Weighing the cost of Jakarta's MRT system

By John Mcbeth, The Straits Times, 22 Feb 2014

MANY of the stately trees that once lined Jalan Sudirman, Jakarta's busy main thoroughfare, disappeared so quietly in recent weeks that it is clear workers used the early morning hours to commit environmental carnage.

Sadly, it is the necessary price the City of Tough Love has had to pay for the building of a new mass rail transit (MRT) system, the single biggest infrastructure project in the now-traffic-clogged metropolis in its 400-year history.

Starting with an initial over-and-under 27km corridor stretching from the southern suburb of Lebak Bulus to North Jakarta's historic Kota district, the MRT network will eventually cover 108km when it is completed in 2030.

It is long overdue. Jakarta is the largest city in the Asian region that still does not have a modern rail-based people-mover. Transportation experts are predicting total gridlock by 2020 unless it can get commuters out of their cars and onto public transport.

The Jakarta municipality itself may house nine million residents, but another four million make the daily commute into the city from the sprawling dormitory suburbs of Bogor in the south, Bekasi in the east and Tangerang to the west.

Plans may have moved a lot quicker if it had not been for the 1997-98 financial crisis, and the inordinately long time it took Indonesia to drag itself out of the hole. Sluggish growth meant the city could not have sustained an MRT system without unacceptably high subsidies.

MRT Jakarta president-director Dono Boestami won't talk about the proposed fare structure, which has been put at anywhere between 10,000 rupiah (S$1.10) and 15,000 rupiah for the initial leg from Lebak Bulus to the Hotel Indonesia (HI) Circle.

"That's a political issue, so we're not going to be part of it," he says, pointing to 2008 legislation which clearly states that any shortfall in operating costs will be topped up by the Jakarta administration.

Governor Joko Widodo took time to decide whether to go ahead with the project after he was elected in 2012. With the city already paying a 253 billion rupiah subsidy for the Transjakarta Busway, he worried the MRT system would prove too much of a burden.

The Japan International Cooperation Agency, the project financier, has committed US$2.4 billion (S$3 billion) in soft loans for the first two phases, carrying an annual interest rate of only 1 per cent over a period of up to 40 years.

Initially, the Jakarta administration was tasked with 58 per cent of the debt burden, but Mr Widodo managed to whittle that down to 51 per cent, with the central government agreeing to fork out the rest.

Charged with building, owning and maintaining the new network, MRT Jakarta is classified as a regional government-owned entity in a way which allows it to retain flexibility in finding alternative financing - something it could not do as a state enterprise.

That, in turn, means operational costs can be subsidised from other sources, similar to Hong Kong's highly profitable 85-station MTR, which now serves as a model for what is known as transit-oriented development.

Indeed, fares may end up representing only as little as 20 per cent of the revenues Mr Boestami hopes to earn from developing areas along the corridor and around the stations. "That," he says, "will be our bread and butter."

Much of the focus will be on Dukuh Atas in Central Jakarta - the eventual meeting point for suburban rail, the airport railway, the long-delayed inner-city monorail, the north-south MRT corridor and the 87km east-west corridor, stretching from Balaraja in the west to Cikarang in the east.

Suburban services have improved dramatically under Mr Ignasius Jonan, the youthful boss of state-owned national railway Kereta Api. By changing routes and cleaning up stations, he has doubled passenger loading to more than 600,000 a day.

Covering a radius of 1.5km, the Dukuh Atas development will potentially transform Jakarta's mid-town, with its planned MRT depot and station, high-rise office blocks and sub-ground shopping along the south bank of the city-splitting Malang River.

Another marina-type project is planned for South Jakarta's Blok M Busway terminal. The site is one of the seven elevated MRT stations before the rest of the north-south line goes underground at the bottom end of Jalan Sudirman.

With an initial capacity of 210,000 passengers a day, it is anyone's guess how long it will take for the MRT to make a difference. But if the early experience of Bangkok's Skytrain is any guide, it won't happen overnight.

Look at the Busway. Taking into account the cost of an ojek ( motorcycle taxi) to get to the bus, the daily 7,000 rupiah two-way fare and perhaps an ojek at the other end, the average Jakarta commuter pays about 200,000 rupiah a month for transport.

That adds up to the down-payment on one of the 1,000 new motorcycles which each day join the nine million already dictating the flow of traffic on Jakarta's streets. In some ways, because of their convenience, they are an even bigger challenge than the car.

Mr Boestami, a career banker with a relaxed open-collar manner and a good grasp of what is required, says a lot will depend on how city administrators introduce policies that will force motorists to leave their cars at home.

Completion of the first stage of the MRT network from South Jakarta to the underground HI Circle station in 2018 is not expected to change much. In fact, the construction itself is likely to make congestion even worse.

But with the rest of the line in place two years later, he predicts the related introduction of inner-city electronic road pricing, higher parking fees and additional vehicle taxes will cut traffic by 30 per cent.