speed of 120 km/hour.

The use of sophisticated 2000 HP locomotives and
electrification of the signaling system will guarantee comfort
and safety for passengers.

The JP-250 project will shorten the traveling time on the
Jakarta to Bandung route from two and a half hours to only two
hours.

Private

In addition to its own projects Perumka is also exploring
plans to invite private investment. At present, a number of
private investors, including PT Lorinta, are already involved in
several railway projects.

Perumka and PT Lorinta will jointly operate an executive train
serving the Jakarta to Surabaya daytime route.

"Basically, Perumka will allow the private sector to serve
only routes which the company cannot handle," Anwar said.

The Ministry of Finance is still studying the proposal, but
hopes that the project can be started next year.

Other private companies have already proposed to operate
commercial trains serving the Jakarta to Merak and the Jakarta to
Solo routes.

Anwar, however, promises that Perumka will never forsake its
primary goal of providing reliable public transportation services
at affordable prices.

"I am optimistic that we can give the public a safe and
punctual railway service and make it the preferred mode of
transportation," Anwar concluded. (raw/pet)