JAKARTA MASS RAPID TRANSIT PROJECT:AN ECONOMIC REVIEW

Wimpy Santosa,Parahyangan Catholic University, IndonesiaTri Basuki, Parahyangan Catholic University, Indonesia

ABSTRACT

Jakarta is the capital city of Indonesia. The growth of Jakarta is increasing, bringing with itparalyzing traffic congestion. The city has responded by planning to build a modern subwaysystem (mass rapid transit system), connecting Blok M and Setasiun Kota. This system isbelieved by many to be able to solve congestion, particularly, in the North-South corridor of thecity.

The subway system is an ideal transportation system for big cities like Jakarta. To civic andpolitical leaders it promises glamour and sophistication, and to urban planners it promisesresolution of overwhelming traffic congestion. However, there are some aspects that need to bereviewed carefully before the implementation of the plan. Those aspects could be far moredifficult and costly than was ever imagined in the planning phase.

In this paper, the rationale for the Jakarta Subway Project is explored. The discussion includesthe need to have a subway transportation system, the benefits to the city, and the cost to build it.It is partly true that the subway system, which has a great capacity to move people, is the onlysystem, which can be used to solve chaotic road conditions in Jakarta, since no other urbantransportation mode has a bigger capacity to move people than this one. However, the financialand economic viability associated with this project need to be justified carefully.

Key Words:

Urban Transportation, Mass Rapid Transit (MRT), Jakarta, economic viability, financialviability, efficiency, and economic aspect.

1. MASS RAPID TRANSITRapid transit (RT) is a generic class of electrically powered transit modes which operateexclusively on ROW category A, a fully controlled ROW without grade crossing or any legalaccess by other vehicles or persons, and have high speed, capacity, reliability, and safety.Includes rail rapid transit (RRT), rubber-tired rapid transit (RTRT), light rail rapid transit(LRRT), and most regional rail systems (RGR). Since rapid transit well-known by its highperformance, various modes are often called „rapid transit“ although they technically do notbelong in that class of modes. For examples (Vuchic, 1981):1. bus rapid transit; actually semirapid bus, since no bus line has ROW category A only.2. personal rapid transit (PRT); no PRT has achieved high speed, capacity, and safety in actual

applications.3. group rapid transit (GRT); it does not have such performance either, but several may

achieve it in the near future.Rail rapid transit compared with light rail transit has (1) higher LOS; speed, reliability, orcomfort; (2) higher system performance; capacity due to long trains, productivity, efficiency; (3)higher safety; signalized, and fail-safe; (4) stronger image; separate ROW and rail technology;(5) higher passenger attraction and land-use impact; result of the above; (6) higher investment;

(7) lower ability to fit into urban environment; (8) less conducive to stage construction; and (9)longer implementation (Gray&Hoel, 1992). General design standards and characteristics forMRT system shown in Table 1 and 2.

Table 1. Major Characteristics of the MRT system (Hermawan, 2001)

Main Items Characteristics Main Items CharacteristicsTrain operation per day Approx. 200 trains Gauge 1,067 or 1435 mmTrain intervals in peakhour Approx. 3 min. Traction power Overhead 1500 V or

Third rail 750 V

Train length 135 m (6 cars) Signaling system Fixed Block System orMoving Block System

Train width (inner) 2800 or 3000 mm Train Capacity 45.000 pass / hPlatform length Train length + 5 m Max. Acceleration 0,8 – 0,9 m / sec2

Distance between stations 1 – 1,5 km Maximum Speed Approx. 80 km / h

2. THE NEED FOR MASS RAPID TRANSITThe trend of urban transport growth in Jakarta is affected by many factors. Those factors includeincreases in population (as a result of natural birth and migration from rural areas or other smalltowns), geographical deconcentration, availability of motorized transport, increases in familyincome, and increases in commercial and industrial activities. A dramatic increase in thepopulation of Jakarta and its surrounding area (Botabek area) is an important cause of highgrowth in urban transportation demand. A study shows that the growth rate of Jakarta is slowingdown from 4.0% between 1970 and 1980 to 2.3 % between 1985 and 1990. On the contrary thegrowth rate in Botabek area increased from 3.8 % in 1970 to 5.3 % between 1980 and 1985,slowing down to 4.8 % between 1985 and 1990. In the late 1980’s the population of Botabekarea surpassed that of Jakarta. In 2015, the population of Jakarta area will reach around 12.06million inhabitants, with the population growth rate remains high (BPPT, 1992).

Transport trips can be expected to grow in proportion to increases in population. At present,about 8.1 million trips/day in Jakarta using private vehicles and 10.9 million trips/day usingpublic transportation. Only about 3 million trips/day of those using public transportation usetrain services (Rini, 2001). With no restriction in private vehicle ownership, the number ofprivate cars in Jakarta will reach almost 3 million in 2015 (BPPT, 1992). The total road lengthin Jakarta at present is about 6,300 km, with an annual growth rate of 4.0 % (Rini, 2001). Withthese figures, the road capacity in 2015 will not be able to meet the projected number ofvehicles in Jakarta. As a result, road congestion will become worse with increasing delays formotorists.

If no or inadequate action is taken to cater for the rapidly increasing demand for transport, roadcongestion will become steadily worse and reach a level where conditions become intolerable.One way of trying to solve this problem is to implement a large road-building program toprovide sufficient capacity for increasing traffic demand. However, this approach has notworked for large cities anywhere in the world, mainly because traffic demand has alwaysexceeded road supply or traffic increases to fill available road space. There have been manyroad construction projects in Jakarta and still traffic congestion gets worse. For this reason, amass transit system is considered to be a necessity (Santosa, 2001).

Table 2. Main Design Standards of Civil and Track Works (Hermawan, 2001)

Main Items Contents RemarksGauge 1.067 mmMinimal curvature radiusOn Main Track 300 m (desirable) 200 m (absolute min.)Along platform 800 m -At platform ends 500 m -On side track 140 m -Maximum cant 150 mmMaximum gradientAt main track 3,50% Minimum 0,2 %Along platform 0,00% -At forwarding track 4,00% -Minimal of drainage 0,20% -Min. vertical radius of curvature 3.000 m (desirable) 1.600 m (absolute min.)Thickness of bedConcrete bed 500 mm from rail top to bottom surfaceBallast bed 650 mm in generalUnit weight of railMain track 54 kg / mSide track 54 kg / m including depotDistance between Centers of double trackMain track not less than 3,9 mSide track not less than 3,6 mPlatform, staircase NFPA – 130Effective length Train length + 5 m

Width incl. Stairs (island type) Not less than 7,5 m > 3 m at platform endWidth incl. Stairs (separate type) Not less than 4,0 m > 2 m at platform end

3. JAKARTA MASS RAPID TRANSIT PROJECTThe MRT concept for the city of Jakarta was first introduced in the early 1990s. It has beenconceived as the backbone of an integrated urban transportation system for Jakarta and wasexpected to be the first modern urban transportation system in Indonesia. The MRT systemrunning on separated or underground tracks provides an alternative means of transport which isalmost free from congestion. For this reason, the Government of Indonesia decided in 1996 toimplement the Jakarta MRT System Project, connecting Blok M to Setasiun Kota. This systemis expected to ease congestion in the North-South corridor of Jakarta. However, in 1997 thisplan was postponed due to the monetary crisis, which took place in Indonesia.

In 1999 the project was revised with a purpose of reducing the cost for implementing it. Fivealignment alternatives, as shown in Figure 1 and Figure 2, were reevaluated and alternative 3Bwas recommended to be the optimum one (JTCA, 1999). The first phase of the alternative line3B, comprising 15.5 km and 13 stations (7 of them underground) is intended to constructearlier. If the project were to be built this year, the expected completion date would be in 2007.The comparisan of alternatives is given in Table 3 (JTCA, 1999).

Table 3. Comparison of Alternative Cases (JICA, 2000)

Section Distance No. of Station StructuresBase Case ( Based on Revised Basic Design )

Fatmawati Depot - - GroundFatmawati - Blok M 7,6 km 5 stations Elevated Guideaway

Senayan - Monas 7,8 km 8 stations UndergroundTotal 15,4 km 13 stations

Outline of Alternative-1Fatmawati Depot - - Ground

Fatmawati - Monas 15,6 km 13 stations Full UndergroundTotal 15,6 km 13 stations

Outline of Alternative-2Fatmawati Depot - - GroundFatmawati - Istora 9,2 km 7 stations Elevated Guideaway

Bendungan Hilir - Monas 6,2 km 6 stations UndergroundTotal 15,4 km 13 stations

Table 4. Comparison of Alternative Cases (JICA, 2000) [continued]

Outline of Alternative- 3AFatmawati Depot - - GroundFatmawati Station 1,6 km 1 station Underground

Cipete Raya – Istora 7,8 km 6 stations Elevated GuideawayBendungan Hilir – Monas 6,2 km 6 stations Underground

Total 15,6 km 13 stationsOutline of Alternative- 3B

Fatmawati Depot - - GroundFatmawati Station 1,3 km 1 station Underground

Cipete Raya – Istora 8,0 km 6 stations Elevated GuideawayBendungan Hilir – Monas 6,2 km 6 stations Underground

Total 15,5 km 13 stations

3.1 Passengers Demand ProfileThe information for present trip patterns was gathered by means of busses passengers surveyconducted on all bus shelters along Fatmawati – Blok M – Kota and Blok M and Lebak BulusTerminal. Bus travelers are deemed to represent the greatest potential MRT market. MRTcorridor account for only 18% of the total bus passenger trips. Bus passenger pattern show inTable 4 and number of bus routes passing MRT corridor show in Table 5.

Table 4. Bus Passenger Pattern, 2000 (JICA, 2000)

MRTCorridor

DKIJakarta Botabek External Total

MRT Corridor 18.0% 22.6% 10.4% 0.1% 51.1%DKI Jakarta 22.6% 8.4% 3.0% 0.1% 34.0%

Botabek 10.5% 3.0% 1.2% 0.0% 14.7%External 0.1% 0.1% 0.0% 0.0% 0.2%

Total 51.1% 34.1% 14.6% 0.2% 100%

Table 5. Number of Bus Routes Passing MRT Corridor (JICA, 2000)Number of Bus Route

Street Name Patas AC Patas Reguler Med. Bus TotalAntasari 2 1 1 3 7Panglima Polim/Fatmawati 4 4 1 3 12Sisingamangaraja 23 17 11 3 54Senayan 28 23 14 2 67Sudirman 31 25 12 4 72Thamrin 24 19 10 2 55Medan Merdeka Barat 17 13 7 - 37Majapahit 15 11 5 - 31Gajah Mada 16 13 7 - 36Pintu Besar Selatan 16 13 7 - 36

3.2 Travel Demand ForecastingTrip generation models were applied to forecast future levels of Jabotabek person trip demandfor each zone, using as input of the forecast distributions of the respective socioeconomic anddemographic variables. Trip totals were stratified into four trip purposes that are used duringtraffic modeling and forecast. Several basic assumptions taken during the course of the MRTdemand forecasting. The forecast for passenger demand for the stretch of Fatmawati – Monas ofJakarta MRT is 169,298 boarding passengers per day as shown in Table 6. The loading andutilization of the MRT line is forecast as shown in Table 7 for year 2005 and 2015.

4. PROJECT EVALUATIONEvaluation is the process of determining the desirability of different courses of action and ofpresenting this information to decision makers in a comprehensive and useful form. Evaluationthus provides information to decision makers on the estimated impacts, trade-offs, and majorareas of uncertainty associated with the analysis of alternatives. Not only does the magnitude ofthe impact have to be determined, but also those who are positively or negatively affectedshould be identified (Meyer & Miller, 2001).

A definition of benefits and costs is basic to evaluation at any level of application. Thedefinition of benefits and costs, and the relative weighting of each, are dependent upon thegroups likely to experience them. Changes to the transportation system can have both direct andindirect impacts on the social and economic activities in a metropolitan area, like Jakarta. Thechallenge in evaluation is to understand these complex relationships and to identify a set ofbenefits and costs that accounts for the diverse impacts associated with any particular action.

Table 6. Forecast MRT Passenger Boarding Volumes (JICA, 2000)

Boarding Volume (passenger / day)Station Name 2005 2015Monas 22,015 35,270Sarinah 19,016 39,200Bundaran HI 12,547 25,095Dukuh Atas 28,338 60,355Setiabudi 4,201 9,551Bendungan Hilir 22,342 51,157Istora 6,726 15,476Senayan 2,218 5,459Blok M 27,167 60,834Blok A 1,102 2,278Haji Nawi 2,574 5,153Cipete Raya 2,086 4,217Fatmawati 18,966 40,607Total 169,298 354,652

Table 7. Forecast MRT Line Loading and Utilization (JICA, 2000)

Line Loading(passenger / day - two ways) Passenger-kmSection

2005 2015 2005 2015Monas – Sarinah 43,749 69,983 40,242 64,384Sarinah - Bundaran HI 74,758 139,567 67,270 235,610Bundaran HI - Dukuh Atas 91,364 178,709 79,477 155,477Dukuh Atas - Setiabudi 94,697 200,903 89,002 188,849Setiabudi - Bendungan Hilir 94,843 202,603 76,811 164,108Bendungan Hilir - Istora 89,876 196,669 152,776 334,337Istora - Senayan 88,468 194,585 63,693 140,101Senayan - Blok M 87,307 192,377 130,082 286,642Blok M - Blok A 46,161 97,819 64,628 136,947Blok A - Haji Nawi 44,989 95,280 62,987 133,392Haji Nawi - Cipete Raya 41,147 87,616 53,904 114,777Cipete Raya - Fatmawati 37,926 81,219 73,578 157,565Total 954,449 2,002,189

4.1 Project CostsThe total costs of an MRT system consist of capital costs and operating costs. Capital costs arebasically the initial investment costs including basically civil and building works, utilities androad diversions, electrical and mechanical equipment, land and property acquisition,depreciation, and interest. Operational costs are composed of operation and administration(staff), energy (traction, stations, and other buildings), maintenance and repair, contractservices, and miscellaneous.

Capital costs are closely related to the life span of vehicles and infrastructure. Difficulties tocalculate and to compare the capital costs for different places or for different times are mainlycaused by fluctuating exchange rates, changes in inflation rates, unknown geological condition,urban constraints and topography, compensation payment to land owners and varying landprices, financing costs, and quality of planning and management. In general, the operating costsare influenced by costs of labor, energy, and materials. The impacts of those factors aredescribed in Table 8.

Table 8. Costs-Influencing Factors and Impact on Costs (BPPT, 1992)

Factors Influencing Cost Impact on CostGeological conditions (underground construction) very largeSystem Features small/moderateUrban constraints and topography largeLand costs moderateLabor cost moderateTaxes and duties smallFreight costs smallCompetition in the equipment/construction market moderateFinance costs very largeQuality of management moderate/large

The capital cost for phase-1 section is estimated Rp 13.683 trillion, as presented in Table 9(JTCA, 1999). The Government of Indonesia has requested to get loan from the Government ofJapan, through Special Yen Loan (SYL) scheme for the project. Under this scheme theGovernment of Indonesia will receive the loan with an annual interest rate of 0.75 % andpayback period 40 years (including 10-year grace period).

Table 9. Capital Costs for Phase –1 of Alternative 3B (JCTA, 1999)

Japanese Yen (million) Indonesian Rp (million)Fatmawati-Monas Section

L/C F/C Total L/C F/C Total

Civil works and Equipment 39,123 81,026 120.149 2,934,208 6,076,936 9,011,143

Detailed Design and TenderAssistance

1,176 2,448 3,623 88,166 183,566 271,732

Construction Supervision 2,347 4,862 7,209 176,052 364,616 54-0,669

System Integration and TrialRunning

80 526 606 5,976 39,438 45,414

Physical Contingency 4,610 6,365 10,975 345,723 477,369 823,092

Insurance 1.369 2,836 4,205 102,697 212,693 315,390

Sub-total (Engineering BaseCost)

48,704 98,062 146,766 3,652,823 7,354,618 11,007,441

L/C and F/CComposition (%)

33.2% 66.8% 100 % 33.2% 66.8% 100%

Land Acquisition andCompensation

10,286 0 10,286 771,457 0 771,457

Import Duty, VAT, etc 25,384 0 25,384 1,903,808 0 1,903,808

Sub-total(GOI contribution)

35,670 0 35,670 2,675,266 0 2,675,266

Total (Project Base Cost) 84,375 98,062 182,436 6,328,088 7,354,618 13,682,706

Note: L/C = local cost and F/C = foreign cost

The MRT riderships were estimated under several different scenarios. One scenario estimatedthat the annual riderships would be 50 million in 2015 and steadily increase to reach 98 millionin 2015. Meanwhile the estimated average fare was Rp 2,600, slightly higher than Rp 2,500passengers pay for Patas AC (express with AC) Bus Service (JTCA, 1999). Assuming that the

MRT service were in service today with the average fare of Rp 2,600, it would needapproximately 40 million passengers per year, just to pay the interest of the capital cost. Thisfigure indicates that the MRT operator would not be able to survive if it relies on fare collectiononly. The revenues are not sufficient to cover the initial and operating costs.

4.2 Project BenefitsBenefits are the desirable effects of an investment, where desirable suggests some positiveimpact on user, community or decision-maker goals and objectives. Benefits focuses on the netincrease to economic welfare. This focus has occurred for macro-level benefits and at the microlevel. The broad range of transit investment impacts that frequently are defined as economiccan be classified in three categories: generative, redistributive, and financial transfer. Withineach category, there are several types of impacts as summarized in Table 10.

The principal reason to build the Jakarta MRT system is to reduce congestion in the Blok M –Setasiun Kota corridor. MRT service on exclusive rights-of-way will increase corridor capacitysignificantly. Benefits are expected to accrue to both MRT users and non-users. The MRT userwould benefit from considerable timesavings, because of avoiding road congestion and costsavings, so MRT fares will be less than car-operating costs. Non-users would benefit fromdecrease congestion on the roads, because each MRT rider represents one less trip on surfaceroads.

Increased travel capacity around the Blok M – Setasiun Kota line could allow more growth tooccur in the corridor. This means that growth patterns of the city could also change, greaterdevelopment along the MRT corridor would take place, and more activities would be generated.However, all of these additional activities, particularly business and commercial activities, inthe corridor can create new transportation problems. The Jakarta MRT project is also believedto generate additional benefits to people. These benefits include creating more jobs availableduring construction and operation, and prospering local products, such as Portland cement andsteels.

Table 10. Categories of Transit-Related Economic Impacts (TCRP, 1998)

Generative Impacts Redistributive Impacts Financial Transfer Impacts• User benefits (travel time savings,

safety benefits, changes inoperating costs)

• Employment and income growthunrelated to system construction,operation, or maintenance

• Agglomeration / urbanizationbenefits (e.g. higher productivity,lower infrastructure costs)

• External benefits (e.g., air quality)• Accessibility benefits (e.g., access

to employment)• Reduced development due to

reduced parking

• Land development (e.g.,clustered developmentaround transit stations)

• Employment and incomegrowth due to landdevelopment

• Increased economic activitywithin corridor

• Employment and incomegrowth related to systemconstruction, operation, ormaintenance

• Joint development income tolocal agencies

• Property tax impacts

4.3 Economic Impacts MeasurementsThe Jakarta MRT project will result a broad impact to several aspects. Those impact can beclassified as an economic impact. Two important aspect are environmental impact and urbandevelopment impact. The environmental impacts that were considered by ‘The Revised BasicDesign Study for Jakarta MRT System, February 1999” are shown in Table 11.

The environmental impact investigation used an environmental examination matrix with itsvertical axis consisting of rows for environmental elements grouped in three categories; i.e.

social, natural and living environment (including pollution), and its horizontal axis consisting ofcolumns of project activities; i.e. planning stage, construction stage, and operation stage.

As shown in Table 11, the Revised MRT covers most of the issues that should be considered inan EIA (Environmental Investigation Assessment) Study. Based on that, the analysis of sameissues are considered insufficient for the following reasons:a. Understanding of the existing environmental conditions along the MRT corridor is not

satisfactory in most of the environmental items/elements.b. A prediction and evaluation of the affects to the surroundings areas only covers noise &

vibration and obstruction of sunshine, andc. A detailed consideration on the issues of environmental management and monitoring is not

carried out.

Therefore, an EIA should be carried out in the next step in order to 1) understand the presentconditions, 2) predict the environmental impacts and evaluate their magnitudes, 3) proposecountermeasures to mitigate the envisaged negative impacts, and 4) formulate plans forenvironmental management and monitoring.

Urban development along MRT corridor must be assessed as a part of the economic evaluation.The analyses about the latest development conditions along the MRT corridor (Kota-Fatmawati)found as follows:a. 69 office building, mostly offer commercial office space in the market. Many high-rise

buildings stand along the corridor, especially the Thamrin – Sudirman area. The SudirmanIntegrated Trade District (Kawasan Niaga Terpadu Sudirman) will accelerate this trend byproviding considerable office space in the 2000s. Generally from a property businessviewpoint, the southern building set higher floor rental rates and enjoy higher occupancyrates than those of the northern buildings.

b. 22 high-rise apartments were surveyed along the corridor, 10 of which have selling unitswith strata titles. The others offer either serviced units or leased units. Various luxuriousunits are available at the Thamrin – Sudirman area. Unlike the office buildings, locationdifference cannot be observed in terms of room’s rate and occupancy rate.

c. 11 shopping centers were surveyed. 2 shopping centers offer the most expensive retail floorspace to tenants and on the other hand, several shopping centers show reasonable rates.

Another aspect that must be considered is the development of Jakarta in the near future, as astatutory document to guide the development of DKI Jakarta between 2000 and 2010. Itindicates the spatial development framework along the MRT corridor about land use anddevelopment volume.

The proposed alignment of the MRT Phase 1, running from Kota to Fatmawati, is a north-southspine in the metropolitan area and it has taken a prominent role of main street in Jakarta. Thecorridor, comprising road and roadside areas, has many distinctive urban function, and these canbe grouped into 1) central business corridor, 2) tourism and recreational corridor, and 3) publictransport corridor.

Table 11. Environmental Examination Matrix for MRT (JICA, 2000)

Major Facilities / Activities MRT DevelopmentPlanning Stage Construction Stage Operation Stage

Environmental Elements Rev. 99Plan

JICAStudy

Rev. 99Plan

JICAStudy

Rev. 99Plan

JICAStudy

Social Environment1 Resettlement / Land Acquisition xx2 Economic Activities + + + + + 3 Traffic and Public Facilities xxx + +4 Split of Communities5 Cultural Property x x6 Water Right / Right of Common7 Public Health Condition x8 Waste (solid waste) xx x9 Hazards (Risk)

10 Religious ConsiderationNatural Environment

11 Topography and Geology12 Soil Erosion13 Groundwater xx14 Hydrological Situation (Flood) x15 Coastal Zone16 Flora and Fauna17 Meteorology18 Landscape (Urban landscape) x xx

Living Environment (incl. Pollution)19 Air Pollution xx + +20 Water Pollution xx + +21 Soil Contamination22 Noise and Vibration xx xxx23 Land Subsidence x24 Offensive Odor25 Disturbance of Radio Wave x26 Obstruction of Sunshine x27 Infringement of PrivacyRemarks:1. means negative impacts 2. means positive impact3. means shows the element that detailed environmental analysis had been carried out by the Study.4. x means the environmental elements that may have a possible negative impact. While “xxx” is

predicted to have more negative impact than “xx”5. ++, + means positive impact.6. No mark means the environmental items requiring no impact assessment since the anticipated impacts

are, in general, not significant.

4.4 PROJECT VIABILITYThe overall objective of the economic analysis in general terms is to assess in quantitative termsthe effect of the MRT on Indonesia’s economic well being and to estimate the project’sexpected economic internal rate of return (EIRR) on all resources invested. This evaluation isdeterministic appraisal of the economic viability of the MRT that follows the conventionaldiscounted cash flow methodology in computing the EIRR, the net present value, and thebenefit cost ratio. The MRT costs and benefits are presented in Table 12.

Table 12. MRT Economic Costs and Benefits (constant 2000 ecn. prices)(JICA,2000)

Economic Costs Economic Savings

Year

LifeCy-cle

Year

LandAcqui-sition.

CivilWork

Enginee-ring

ConsultingServices

Equip-Ment

Compo-nent

Phy-sicalConti-ngency

In-surance

Levies &

DutyTaxes O&M

Add.RollingStock

Replace-ment .Invest-ment

TotalCosts

VOCSavings

TimeCost

Savings

TotalSavings

NETEconomicBenefits

2000 -8 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

2001 -7 541.95 0.00 89.27 0.00 54.20 0.00 0.00 0.00 0.00 0.00 0.00 685.42 0.00 0.00 0.00 -685.42

2002 -6 108.39 0.00 138.86 0.00 10.84 0.00 0.00 0.00 0.00 0.00 0.00 258.09 0.00 0.00 0.00 -258.09

2003 -5 0.00 615.14 72.35 2.71 61.66 22.38 0.00 0.00 0.00 0.00 0.00 774.24 0.00 0.00 0.00 -774.24

2004 -4 0.00 1586.99 105.85 173.17 167.56 63.89 0.00 0.00 0.00 0.00 0.00 2097.46 0.00 0.00 0.00 -2097.46

2005 -3 0.00 1688.69 233.25 1365.62 239.81 111.29 0.00 0.00 0.00 0.00 0.00 3638.66 0.00 0.00 0.00 -3638.66

2006 -2 0.00 787.77 133.63 835.01 120.12 59.31 0.00 0.00 0.00 0.00 0.00 1935.84 0.00 0.00 0.00 -1935.84

2007 -1 0.00 135.87 26.49 109.61 19.60 9.00 0.00 0.00 0.00 0.00 0.00 300.57 0.00 0.00 0.00 -300.57

2008 1 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 138.43 166.13 304.56 89.20

2009 2 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 150.33 177.84 328.17 112.81

2010 3 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 163.26 190.38 353.64 138.28

2011 4 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 55.96 0.00 271.32 177.31 203.80 381.11 109.79

2012 5 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 192.55 218.17 410.72 195.36

2013 6 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 209.11 233.55 442.66 227.30

2014 7 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 227.10 250.02 477.12 261.76

2015 8 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 111.24 0.00 326.60 246.59 267.75 514.34 187.74

2016 9 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 267.80 286.63 554.43 339.07

2017 10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 383.35 598.71 290.83 306.84 597.67 -1.04

2018 11 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 315.84 328.47 644.31 428.95

2019 12 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 343.01 351.63 694.64 479.28

2020 13 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 372.50 376.42 748.92 533.56

2021 14 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 404.54 402.95 807.49 592.13

2022 15 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 439.33 431.36 870.69 655.33

2023 16 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 442.39 657.75 477.11 461.77 938.88 281.13

2024 17 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 518.14 494.33 1012.47 797.11

2025 18 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 384.17 599.53 562.70 529.18 1091.88 492.35

2026 19 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 611.10 566.48 1177.58 962.22

2027 20 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 663.65 606.42 1270.07 1054.71

2028 21 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 796.71 1012.07 720.73 649.17 1369.90 357.83

2029 22 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 782.71 694.94 1477.65 1262.29

2030 23 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 166.85 0.00 382.21 850.03 743.93 1593.96 1211.75

2031 24 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 923.12 796.38 1719.50 1504.14

2032 25 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 1002.51 852.53 1855.04 1639.68

2033 26 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 1088.73 912.63 2001.36 1786.00

2034 27 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 171.89 387.25 1182.36 976.97 2159.33 1772.08

2035 28 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 611.80 612.54 1439.70 1284.04 1045.85 2329.89 890.19

2036 29 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 229.19 444.55 1394.47 1119.58 2514.05 2069.50

2037 30 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 1514.39 1198.51 2712.90 2497.54

2038 31 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 1644.63 1283.00 2927.63 2712.27

2039 32 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 1786.07 1373.46 3159.53 2944.17

2040 33 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 111.24 0.00 326.60 1939.67 1470.29 3409.96 3083.36

2041 34 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 2106.48 1573.94 3680.42 3465.06

2042 35 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 2287.64 1684.90 3972.54 3757.18

2043 36 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 2484.38 1803.69 4288.07 4072.71

2044 37 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 383.35 598.71 2698.03 1930.85 4628.88 4030.17

2045 38 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 166.85 0.00 382.21 2930.07 2066.97 4997.04 4614.83

2046 39 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 442.39 657.75 3182.05 2212.69 5394.74 4736.99

2047 40 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 215.36 0.00 0.00 215.36 3455.71 2368.69 5824.40 5609.04

The initial cost structure of the revised basic design was in a first step adjusted to reflect therequirements of the selected alternative 3B. The MRT project is likely to require: 1. Investment into new rolling stock in the operational years 2011, 2015, 2030, 2035, 2040,

and 2045 amounting to an accumulated total of 10,016.8 billion Rupiah in constant 2000prices over the live span of the MRT project.

2. Replacement cost for the identified items will have to be initiated in the operational years2017, 2023, 2025, 2028, 2034, 2036, 2044, and 2046 estimated at an accumulated total of4,960 billion Rupiah in constant 2000 prices.

3. Annual regular O&M expenditures, including spare parts, of approximately 250.4 billionRupiah, equivalent to an accumulated value over the life span of the MRT project of some9,666 billion Rupiah in constant 2000 prices.

4. Total accumulated additional investment and O&M costs over the life span of the projectare estimated at 16,251.9 billion Rupiah.

The quantified direct economic benefits in travel costs, comprising vehicle operating costs(VOC) and time costs (TC) are defined as the savings in economic travel costs achieved througha comparison of the “with MRT” and the “without MRT” project conditions. The total dailyeconomic vehicle operating costs were calculated by taking the daily section volume PCU-kilometers by average operating speeds and multiplying these by the respective vehicle categoryoperating costs by speed and surface condition. The daily costs were converted to total annualcosts by multiplying with factor 365. The economic benefits in VOC were obtained for the“with MRT” and “without MRT” cases and the difference taken as the VOC savings.

The economic benefits in TC savings were estimated by applying the total vehicle-hours in the“with MRT” and “without MRT” project conditions directly to the value of time. The dailyvalues were converted to yearly costs and the difference resulted in the TC savings.

The following other benefits that would be realized have not been taken into account in thisanalysis:

1. Reduction in accident costs resulting from improved travel conditions and increasedcomfort in travel.

2. Indirect development benefits along the direct influence area of the MRT.3. Short term employment opportunities arising from the MRT project.

The fundamental assumptions for the economic evaluation are:1. Base year; 20002. Analysis period; life cycle of the project, 47 years.3. Prices; constant 2000 price base4. Residual value; none

The MRT project has an EIRR of about 6.17%. The NPV is positive at a 5% discount rate, but itturns negative at a 10% discount rate. The project’s B/C ratio is about 2.2 at total life cycle costapproach. The EIRR result of the MRT project has to be interpreted keeping the followingfactors in mind:

1. The benefit stream into account only direct and no indirect economic benefits.2. The overall EIRR result is calculated on a “all resources” and “all life cycle cost” basis.

In other words no single cost component has been treated as “sunk cost”, which issomewhat strict for an assessment of rail-based projects.

4.5 Project SensitivityEvery project faces risk and uncertainty. These can be cause by quality of data, assumptionwhich used, incorrect forecasting, or unpredictable factors. The changes that happen are beyondthe control of the planner. Construction costs can be changed because of unforseen delays andinflation, for instant force major. In fact, risk and uncertainty become the great amount in mostactivities of a developing country (Dickey & Miller, 1984). Because of risk and uncertainty,financial evaluation become one of the important thing to do for evaluating the benefits and

costs of the project. One of the method to help assess the implications of risk and uncertainty forthe financial evaluation is Sensitivity Analysis Method.

Sensitivity analysis is the study of the sensitivity of an economic conclusion to changes or errorsin parameters. It includes breakeven analysis but is more broad; often several parameters orcombinations of parameters or combinations of parameters are manipulated, and the focus is notonly on profitability boundaries but on the other aspects of probability such as how much theworth changes, and in which direction, for a unit change in a parameter. The sensitivity of aproposal to a parameter is often measured by the derivative of the present worth with respect tothe parameter (Young, 1993). Sensitivity refers to the relationship between the relative changein the forecast of some element of an economy study and the measure of attractiveness of analternative. If one particular element can be varied over a wide range of values without affectingthe recommended decision, the decision in question is insensitive to uncertainties about thatelement.

In this MRT project, study about sensitivity analysis conducted by change the vehicle operatingcost saving and time saving from –50% up to 50% and calculate the EIRR as shown in Figure 3and Figure 4. NPV sensitivity for of VOC saving, time saving, and interest rate change showngraphically in Figure 5 and 6.

MRT project face uncertainty in many aspect, so MRT project is sensitive enough that can makeeffect to the project feasibility. Figure 3 and 4 show that even benefit has been raised up to 50%,the project still has low EIRR. Figure 5 and 6 show similar problem, the project has low netpresent value shown by low interest rate to produce higher net present value, even the projectbenefit has been raised up to 50% from the consultant calculation.

This analysis shows that the project need more alternative exploration about other source ofbenefit. The problem can be more worse by limited source of financial. This analysis can showthat the project has a high risk, because of the uncertainty faced by the project. To minimizerisk, the government need several strategies, including find financial strategies.

5. DOUBTS AND MITIGATING FACTORSThere are several factors that must be considered carefully before the implementation of theproject. Although the project is, undoubtedly, a necessity for Jakarta, the Government ofIndonesia has not decided yet when the project will be implemented. Those factors include: 1. A significant problem with the construction of the MRT project is related to fact that the

transport facilities along the MRT corridor are already at or near capacity, and the MRT lineis built to serve an already overburdened corridor. In fact, this is the reason for consideringthe project. Road users will have to spend more time and money to travel in this area duringthe subway construction (at least for 6 years).The subway project is a multi billion-dollarproject. This is not a project that merely depends on the technology used to build it. A largeamount of foreign financing would be needed, and a substantial amount of the equipmentand services should be imported. This means that foreign dependency of the country will beincreased. Furthermore, with an erratic fluctuating exchange rates, the real construction costcould go far beyond those estimated in the planning stage.

2. The project is expected to cost between US $ 65 million and US $ 110 million per km. Thetotal cost needed to build the Jakarta MRT is comparable to those needed to build similarsystems in other cities in the developing countries, as presented in Table 13. However,these capital-intensive projects have not always been cost effective. During theimplementation of the project, the real construction cost should be monitored closely, sothat it could be constructed on time and, more importantly, within the budget.

Table 13.Comparison of MRT Capital Costs in Different Cities(the World Bank, 1986)

Length (km)City Total UndergroundTotal Capital Cost per km

(million US$) Note

Calcutta 16.4 15.0 67.1Baghdad 5.5 5.5 81.8Caracas 12.0 12.0 116.6

1998 value

Jakarta 15.5 7.5 88.2 1US$ = Rp. 10.000

3. If the project is to be implemented, the principles recommended by the World Bank to guidethe development of urban transport policies can be used to justify the project. Thoseprinciples are economic viability, financial viability, and efficiency (the World Bank, 1986).Economic viability means that transport services and infrastructures should be supplied ifthe benefits to society outweigh the additional costs to society. When the MRT project iseconomically viable and the benefit outweighs the full cost, people would be willing to payfor the service from which they would benefit. The objective of the financial viabilityprinciple is to ensure that fares cover costs. The investment should be undertaken andservices supplied if the financing is self-sustaining and enables the project to be replicated.If the government decides to subsidize, as a matter of policy, the subsidy should notunderwrite the MRT operator’s costs, because this promotes inefficiency and higher costs.Efficiency is achieved when costs are as low as possible for a given service. Lessons fromother systems show that efficiency for a publicly owned operator is difficult to achieve dueto bureaucratic inertia, political interference, and restrictions on competitors. If the MRTsystem is efficient so that costs to operate can be kept minimized, then the financial viabilitycan be achieved.

4. The Jakarta MRT project has two central assumptions for the project review andassessment: a) the MRT remains a vital element needed in the Jabotabek metropolitan area,and b) how to proceed in a reasonable manner and under given circumstances with itsrealization. The project review and assessment will have to pay particular attention to thefollowing topic, 1) ridership demand – to provide a realistic forecast for ridership; 2)implementing entity – must be addressed from a long-term perspective; 3) financing plan –the structure (debt to equity ratio, terms and conditions of long term loans, short-term loanrequirements); and 4) external factors – aspect that make an impact for further large-scalesovereign borrowing.

5. Today, about 82 % private cars in Jakarta carry 1-2 passengers and only about 4 % carrymore than 4 passengers (Rini, 2001). This means that providing MRT system alone wouldnot solve the city transportation problem. Together with the MRT system, it seems thatJakarta will need some form of motor vehicle restraints to combat it worsening transportconditions (Santosa,2001)

6. Mass rapid transit is believed can contribute both to city efficiency and to the needs of thepoor in the large city like Jakarta, but it can also impose a heavy fiscal burden. Anappropriate strategic stance is thus not to be “for” or “against” MRT, or any particularvariant of it, but to properly appreciate the critical factors affecting choice of technologies,operating, financing, and ownership arrangements, and to ensure that the choices made areconsistent with city characteristics, objectives, and economic capability. In designing anMRT strategy, there are several critical questions must be addressed (The World Bank,2002), including a) the objectives and role of MRT within the city development strategy, b)the relation of MRT to urban structure and land-use policy, c) the impact of MRT on theurban environment, d) factors should be considered in the selection of MRT technology, e)the integration of MRT within a broader transport sector policy, f) the operator and theowner of MRT, g) the impact of MRT on the finance of national and local governments.Some of those questions have been discussed in this paper, but the others need to beexplored more deeply. One example is the impact of MRT on the city environment,particularly on how the MRT influence the urban poor. This aspect has not been touchedappropriately yet, although the urban poor also plays significant role in the urban

community. Another of critical aspect is the scheme of finance, management, and pricing.This aspect needs to be evaluated carefully, because the MRT project is capital intensiveand, on the other hand, is believed by many will never produce profit. The EIRR of thisMRT project is not good enough, meaning that the project is not financially attractive.

6. CONCLUSIONS AND RECOMMENDATIONSJakarta has faced urban transportation problems similar to those experienced by othermetropolitan cities in the world. As those cities, Jakarta also has responded by designing anexpensive MRT subway system. Some people, including government officials, might say thatthere really is no alternative to solve transportation problems in Jakarta but the subway system.This is partly true. The capacity of the MRT system appears to offer an attractive solution tochaotic road conditions. No other urban transportation mode has a bigger capacity to movepeople than the MRT system.

The subway transportation system could be easily sold to the public as symbol of progress and asign that the city of Jakarta has achieved the status of a major world city. However, MRTproject face uncertainty in many aspect, so MRT project is sensitive enough that can makeeffect to the project feasibility. Analysis shows that even benefit has been raised up to 50%, theproject still has low EIRR. It means the project need more alternative exploration about othersource of benefit. This analysis can show that the project has a high risk, because of theuncertainty faced by the project. To minimize risk, the government need several strategies,including find financial resources strategies.Taking these arguments into account, building theJakarta subway project, particularly in present economic conditions, is difficult to justify.

Since the MRT project is a capital-intensive investment with high operation costs, thegovernment will have to keep the fares low to attract more riders; particularly those belong tolow-income groups. This will require a heavy subsidy or to increase fares. The latter precludespoor people from sharing the benefits of the MRT service. What the government need is preparea pricing strategies. The strategy must into account all the raising major issues in last decades,i.e. right to use public facilities for all community strata and users ability to pay and willingnessto pay.

The analysis shows the implementation of MRT project face several problem. It would be notenough to implement MRT project without thinking about cooperation with many stakeholders.These stakeholders are a potential source to minimize the financial and economic burdens,means they can contribute in several manner to make benefit higher. MRT project is not a singleproblem, about how to implement, to finance, or to operate and maintenance, but how to makeall stakeholder involve and distributes benefit. One example community partnership isgovernment selling spaces in a long of MRT corridor to businessman as a business space. Thisexample scheme will generate benefit to broader stakeholder and it means higher benefit.

An appropriate strategy to implement the MRT projects is necessary. This strategy should not tobe “for” or “against” the Jakarta MRT project, or any particular variant of it, but to properlyappreciate the critical factors affecting choice of technologies, operating, financing, andownership arrangements, and to ensure that the choices made are consistent with citycharacteristics, objectives, and economic capability.

7. REFERENCES1. Badan Pengkajian dan Penerapan Teknologi. Jakarta Mass Transit System Study.

Deutsche Gesellschaft fur Technische Zusammenarbeit. Jakarta. 1992.2. Meyer, M.D. and Eric J. Miller. Urban Transportation Planning: A Decision-Oriented

Approach. Second Edition. New York, NY. 2001.3. The World Bank. Cities on The Move. A World Bank Urban Transport Strategy Review.

Washington, D.C. 2002.

4. Japan International Cooperation Agency (JICA) – National Development PlanningAgency (Bappenas). The Study on Integrated Transportation Master Plan forJABOTABEK (Phase 1). Interim Report. Volume II. Review of Jakarta MRT Project.Pacific Consultants International. ALMEC Corporation. Jakarta. 2000.

5. Vuchic, Vukan R. Urban Public Transportation. Systems and Technology. Prentice-Hall.Inc. New Jersey. 1981.

6. Transit Cooperative Research Program. Economic Impact Analysis of Transit Investment:Guidebook for Practitioners. TCRP Report 35. Transportation Research Board. NationalResearch Council. National Academy Press. Washington, D.C. 1998.

7. Rini, Daryanti A. Kebijaksanaan Transportasi di DKI Jakarta. Seminar InternasionalManajemen Lalu Lintas Perkotaan di Jakarta Barat. Universitas Trisakti. Jakarta. 2001.

8. Japan Transport Cooperation Association. Revised Basic Design Study for Jakarta MRTSystem. Jakarta. 1999.

9. The World Bank. Urban Transport; A World Bank Policy Study. Washington, D.C. 1986.10. McSpedon, E. Building Light Rail Transit in Existing Rail Corridors - Panacea or

Nightmare? Special Report 221. Transportation Research Board. National ResearchCouncil. Washington, D.C. 1988.

11. Santosa, W. Jakarta Subway Project: Necessity or Luxury? Subway ConstructionSeminar. Universitas Pelita Harapan. Karawaci. 2001.

12. Hermawan, Rudy. Tinjauan Persiapan Pengoperasian Sistem Angkutan Massal Cepat diKota-Kota Besar di Indonesia. Makalah Seminar Sehari Nasional Transportasi UmumDarat dengan Bus, Trem, dan KA Listrik, MASDALI – Teknik Elektro ITB. Bandung.2001.

13. Gray, G.E., and Hoel L.A. Public Transportation. Second Edition. Prentice-Hall, Inc.New Jersey. 1992.

14. Dickey J.W., and Miller L.H. Road Project Appraisal for Developing Countries. JohnWiley & Sons Ltd. New York. 1984.

15. Young, Donovan. Modern Engineering Economy. John Wiley & Sons, Inc. New York.1993.

8. AUTHOR BIOGRAPHIESWimpy SANTOSA is a faculty member in Civil Engineering Department of ParahyanganCatholic University, Bandung, Indonesia. He holds a PhD degree from the University ofConnecticut in Transportation and Urban Engineering.

Tri BASUKI is also a faculty member in Civil Engineering Department of ParahyanganCatholic University. He holds Master’s degrees from Parahyangan Catholic University, inInfrastructure Management and Engineering, and from Bandung Institute of Technology, inSystem Engineering. He joined the University in 2001.

Figure 1. Vertical Alignment Alternatives

Figure 2. Alternative 3B Route

4.00%

4.50%

5.00%

5.50%

6.00%

6.50%

7.00%

7.50%

8.00%

-50% -30% -10% 10% 30% 50%

Change of VOC Saving

EIR

R

Figure 3. Sensitivity Analysis for EIRR by VOC Saving Changes

4.00%

4.50%

5.00%

5.50%

6.00%

6.50%

7.00%

7.50%

8.00%

-50 -30 -10 10 30 50

Changes of Time Savings (%)

EIR

R

Figure 4. Sensitivity Analysis for EIRR by Time Saving Changes

-20000

-10000

0

10000

20000

30000

40000

50000

-60 -40 -20 0 20 40 60

Changes of VOC Savings (%)

NPV

(billi

on R

upia

h) i = 1%i = 2%i = 4%i = 5%i = 6%i = 8%i = 10%

Figure 5. Sensitivity Analysis for NPV by VOC Saving and Interest Rate Changes

-10000

0

10000

20000

30000

40000

50000

-60% -40% -20% 0% 20% 40% 60%

Changes of Time Savings (%)

NPV

(billi

on R

upia

h)

i = 1%i = 2%i = 4%i = 5%i = 6%i =8%i = 10%

Figure 6. Sensitivity Analysis for NPV by Time Saving and Interest Rate Changes