Urban Transport in the OIC Megacities
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In the case of road construction, jurisdiction is determined by type of roads such as national roads,
provincial roads and roads under regency/city. However, all the currently operating railway lines are
operated by a sole state-owned railway operator in Indonesia, PT. Kereta Api Indonesia, under the
jurisdiction of the central government. In terms of buses, inter-provincial buses are licensed by the
central governments, and inter-city buses are licensed by the provincial government in principle. Bus
route licenses within a regency/city are issued by the regency/city government. However, buses
between DKI Jakarta province and the other two provinces in the Jakarta Metropolitan Area can be
licensed by the provincial governments. This significantly increases the number of stakeholders of the
transportation sector.
Due to the connection between Jakarta and its peripheries, solving transport problems in Jakarta must
take transport developments of the surrounding regencies and cities into account. Integrated planning
is crucial. Therefore, a single transport authority for the Jakarta Metropolitan Area, which is currently
still absent, needs to be formed. Until this report is written, the forming of Otoritas Transportasi
Jabodetabek/OTJ (Jabodetabek Transportation Authority) is being discussed with the President. The
establishment of this authority aims to tackle transportation problems of not only Jakarta but also
other regions within Jabodetabek area. Furthermore, this authority is hoped to be able to remove
administration/bureaucratic and institutional obstacles that have been hindering many attempts to
create a robust transportation system.
4.1.9. Urban transport infrastructure financing
As described before, pertinent transport problems in Jakarta are mainly caused by a lack of quantity
and quality of transport infrastructure that cannot cope up with the rapid motorization increase. This
situation demands the Jakarta government to continuously provide transport infrastructure and
facilities. According to the World Bank (2010), Indonesian government can only cover 30% of total
investment need for its infrastructure program and is relying on state-owned enterprises and private
investors for the rest. Therefore, extra government effort is required to enable private funding, which
mainly through PPP. The Indonesian government has had a pro-PPP policy since the early 2000s. A
state owned company, called PT Sarana Multi Infrastruktur , was established to facilitate the
cooperation between the government and private parties in financing infrastructure projects in
Jakarta including transportation infrastructure.
Private participation is strongly influenced by a conducive investment climate and - although
improving - Indonesia is struggling to provide such an environment. The legal framework involving
land acquisition has been a serious obstacle for transport infrastructure projects to materialize and
makes investors hesitant to invest. Recently, steps to improve the land situation have been taken. In
2012, the government and parliament approved the new Land Acquisition Law that is regarded to
speed up the land acquisition process notably as it deals with the revocation of land rights to serve
public interest, puts time limits on each procedural phase and ensures safeguards for land-right
holders. Both government and PPP projects on state-owned land are protected by this bill.
Furthermore, to provide more assurance for private investors, the government has established
th (IIGF). This institution gives certain guarantees against
infrastructure risks for projects under the PPP scheme.
Another obstacle is capability. Generally speaking, government bodies do not have the experienced
staff needed to properly prepare infrastructure projects for tender. This includes making sure they
are economically viable and are evaluating and managing the many project risks. This problem is even
more serious when complex finance is involved, as in the case of a PPP. TransJakarta is one of the PPP
success stories in Indonesia. The infrastructure provision of TransJakarta is fully financed by Jakarta
Provincial Government, while ticketing system, bus procurement and operation are financed by
private parties. Apart from PPP schemes, several transport infrastructure projects in Jakarta are
funded by multilateral organizations. As discussed above, multilateral agencies and bilateral donors