State railway operator PT Kereta Api (PT KA) is forming a new subsidiary to handle operations in Greater Jakarta, a company official said Monday.
PT KA head of public relations Adi Suryatmini said the company was restructuring its business to become more efficient.
"It is urgent to set up a new company that will operate trains in Greater Jakarta as we may face fierce contenders in the future," she told The Jakarta Post.
"In addition, we are a state company that provides services for the public, while future operators may look for profit. We could be beaten if we don't prepare from an early stage," she added.
Suryatmini also said the board of directors, who initiated the plan, had yet to discuss capital needs for the subsidiary.
"We also have yet to decide whether the subsidiary will revive abandoned railways in Greater Jakarta or add more trains to improve services," she said.
Suryatmini said the company's move was triggered by a 2007 law on railway services that replaced a 1992 law and opened the way for other companies to operate trains in the country.
Such a provision was not made in the previous law.
The future subsidiary, in addition to existing subsidiaries PT RaiLink and PT Refka, is expected to be established by the end of the year, said Suryatmini.
However, PT KA's head of operations in district I of Greater Jakarta, Akhmad Sujadi, said a July date was also possible.
"Hopefully, the subsidiary, expected to be established by July, will be more independent in attracting investors," he told the Post.
As PT KA is crafting a new business plan, there will be an opportunity for investors to join in, said Suryatmini.
"PT KA will provide opportunities for private companies, Jakarta-owned enterprises or the Jakarta administration to also have shares at the future company," she said.
"But I believe only the administration ... will have big interests in the future subsidiary and will thus buy its shares," she said.
Separately, Jakarta Governor Fauzi Bowo hinted the administration would place a stake in the subsidiary, saying it was important for the administration to invest in mass transit services.
"The administration will be able to be a shareholder when it (the new subsidiary) is officially established," he said at City Hall.
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