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The issues in the road transport sector fall into three broad
categories. First ,provision of the road network has been
madequate . Provincial and kabupaten roads are in poor
condition . congestion is a signicant problem , and access to
rular communities is low. Many factors contribute to poorprovision of the road network. Funding is inadequate and
unpredictable, hich is e!acerbated by the fact that e!penses
are misallocated. "nd the works that are allocated funds are
generally e!pensive and of low quality. #econd. $se of the road
network is ine%cient. &haracteri'ed by overloading, suboptimal
use and a lack of tra%e safety. (astly , institutions and the legal
framework. )specially with toll roads. "re weak.
*nadequate Provision +f The oad -etwork
".Poor &ondition of the network
hile central funding has been adequate for keeping the
national artenal network in sausfactory and sustainable
condition. There is a backlog of preservation and upgrading
needs on the provincial network and a very large backlog on the
kabupaten network . ia the absence of budget and
unplementation constraints . the /000 #)PM analysis medicates
that e!penditures on road preservation should mercase sharpy
down then level of circa p. 1,2 million to nance a massive
program of betterment followed by a sharp decline in
e!penditures once the ma3or part of the network is in a stable
muntainable condition. The unconstrained /004 budget in /000prices was estimated at circa p /4 million. ith e!penditures
in subsequent yeats fallingto circa p 45 million in /00/ and to
less than p 1 trillion in /005. +ver a ten6year periode. The
analysis indicates an average budged of circa p 7 8 7,2 trillion.
)%ciently allocated. ould be needed to bering the network to
an optimal condition. The computed relationship between
average road agency e!penditures and road user costs foralternative budged constraints 9406year averages: is shown in
Table 4/. " further analysis of Table 4/ is found in oad "nne!
4.
;. &apacity )!pansion -eeds in
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Managing the increase in tra%c demand that results from
economic growth requires a systematic investman in e!pansion
of network capacity and improvements in tra%c management.
=eferral of a susbstantial program of upgrading at the time of
the nancial crisis and the subsequent resumption of tra%cgrowth have resulted in very pressing needs to e!pand the
capacity of sections of the arterial road network. ava , where it is
estimated that at least /10 km of capacity e!pansion per year
is ecconomucally 3ustied through /040 , which is 50? higher
than similar estimates in 4@@A.
"ll the ma3or urban areas are sub3ect severe tra%c congestion
and this is a growing problem for the smaller satellite towns.
$rban tra%c Bowshave continued to increase rapidly, despite
the nancial crisis. Private motor vehicle use has grown
particularly fats, following liberali'ation of motor vehicle import
regulation. "tmospheric pollution is a serious problem in the
large cities 9in the 4@@0s >akarta was ranked the third most
polluted mega6city in the world:6 and is an rapidly emerging
concern for the ne!t level of cities. Cehicle emissions are
considered to contribute much to local levels of pollution and
the use of leaded gasoline has been ma3or concern.
&.(ow "ccess for emote &ommunities
$ncompetitive procurement results in high costs and poor
performance of construction and maintenance works. " surveyof preservation works on national and provincial roads carried
out during the late 4@@0s recently relaved that /2? were
performing signicantly less well than designed and reching a
critical condition at least 50? earlier than pro3ected
&orruption, collusion and nepotism remain pervasive in the
construction industry and contribute substantially to theproblem. &ollusion between bidders and o%cials undermines
competition, leading to the higher initial prices and losses
estimated at 40650?.
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hen this weakens supervision control ovr the quality of work,
the consequent under performance can increase losses to in the
order of 10?. The impact is even more negative when poor
supervision performance on the part of public authorities,
particularly at the kabupaten level, also signicantly diminishesthe eDectiveness of maintenance resulting in premature road
deterioration, e!cessive vehicle operating costs and a greater
need for costly rehabilitation.
eform in the areas can give rise to substantial direct saving
together with even greater indirect benets through reduced
vehicle operating costs as a result of the improved conditionnetwork.
*ne%cient use of the road network
a. Cehicle overloadingThe enforcement of vehicle loading and dimension
regulations in *ndonesia is very weak, with between 50 8400 ? of heavy vehicles overloaded 8 such vehicle is
overloading has been estimated to increase road
preservation costs by between /0670? . as long ago as
4@E4 government close all roadside weighbridges due to
their being ineDective and functioning primarily as collection
points for illegal levies. Most have since been else has
changed. Cisual observation conrm that the problem
remains very serious and is possibly worsening. *n
sumatera trucks transport logs that overhang far beyond the
permitted the limit. *n 3ava hungry boardsG are used to
enable trucks to carry e!cessive volumes of sand ad
aggregates. #imilarly in >akarta, ready6mi! concrete trucks
are tted with drums that are much larger than the volume
stated on the vehicle documents, many overload trucks
en3oy military or police protection and indeed many areoperated by military or police cooperatives.
b. #ub6optimal utili'ation of e!isting
road network capacitywith budget constraints limiting the scope for road capacity
e!pantion investments, it will be essential in the medium
term to ma!imi'e utili'ation of e!isting capacity. "t present,
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serious congestion, which greatly increases road user costs,
is commonly caused by poor tra%c engineering and tra%c
management, especially at intersections, by roadside
activities such as markets that impede tra%c Bow, by slow6
moving vehicles that are overload, under powered orunsafe, and by poor driver behavior. *n some areas,
problems are compounded by poor public transport route
licensing practices that allow the operation of e!cessive
numbers of small pick6ups and that require these to pass
through badly located and managed terminals for the
primary purpose of revenue generation.
#ome basic tra%c management measures such as tra%clights and one wayG streets are applied in most urban areas.
To date there have been rather limited attempts to introduce
more sophisticated tra%c management measures such as
segregated tra%c, tidal BowG lanes and variable geometry
at roundabouts. The very substantial needs for improved
regulation and management of urban transport as well as
for capital investment must be assessed in the comple!contect of urban management planning.
c.Poor road tra%c safetyoad tra%c accidents cause around /2 deaths per day in
*ndonesia and give rise to substantial material costs. oad
accidents impose an estimated cost of 4.2? of H=P. The
number of reported fatalities has declined in recent years,
falling from circa 44,E00 in 4@@E to E.A7/ in /00/. Thenumber of fatalities per 40.000 registered vehicles is
relatively high at 1.2. poor public and driver education
coupled with la! driver testing procedures for drivers of
public transport and heavy goods vehicles, are important
factors. They are compounded by weak enforcement of
safety related tra%c regulations, ineDectual instpection of
motor vehicle condition, which is currently required only for
commercial vehicles and poor road and intersection
geometry and signing. *n some instances, notably driver and
vehicle testing, corruption recogni'ed to be a signicant
underlying factor.
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*nformation on the causes and consequences of the tra%c
accidents is poor. *n part because it has taken more than a
decade to secure inter6agency agreement on the adoption of
an improved tra%c accident reporting and data processing
system whose implementation is only now commencing on apilot basis. +%cial statistics are believed to understate
actucal number of fatalities . in part because deaths
occurring more than /1 hours after an accident are often not
included.
*nadequate institutional and regulatory framework for toll
roads
The limited interest now being shown in the toll road sectorby serious private investors is attributable to several factors
aside from the overall investment climate. Prominent among
them are concern regarding the concessions award process
and the multiple rolcs assigned to 3asa marga 9which
operated: as a toll road developer, an agent of development
required by the government to construct roads that are not
commercially viable, and as a counter 8party for
concessions agreements with private developers or as a
3oint venture partner for such developers:, the absence of
an agreed mechanism for ad3usting tolls to reBect changes
in cost not controllable by developers, the requirement for
developers to be responsible for the costs of land acquisition
in the absence of functioning eminent domain powers, slow
progress in the resolution of e!isting concessions, and the
absence of a soundly based and update toll road master 8plan on which to prepare meaningful feasibility studies.
C**. Th) ay Forward
Hovernment has recogni'ed and has been seeking to tackle
the core problems impeding the e%cient functioning of the
road sector for more than two decades. hile some
initiatives have borne fruit, the pverall pace of progress has
been disappointingly slow.The resultant costs6 for the budget and for road users6
amount to several trillions of rupiah per year. These are real
costs that impact the performance of the economy and
impede eDorts to alleviate poverty. " fundamental
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rethinking on the way in which the sector is managed and
regulated is clearly needed.
*mprove road network provisiona. )!pand and e!tend network
managing the increase in tra%c demand that results fomeconomic growth requires a systematic investment in
e!pansion of network capacity and improvements in tra%c
and demand management. Programs of priority
investment on the core section of the network should be
identied , particularly those that may be suitable for
private investment.
" recent study for 3avaGs arterial road network indentied
the growing congestion and concluded that I6 ;y around /00A, all primary arterial and collector links of
less than A meters width should be widened to A meters6 ;y /050, the entire arterial road network should be
developed to a 16lane standard.
" preliminary screening process identied a program ofeconomically warranted upgrading pro3ects amounting
to p. 407 trillion at /000 prices over the period /0006
/050. +f this total , p.1,2 trillion is for widening to a A6
meter /6lane unseparated standard 9 uA:, p.51,7
trillion is for widening to 16lane dual camageway
standard on e!isting alignments 91=:, and p.77,A
trillion is for construction of new 16lane dual carriageway
limited access roads 9("-:. The criteria for including
investment in the program was a rst year economic
rate of return of /0? or greater, which is estimated to
equated to an )* of over 10? with the pro3ected tra%c
growth rates. "s shown in gure 1. The premilinary
screening indicated that further investments in new 16
lane dual carriageway inter6urban limited access road
would not be 3ustied prior to /042. ava massively e!ceed past levels of funding for all new
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construction works 9see Table 7:. The studyGs
recommended e!penditure program for the period /00/6
/040 was prepared on the basis that funding available
for >ava capacity e!pansion works would increase
progressively from p.0.2 trillion in /00/ to p.4.0trillionin /00A and remain at that level through /040,
with the total budged over the period being p 7.1
trillion. This necessarily involves deferring many pro3ects
with high rates of return. )quivalent studies have yet to
be conducted for other island groups. hile their
collective capacity e!pansion needs will not he as large
as those for >ava, they will nonetheless be signicant
and 3ustify substantial investment
b.*mprove "ccess to emote &ommunitiesThere is a need to e!tand the all6season road network in
order to provide reliable access for the @ ?of the rural
population which is not directly connected.
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6 )stablish criteria lot &entral Hovernment support for
e!tending the network in the conte!tof the poverty
eduction #trategy6 )nsure that decistoas to e!tend the network take
adequate account of the e!pected recurrent costumplications llost mainting the new road links6 emove Hovernment intluence from +H"-=", the
*ndonesian oad Transport +peratorGs association and
encourage the "ssociation to represent its members
interests more eDectively
*n order to eDectively implement the recommendationsabove, the following are required
a.#tabili'ed the Funding for oad "ssetsManaging road assets is an e!pensive business, and
while roads are seen as pblic good, they are competing
for public e!penditures with other sectors on the basis of
outputs which are di%cult to compare. $nder the public
e!penditure model, the road networks have beenunevenly funded or under6funded 8 the economic needs6
based estimate for preservation of satisfactory service
on the primary networks is an average of *= 7.2 trillion
annually 94@@@ values: with a gap in /000 of about *=
/./ trillion, a 426/0 ? shortfall on provincial roads and
50? shortfall on =istrict.
*nstead, if the provision and preservation of road assetsis considered as a commercial service rather than a
public good, the costs of preservation can be recovered
through a fee charged to road users for the services they
receive. oad users are playing about *= //0 trillion
annually in operating costs, and the added costs they
incur through the underfunding on roads is estimated to
be about *= 7 trillion ,or three times the funding gap. *f
the nancing of road preservation was put on a fee6for6
service basis, users may pay an additional *= /./ trillion
but they would have net savings of double that amount.
$nder a commercial service model, the full economic
costs of road preservation would be recovered from
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users and invested in the road assets, in a similar way to
the operation of unlities such as telephones or electric
power. "doption of this costs recovery model could place
the management of road assets on a fully sustainable
basis which does not impose on general publice!penditures. ;ecause the revenue would keep pace
with the e!penditure needs, provided that the funds
were invested back in the assets e%ciently. *n essence
the funds would pass through from road user revenues
to the budget for road e!penditures 8and eventually.
ith the appropriate controls, could be managed oD6
budget.
+D6 budget road funds nanced by predictable revenue
streams from user chargers have proven eDective in
many countries. Particularly where they are part of a
broader strategy for managing roads on a business6like
fee6for6service basis. oad fund revenues should be
sourced from specic road user charges. -ot from
general ta! revenue, and its claim to these revenuesshould be established in law. The level of revenues
should be su%cient to nance the works and services
needed to improve and maintain the network to a
satisfactory standard. hile the structure of users
charges should provide incentives for economically
sound vehicle purchase and operating decisions. oad
preservation works would thus be nanced entirely oD6
budget by users and without nancing from foreign
loans.
hen the subsidy on gasolinean "=+ is eliminated, road
users will start to make a substantial contribution
towards the costs of road preservation rehablition,
routine and periode maintenance and limited
betterment. evenues from the PJ; motor vehicle ta!.The P;;J; motor vehicle tuels ta!. "nd other ta!es on
road users would be broadly in line with the desirable
level of preservation e!penditures.
The present structure of the e!isting road user charges is
fas from that ideal, however
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