Redesigning Indonesia's Railways: Integration, Efficiency, and the Role of the State
Indonesia does not lack plans for railway development. Since the National Railway Master Plan (RIPNAS) was drafted in 2011, the direction for network expansion until 2030 has been comprehensively mapped out.
However, as we enter 2026, its realisation remains far from the targets. With less than five years remaining, the fundamental question is no longer just about accelerating construction, but whether the institutional design of the national railway system is truly appropriate.
Factually, development continues, but it tends to be limited to strengthening existing lines with high economic value. Double tracks are expanding on busy routes, and even on certain segments like Jatinegara-Bekasi, double-double tracks have been built.
In contrast, expansion of new lines remains minimal, and reactivation of inactive lines proceeds very limitedly. With such achievements, the RIPNAS targets risk becoming a planning document without adequate realisation.
The root of the main problem lies in the economic aspects of railway infrastructure. Building tracks, stations, signalling systems, and bridges requires very large initial investments, while the rate of return on capital heavily depends on network usage intensity. Low utility will prolong the investment recovery period, naturally reducing attractiveness to investors.
Consequently, a policy dilemma arises: whether to build earlier with relatively lower construction costs but risk facing suboptimal utility, or to delay until demand forms for higher utility, but with the consequence of much higher investment costs. Both options carry risks, especially amid funding limitations.
From an institutional structure perspective, Indonesia’s railways also do not yet fully support efficiency. To date, network utilisation in practice is still dominated by one main operator, the state-owned enterprise (BUMN).
This condition differs from the toll road sector, which is open to various users, thus having a much broader demand base. It is no surprise, then, that rail network utilisation is limited and the potential for efficiency improvements has not been fully realised.
Yet, in terms of capacity, the existing rail network still has considerable room for optimisation, especially outside the Jabodetabek area. On many routes, the number of daily train trips is still far below maximum capacity.
This means there is significant room to increase network utility without always needing to build new lines. Technically, the capacity of single-track routes ranges from 80-120 train trips per day, while double tracks can reach 350-380 trips per day.
This capacity variation is influenced by inter-station distances, train operating speeds, and signalling system performance. Thus, the current utilisation limitations more reflect institutional and demand issues rather than purely physical capacity constraints.
Regulations in Law No. 23 of 2007 on Railways have actually opened space for separating infrastructure management (infrastructure) from operations (transport services). However, the implementation of this separation has not yet proceeded firmly. It is very possible that in daily operations, there is overlapping cost allocation between parties.
On one hand, the government allocates budget through the APBN for building and maintaining rail infrastructure. On the other hand, service operators are still burdened with some maintenance responsibilities for certain infrastructure elements.
This lack of clarity in role division ultimately increases cost components in the transport fare structure, as there is potential for funding duplication. Yet, with a firm separation, the cost structure could become more efficient.
Operators would focus solely on transport services and pay access fees or rail usage rents to the government as the infrastructure owner. Thus, irrelevant cost burdens could be eliminated, and fares would become more competitive and attractive to users.
From an investment perspective, this condition also creates uncertainty. Without clear separation of authorities, business actors find it difficult to perform accurate business calculations. Investments that should be limited to operational services could expand to include capital-intensive infrastructure building and maintenance. Such a cost structure generally would not pass business feasibility analysis, clearly reducing interest from new players in the domestic railway sector.
Inter-country comparisons show that railway management does not have a single standard model that can be uniformly applied. In the United States, railway companies generally control the rail network while operating transport services.
This model works because it is dominated by high-value freight services, such as agricultural and industrial products. These high-value cargoes align linearly with the revenue received, enabling coverage of owned infrastructure building and maintenance costs.
In contrast, in Europe where passenger transport is more dominant, infrastructure costs become a major component in fare formation, so train ticket prices on several routes tend to be higher than air services.
Indonesia’s experience shows a different dynamic. In the colonial era, several private companies controlled the rail network while operating transport services. However, this model was not sustainable, and gradually the companies were