Turning Rail Tracks into a National Revenue Engine

Railway infrastructure has long been viewed as a fiscal burden on the state. The government must allocate a sizable budget for railway track construction, network maintenance, and operations each year. Yet the amount spent does not seem proportional to the revenue received. In fact, the economic potential of the rail network is far greater than what has been exploited to date.

Of course the government has a duty to serve the public, not merely to think about profit and loss in public services. However, that paradigm should perhaps be abandoned, especially when talking about railway infrastructure.

Construction and maintenance of tracks are largely financed through borrowing and the issuance of government securities (SBN). Therefore, it is not unreasonable for the state to expect the railway infrastructure to contribute to public finances. Even if it does not generate profit, at least the assets’ existence can cover the costs incurred by the state so that management remains fiscally neutral.

In the current management framework, money flows into the state treasury from track access charges (TAC), the fees charged for the use of government-owned railway infrastructure by rail operators. Meanwhile, outflows come from infrastructure maintenance and operation (IMO) and public service obligation (PSO).

IMO is the cost incurred by the government for the operation and maintenance of railway infrastructure. In fact, maintenance and operation could be done directly by the government, but in practice those activities are still carried out by railway operators. PSO is the subsidy provided by the government so that train services remain affordable for the public.

In 2024 the government allocated Rp2,687 trillion for IMO. In addition, the government allocated Rp4,596 trillion for PSO to maintain passenger fare affordability. Meanwhile, the target state revenue from TAC is Rp3,052 trillion, although actual remittances to the state were smaller than the target set. From this simple calculation, it is clear the management of railway infrastructure still faces a substantial fiscal gap.

Mathematical calculations to reduce the ‘deficit’ of railway infrastructure management present two options. The options are to increase TAC revenue and to streamline IMO and PSO expenditure. If these conditions are achieved, railway infrastructure management will no longer be a permanent fiscal burden but could move toward break-even or even surplus.

That strategic shift shows that railway tracks are not merely public service infrastructure. They can also be positioned as an economic instrument capable of generating large state revenues if managed correctly.

However, the utilisation of Indonesia’s railway network is not yet optimal. Tracks are still mainly used for long-distance and urban commuter services. There are intercity lines with low travel frequency, resulting in limited utility. There are even stations in various regions that serve only as passing points, with no passenger or goods service activity.

For example, the Cirebon to Cikampek route has many stations that practically only serve operational crossing needs. As the line doubles, the potential for crossings becomes very limited unless a disaster disrupts traffic.

A similar condition is found on other lines such as Semarang-Bojonegoro, Solo-Madiun, or similar routes. On such lines, the existence of rails or stations becomes passive assets that still incur maintenance costs despite low utilisation.

To increase TAC revenue, the government must revive the lines that have been ‘asleep’. One approach could be to emulate Japan’s practice by using short DMU diesel multiple unit trains on low-demand lines. DMUs are more rational than forcing regular trains with long formation whose operating costs cannot be covered by the number of passengers.

The main key to reviving dormant lines is not simply to chase large profits but to create demand gradually. A line or station that is never served will forever lose its market.

Conversely, the presence of a regular service with a fixed frequency can build a new mobility pattern for society. In this case, involving non-governmental businesses is important so that operations on quiet lines or stations do not rely solely on a state-owned operator.

Relying on a single dominant operator is clearly not enough to boost TAC revenue. Each additional passenger service, especially on quiet lines, is directly correlated with the need for additional PSO subsidies.

In the TAC calculation framework, the amount of state revenue is heavily influenced by the level of track usage. The higher the travel frequency, the greater the distance travelled and the heavier the cargo, the greater the state revenue. Therefore, the main strategy to optimise rail revenue essentially comes down to two things: increase travel frequency or increase freight volume.

Here, freight transport should become the national railway policy’s primary priority. The success stories of coal transport in South Sumatra and Lampung show how rail tracks can …