Management & Operations

Without reforms, Indonesian public transportation heading for bankruptcy

Posted on April 1, 2002

Despite a collective fleet of some 21,000 buses, Jakarta, Indonesia, is a city on the brink of public transportation bankruptcy, with no apparent solution for avoiding complete collapse. Signs of the trouble abound. Ridership has remained relatively stagnant during the past 15 years, even though the population has skyrocketed. Onboard crime, in the form of pickpockets and sexual groping, is renown. Maintenance is widely inadequate or non-existent, drivers are famously reckless or untrained, fares (tightly controlled by the government) fail to provide operators with even slim profits and the entire system seems hopelessly disorganized and inefficient. “Indonesians learn early in life that they can enter and exit a bus whenever and wherever they want,” said Friedel Engisch, president of DaimlerChrysler Group Indonesia. “That is a tradition here. You’ll be on a bus, and someone will yell, ‘stop.’ Then, five meters later, someone else will yell for another stop.” This arrangement has contributed greatly to the area’s two biggest transportation woes: chokingly thick air pollution and massive traffic jams. DaimlerChrysler is Indonesia’s leading supplier of large buses, controlling 60% to 70% of the market. It builds buses locally at a sprawling campus-like facility in Bogor, just outside Jakarta. Engisch said his company is trying to help improve conditions for the traveling public, but its efforts are repeatedly thwarted by government officials, some of whom have a vested interest in the status quo. Numerous studies, for example, have concluded that traffic jams and air pollution could be significantly reduced by eliminating toll roads around Jakarta, banning bajaj (a sort of motorized rickshaw) and firmly regulating bus routes and stopping points. Bureaucrats, however, routinely dismiss all three recommendations as being “impossible.” “I’m not sure what it will take for people here to start making changes,” Engisch said. “But I believe that, without change, the situation will become unbearable within five years.” Rudy Thehamihardja, a 30-bus fleet operator based in Bogor, hopes such a dismal fate can be avoided. He said many of the region’s busing problems could be solved if the authorities would simply enforce existing regulations. “The rules are there,” he said, “but they can easily be altered if you have money.” Across Indonesia, officials of all stripes are sorely underpaid and notoriously corrupt. Thehamihardja said a lack of money is at the heart of the matter. With the exception of tourists, bus riders are normally from lower income levels, a sizeable portion of the population. To placate the masses, officials have long kept fares artificially low. This, Thehamihardja said, has produced a public transportation system much different from those in Europe or the United States. “Operators in other countries seem to be able to cover their costs, maybe even make some money,” he said. “When they’re making money, they are trying to improve service for the people. There is a [visible] correlation between income and service. Here, since we’re struggling just to survive, service is not our main concern.” — PAUL HARTLEY

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