Indonesia’s rail network was built under the supervision of its Dutch colonial rulers but since independence in 1945 successive governments have allowed it to wither. According to the World Bank, the archipelago had 4,814 kilometres (km) of track in 2014 (3,464 km on Java and 1,350 km on Sumatra Island), down from 6,458 in 1981. India has more than 65,000 km of track. Gridlock in the capital, Jakarta, and increasingly in secondary cities coupled with climbing property prices in city centres have spurred improvements in passenger railway services to connect commuters to the suburbs under state owed Kereta Api. However, utilising railways to unclog bottlenecks and reduce logistics costs for cargo transportation remains neglected.
The Directorate General of Railways that was created in the Ministry of Transportation formulated a master plan in 2011 (See The Missing Link: Investment Opportunities in Indonesian Railways). The master plan’s strategy is to develop network and services on the major islands. One of several targets to achieve by 2030 is the extension of the network by up to 12,100 km in all major islands, including 3,800 km of urban railway network. On Java, the network development plans include: an intercity network with double tracks; urban agglomeration area network; urban network in six major cities; railway links to six major airports (See Indonesia’s Aviation & Airports Sector); railway links to six major seaports (See Indonesia's Maritime Ambitions Require Massive Upgrade of Seaports); high-speed rail between Merak and Banyuwangi; extension of the urban network with electric railways; and revitalisation of the old network.
Indonesia needs to develop its railway network in an effort to advance its transportation and logistics sector, promote economic activities and ensure connectivity across the country. With that aim, the government is accelerating the development of railway infrastructure in various parts of the country to promote connectivity. The ventures include railway projects in Java, Sulawesi, Papua and Sumatra which will ensure better connectivity not just among the people but also regions. In total, 20 railway projects are planned or ongoing across Indonesia.
After years of under investment, President Joko Widodo has ordered increased spending on railways, roads and ports to drive growth in Southeast Asia’s largest economy. The government will provide the funds for 30% of its estimated infrastructure bill of $400 billion USD, and wants private investors and multinational organisations to fund the rest.
The flagship project, funded by Chinese investment, links Jakarta to Bandung, spans 142.3 km and will stop at four stations, namely Halim, Karawang, Walini and Tegalluar. Based on the concession agreement, PT Kereta Cepat Indonesia China (KCIC) has the right to operate the Jakarta-Bandung railway line for a span of 50 years, starting from 31st May 2019. The company estimates that it will break even within 40 years. The ministry has also set a three-year time limit for the construction of infrastructure from the issuance of the construction permit.
The Jakarta-Bandung line is part of a 750 km high-speed train plant that would cut across four provinces on the main island of Java and end in the country's second largest city of Surabaya. Also currently under way is the Jakarta Mass Rapid Transit (MRT) system. Seven aboveground and six underground stations are being constructed in phase one of the MRT project, with eight further stations to be built in phase two. The MRT, which has both a north-south and an east-west line, has been delayed and significantly impacted by land acquisition and funding issues (See Indonesia’s Land Acquisition Laws; On Paper Only?). The 15.2 km phase one is expected to be open to the public in 2019 at the earliest, and the entire $1.7 billion USD project should be open by 2027.
Supporting the MRT system is the Jabodetabek railway network, which combines existing track with the MRT and, originally, with the Jakarta Monorail. The latter scheme has run into trouble, however, and the government has put plans on hold in order to reassess the project.
Outside of Java, there are also plans to build some 3,258 km of railway lines on several islands, including Java, Sumatra, Sulawesi, Papua (where work is planned to begin before the end of 2016) and Kalimantan. Currently, Indonesia has a very low railway density in comparison to its peers: 0.25 km per sq. km compared to 0.79 km per sq. km in Thailand, for example. Passenger numbers are 196.68 million per year on Java and 5.25 million per year on Sumatra, while freight averages 3.9 million tonnes per year on the former and 15.25 million tonnes per year on the latter.
According to a BAPPENAS study, a total of around 278 trillion IDR ($22.98 billion USD) would need to be invested in the network to meet the planned goal, with this achievement radically reducing logistics costs, as well as greenhouse gas (GHG) emissions, as rail is generally more efficient for carrying commodities than road. As a result, the $3.24 billion USD Trans-Sumatra railway, stretching through the island’s main cities from north to south, has been prioritised. A $2.76 billion USD Trans-Kalimantan railway has also been proposed, which would begin from scratch in 2016, while work on a Trans-Sulawesi line, with an estimated cost of $2.76 billion USD, is underway.
Regarding this project in Sulawesi, Indonesian officials say construction of a new 143 km line from Makassar to Parepare in South Sulawesi will begin in July 2016 once land acquisition is complete. Local officials have committed to completing land acquisition for the initial 30 km stretch of the standard-gauge line by the end of June 2016. Further 70 km and 43 km stages of the project should begin in 2016. The ministry hopes to launch services in 2018 following the delivery of locomotives. The project is estimated to cost 9 trillion IDR ($693 million USD). Ultimately the ministry is aiming to develop a 2,000 km network on the island, between Makassar and Manado.
Another major project in the works aims to establish rail links to 13 airports nationwide by end-2019. These will include links to be built at Padang, Batam and Palembang in Sumatra; Makassar in Sulawesi; Banjarmasin in Kalimantan; and Jakarta, Yogyakarta, Surabaya and to Kertajati Majalengka airport on Java.
Regarding the light rail transit (LRT) project in Palembang, South Sumatra, the government hopes that it would be completed in 2018, before the 18th Asian Games. The local government has said the development of railway stations that are a part of the LRT project has been accelerated. Five of the 13 planned stations, part of the 24.5 km LRT project, had been under construction for only two months after the ground breaking ceremony.
The Indonesian government’s progress toward the target of building 3,258 km of new track by mid-2019 has been slow so far, but they have stated that it remains achievable. In 2015, a total of 250 km of railways was constructed, and plans are underway to quicken the pace with up to 700 km more in 2016. The expansion plan of the rail network would require some 400 new locomotive engines, up from the current stock of 550, and around 5,000 new wagons which offers opportunities to manufacturers outside of the country as well as scope for developing local manufacturing capacity such as for local content, should Indonesia continue to develop its railways as a key tool in reducing the logistics burden.
Global Business Guide Indonesia - 2016
Efficient railway connections are pivotal to unlock the full potential of Indonesia's emerging economy, as the focus of business and trade activity gradually shifts from the industrial heartland of West Java to far flung regions of the archipelago.
Contribution to GDP: 4.19% (Q3 2015)
Existing Road Network: Paved 287,926 km, Total 508,000 km (2013)
Existing Toll Road Network: 949 km (June 2015)
Active Railway Network: 4,069.4 km (September 2015)
Number of Airports: 295; 27 with runway length >2,000 metres (2015)
Active Commercial Sea Ports: 78 (2015)
Main Government Bodies: Ministry of Transportation, BAPPENAS, Ministry of Public Works and Housing, Indonesia Toll Road Authority (BPJT).