Fixing Indonesia's Public Transport Woes: Roadblocks

Fixing Indonesia’s Public Transport Woes
Traffic jams are now common place in many Indonesian cities. Indonesia is one of the largest countries in the
world without a decent or well-functioning public transportation system. The public transportation issue itself is
not only limited to large cities such as Jakarta, Surabaya or Medan, but it also involves many intra-city
transportation hubs and island transportation systems. It is, without a doubt, one of the largest and most
complex issues that the government and private sector must tackle from all fronts.
Looking back at the 1960s, our then-president, Sukarno, ordered the removal of the tram-train system and
replaced it with buses, disregarding the possibility of a rapid increase in public transportation demand in the
future.
It then turned out that the supply of public transport failed to fulfill the market demand, so people began to
collectively opt for private vehicles over public transportation.
Now, for over the last decade, the average number of public transportation users has decreased rapidly, partly
due to the overall growth of the Indonesian economy, which has increased the number of middle-income earners
and the market’s vehicle affordability.
Ten years ago, public transport users accounted for 45 percent of total transportation users, and it remained so
until 2012. From that point, motorcycles became more ubiquitous as a result of their almost 60 percent market
share, as fewer and fewer people took to public transportation.
It is also worth noting that over the same period, public transport only accounted for 1 percent of total vehicles
on the road.
Unfortunately, this growth was and still is not concurrently carried out with enough responsibility from the
citizens. Vehicle ownership symbolizes prestige and relates to socioeconomic status, while quantity is valued
over quality: the more vehicles one owns the better their perceived economic status.
Gridlock and inconvenient public transport systems are becoming a hindrance to productivity and a winning
strategy to increase citizens’ stress levels.
The cities that were initially developed for human purposes, are now transforming into a container of vehicles,
growing at a 12 percent rate annually.
Roadblocks
There are considerably several main issues with regard to the Indonesian public transportation system,
constituting infrastructure, government support and regulatory framework, public behavior, as well as business
ecosystems.
Jakarta as the national center of development and economic growth is, ironically, becoming the place in most
need of a public transport fix.
The city contends, on a daily basis, with a constant overcapacity in TransJakarta buses and trains, and old city
buses (operating for 30 years in general), of which some do not even have speedometers or proper brake
systems.
Given such conditions, it is only natural that merely 15 to 20 percent of citizens are willing to use public
transportation.
Meanwhile, transportation issues in cities including Bandung, Bogor, Padang and Semarang also spring from
the imbalance between public transportation facilities and public demand. The difference is that these cities face
an oversupply of public transport to accommodate the small number of passengers, which is in this case the
cause of the congestion.
In these areas, public transportation tends to have low occupancy partly due to ticket prices, overly frequent
stops, and short routes.
This brings us to another vexing issue — the poor level of driving by those operating transport services.
Reckless driving, haphazard stops in improper areas, and a general disregard for road rules are only a few of the
driving concerns.
In 2013, the Bekasi administration found that some 2,000 drivers did not even have a driver’s license, and
around 900 of them were underage.
Similarly in Bogor, the city with the nickname of “ Kota Sejuta Angkot ” (“City of a Million Public Minivans”),
only 30 percent of public transport drivers possess a driving license.
The regulatory framework is yet another example of poor transport management. As opposed to the constantly
declared plan to fix Indonesia’s transportation system, the applied policy is showing the contrary.
The approval of the Low-Cost Green Car incentive, allowing manufacturers to sell cars at a lower tax rate, is
one such example. And the impending effects will go beyond the congestion problem. Despite the aggressive
attempts to mitigate energy and fuel consumption in order to reduce government spending on fuel subsidies, the
proliferation of private vehicles such as motorcycles and cars will surely jack up fuel consumption and take a
significantly chunk out of the state budget.
Industry perspective
Seen from an industrial point of view, Indonesia’s case of public transport is a double-edged sword — there are
some parties who benefit from the grief of others.
The automotive industry, for example, is a clear winner as a poor public transport system spurs private vehicle
sales.
The Indonesian government, however, is not simply taking the easy way out to tackle this issue — in fact, it has
a lot of factors to consider.
Accounting for around 7 percent of the country’s gross domestic product, the automotive and supporting
industries are one of the most important sectors in Indonesia’s story of economic growth. Castrating the
automotive industry also means putting millions of jobs in jeopardy.
On the other hand, some other parties are aggrieved by the economy’s reliance on this industry, namely the
public and business owners.
The public at large is vexed, and the high tax on public transport vehicles discourages business owners from
investing more money into fixing and replacing older vehicles.
According to the Organization of Land Transportation Owners (Organda), the government has shown a lack of
support to fix this issue, as the public transportation vehicle tax is pegged at 16 to 20 percent, while private
vehicle tax is pegged lower at only 6 to 10 percent.
Strategies
In all fairness, there is no quick fix to Indonesia’s transportation issues. The problem itself involves many
stakeholders, requiring the government to cultivate a genuine willingness as the regulator to revitalize the
industrial environment, and above all to encourage a genuine willingness to solving the various problems.
The government needs to create a more competitive marketplace for entrepreneurs while averting monopolies.
Inviting foreign investors and/or consultants is also worth considering to educate local entrepreneurs and
authorities on how best to improve the sector.
Moreover, educating the public about the benefits of using public transportation is pivotal — initiatives such as
obligating citizens to make use of public transport on a certain day of each month could be some of the
cornerstones toward improving the overall sentiment.
It all won’t be easy, but the diamonds won’t shine without force and pressure.
The author is the principal at Solidiance, a management consultancy firm focused on Asia Pacific, who heads
up their Indonesia operation. He is an experienced global professional providing entrepreneurial, financial,
and strategic leadership to Global Fortune 500 companies for more than 18 years. Fuad Hasan, an analyst at
Solidiance, also supported and contributed to this article.

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