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Indonesia’s transport planning lacks rigour

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In Brief

Both of Indonesia’s presidential candidates have committed to tackling the country’s deficient infrastructure. Joko Widodo (Jokowi) promises 2000 kilometres of roads, ten new airports and seaports and ten new industrial zones, while Prabowo Subianto promises 3000 kilometres of roads and 4000 kilometres of railways.

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These promises indicate serious intent, and rightly so. Indonesia’s poor logistics have been identified as holding back national development, a problem that will become more acute next year when ASEAN becomes a single market. The incoming president will have to prioritise Indonesia’s logistics strategy and financing so that the existing pipeline of projects can be advanced and new design work and tendering initiated.

Currently, however, strategy is lacking and the means of financing are at best vague. Neither candidate has much experience of infrastructure planning and management. Jokowi has made some progress with the infrastructure problems of central Jakarta but must now think nationally. Prabowo probably has some understanding of logistics from his service in the army but is, at present, untried in a civilian role.

The good news is that both vice-presidential candidates — Jusuf Kalla and Hatta Rajasa — have a lot of hands-on experience, both holding important infrastructure roles as ministers in the Yudhoyono administration.

As a result, there is likely to be a good deal of continuity from the last administration. In particular, Indonesia’s new president is likely to continue the Master Plan for Acceleration and Expansion of Indonesian Economic Development, 2011-2015 (MP3EI). The plan will probably remain the basis for infrastructure planning but, if financing permits, with considerable scaling up.

Still, this economic master plan is a framework for development, not a transport master plan. It recognises the need for better logistics, ‘connectivity’ and regional corridors — all steps forward but not much more than an inter-departmental consensus, giving rise to a long list of projects.

The Master Plan has incorrectly identified bottlenecks as the logistics problem. The visible bottlenecks are the symptom, not the underlying cause. The fundamental problem is one of outmoded and overloaded transport systems that are being patched up instead of being replaced.

Indonesia’s logistics problem is best understood in terms of its historical evolution. At the time of independence, as part of the colonial inheritance, Indonesia’s logistics system for both passengers and freight relied on railways in Java and water transport (rivers and seas) throughout the rest of the archipelago. Since then, and very rapidly since the 1970s, passengers have shifted to aircraft (for longer hauls) and to roads for short hauls. Meanwhile freight has also moved onto the road, with trucks carrying up to 40-foot containers. The rail network has shrivelled while the road network linking ports, airports, cities and their hinterlands has become hopelessly congested.

These long-term trends have been compounded by three economic trends. First, Indonesia has grown enormously in population, income and even income per capita. Second, a third of the growing population has moved to or been absorbed by cities, so that more than 50 per cent of the population is now urbanised. Third, rising incomes have allowed people to buy motor vehicles and add them to the road system without any price signals as to the marginal cost in terms of road usage, congestion and pollution.

A system problem demands a system solution. In this regard, China’s transport planning has been exemplary. Early decisions were made to build a national high-speed passenger rail network and a national highway system, both of which have largely been achieved within a short timeframe. In transport terms at least, China has broadly become a twenty-first century nation, in some respects more so than the United States.

China’s example suggests some of the strategic decisions that Indonesia’s new president needs to consider. These issues need to be determined explicitly, and at an early stage of planning, to ensure that scarce capital is invested in the appropriate modes.

Choices have to be made. For example, a bridge across Sunda Strait is technologically feasible and would break the bottleneck at the ferry crossing between Java and Sumatra. It would also be a prestigious project on a world scale. It would, however, divert tens of billions of dollars from the construction of other transport systems. By contrast, a ferry crossing can be duplicated and more vehicle ferries added at quite modest cost. Additionally, if high-speed rail will be the system of the future, it makes little sense to invest in upgrading a conventional passenger track that will become redundant or to invest heavily in the expansion of airports and associated infrastructure.

Also, no minor consideration is the technological change that will be spurred on by climate change. Indonesia’s government is yet to integrate climate change with national planning or transport planning. Yet, by the end of this decade, there will almost certainly be an international carbon price.

The planning challenge is therefore to apply intellectual rigour to devise a long-term multi-modal national transport master plan that sets the nation on an optimal and sustainable long-term trajectory. The financing issues are daunting but they are subsidiary.

Howard Dick is Professorial Fellow at the Faculty of Business & Economics, University of Melbourne and Conjoint Professor, Faculty of Business & Law, University of Newcastle (NSW).

 

2 responses to “Indonesia’s transport planning lacks rigour”

  1. This contribution from Howard Dick about transport policy in Indonesia is very useful. Similar issues arise in other parts of the infrastructure sector (power, water supply) as well. In support of Howard’s observations, there are two additional considerations to mention.

    First, it isn’t really clear whether a large investment in the Sunda Strait Bridge (SSB) is a good idea or not. Numerous observers have pointed to the alternative of expanding the ferry service across the Sunda Strait. But there are pros and cons with both the idea of the SSB and the proposal to expand the ferry service. For example, there is already substantial N-S (north-south) and E-We (east-west) traffic in a crowded area in the Sunda Strait. Traffic volumes through the Strait are bound to increase substantially in the next decade or so. There will be an increasing risk of collisions if the E-W ferry service is substantially expanded. Perhaps it is sensible to take the risk, depending on what the estimated risks are. What is really needed — and what does not exist at present — is a throrough feasibility study of the SSB along with a careful consideration of the investment alternatives (including expanding the ferry services).

    Second, it isn’t really clear that the financial issues are always subsidiary to the planning issues. Planning and financing often go hand-in-hand. Projects can go wrong in lots of ways: in the planning stage, in the construction phase, in the operational stage, and in financing. My impression is that there are lots of financial problems holding back infrastructure policy in Indonesia so it would be an advantage to consider financial issues as part of the overall policy package.

    • Peter McCawley makes two good points but I would draw different conclusions.
      1. Sunda Strait is becoming busier but is still an order of magnitude below traffic in the English Channel, where ferries are crossing all the time. An upgraded navigation system would be much cheaper than a bridge, which would also be vulnerable to earthquakes and volcanic eruptions (Krakatau!).
      2. Financing may enable or constrain infrastructure development but it is important first to have a masterplan that identifies the optimal systems, networks and sequencing. Otherwise funds may be borrowed for sub-optimal projects, to the benefit of those who honestly or not enjoy the fees, commissions and bonuses but not in the long-term best interest of the nation that must service the loan.

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