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Indonesia's new transportation minister has set railway
transportation development as a priority. How far do we need to go?
Discussion on infrastructure usually circles around road
infrastructure, especially toll roads. However progress in this area so
far has been lackluster. What about railroads?
Here are some statistics. The total length of railroad tracks around
Indonesia is only 4,500 kilometers, of which around 14 percent
(small-width tracks) are 70-130 years old and 45 percent (medium-width
tracks) are 60-100 years old.
Only the remaining 59 percent are relatively new.
Data on locomotives are also less than encouraging. To date there are
519 locomotives, of which most have reportedly passed their economic
lives. As for the cars, data from the website of state railway operator
PT KAI show that 44 percent of cargo cars are 16-30 years old and 31
percent are 31-40 years old.
So the huge number of rail accidents recorded each year should not come
as any surprise.
In the last 12 years, there was an average of nine accidents per year.
But the potential is huge. Railroad infrastructure is less complicated
compared to toll roads. There are no meaningful land acquisition
problems, as railroad tracks are government property.
The responsibility of railroad infrastructure development falls to the
government. According to the 1992 railroad law, railroad tracks,
signals and bridges are government owned. The government can delegate
the maintenance to appointed institutions.
But maintenance is minimal. Liputan6.com reported that the cost of
required maintenance reaches Rp 6.6 trillion. What's the problem?
Comments we gathered mostly point toward lack of funds. One House of
Representatives member said that since 1950, 29.3 kilometers of
railroad track are rendered unusable each year.
The number of train stations has dropped 62 percent, and six units of
locomotives per year are going out of operation. This decline in
operational assets happened despite a 9.3 percent growth of passengers
per year.
PT KAI suffers fund shortages from the current budget arrangement with
the government. PT KAI is required by the government to promptly pay
fees for the usage of railroad tracks, however payment from the
government to PT KAI for Public Service Obligations (PSO) is untimely;
accumulated delays since 2000 have reportedly reached Rp 1.6 trillion.
PT KAI also has not been paid for the maintenance it did for railroad
tracks and other government-owned assets. So if accidents happen,
should the responsibility be borne only by PT KAI's management and its
machinists?
The House of Representatives recently approved revisions to the 1992
railroad law. These revisions open the possibility for new players to
join the domestic railroad business, which is now exclusive to PT KAI.
However, considering the badly tattered infrastructure, we think
investors will not instantly jump onto the bandwagon.
Who will be held responsible if an accident occurs? Who will be in
charge of the investigation? And who will ensure that the investigators
are unbiased?
Here then is the irony. We believe railroads are easier to improve
compared to toll roads, and the benefits are also huge. As a mode of
transportation, railroads have several advantages, namely speed and
capacity. A train with eight cars can carry up to 1,200 people, equal
to 16 buses with 75 people/unit capacity.
A dedicated track would improve speed and also safety. In many
countries, railroads are the backbone of public transportation.
Contrary to toll road development, which aside from needing massive
capital, has to face additional problems such as land acquisition, all
that is needed for railroad development is government commitment and
funds.
Funds, we also believe, are not difficult to obtain, given the
abundance of global liquidity.
Of course return on investment needs to be adequate. However, we
believe several factors do make returns on railroad investment more
attractive: (1) no land acquisition is required; and (2) much of the
supporting infrastructure, such as stations and signaling equipment,
are already built and only need improvement.
Railroads are also a labor-intensive business, thus may help create
employment opportunities.
One ironic case of neglect are the problems in container transportation
from Bandung to Tanjung Priok, North Jakarta. Currently, containers
transported by rail from container terminals in Bandung can not be
directly transported to the ships at Tanjung Priok harbor, and have to
stop at a station near Tanjung Priok and then be reloaded onto trucks
to be brought to ships.
The problem is that 35 people now live on the land owned by PT Pelindo,
a state-owned port operator. Potential: in 2004, the service carried
7,602 TEUs (Twenty-foot Equivalent Units), and in 2006 that amount grew
21 percent to 9,235 TEUs.
Thus in this case, development is being held hostage by 35 people who
do not even have a right to the land in the first place.
Clearly, railroad improvements can not be categorized as a challenge;
but inaction can be categorized as neglect.
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