business
From the ground up Failed infrastructure projects can be found across Indonesia’s sprawling archipelago, but a new transport system offers Jakartans a glimmer of hope Words by Nithin Coca Illustration by Oliver Raw
D
otted around Jakarta are lonely concrete and steel pillars that cut off traffic lanes and obstruct views. Erected in the early 2000s in an attempt to build a badly needed monorail system, the project failed to get off the ground due to a lack of funds and, more importantly, an absence of political will. This situation is not unique. Unfinished roads, half-constructed ports and abandoned infrastructure projects can be found across Indonesia – all signs of endemic corruption and short-term thinking. But something big is happening in Indonesia’s capital. Jalan Jeneral Thamrin, the multi-lane artery that cuts through some of the city’s densest area – from the historic neighbourhood of Kota Tua, along the leafy estates of Menteng, to the Blok M shopping district – is currently lined with construction equipment that churns away day and night. The workers are building something Jakartans have dreamed about for years: an urban, mass rapid transit (MRT) rail system that could herald a new era of modern infrastructure for a country sorely in need of it. The $1.7 billion-dollar project will, if all goes to plan, see 87km of railways built by the time it is completed in 2027. The construction is being partly funded by $1.3 billion in loans from the Japan International Cooperation Agency (JICA), which is also leading the project.
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The MRT is the latest attempt to address Indonesia’s deficient transport system in light of both an ever-growing population and mounting public expectations. Across the nation, poor infrastructure is creating challenges not only for Indonesians, but for foreign businesses as well. “There is a direct effect on ease of doing business caused by issues such as power outages and traffic congestion in ports, roads and airports,” said Julian
Unfinished roads, halfconstructed ports and abandoned infrastructure projects can be found across Indonesia – all signs of endemic corruption Smith, leader of the capital projects and infrastructure advisory team at PwC Indonesia. “Logistics costs are amongst the highest in the world, which makes it difficult to get goods to consumers and to source goods within the country.” Infrastructure challenges have long been present in Indonesia and are part of the reason the nation of 240 million has yet to join its fellow Asian giants, India and China, as an emerging economic powerhouse. It is just too difficult to do business in much of the country, an issue
that directly impacts prosperity. A study by the Jakarta-based Pelangi Foundation in 2010 found that the city loses almost $1.5 billion a year in productivity due to time spent stuck in traffic. Such statistics are the result of years of bad planning, corruption and a national policy implemented during the Suharto era that favoured centralisation, resulting in huge population influxes that the city was not prepared to handle. This legacy also means that outside of Jakarta the infrastructure situation is often even worse. “It is common that local governments only use 2-3% of their budget for the transport sector, with around 60-70% of the budget for salaries and human resources,” said Danang Parikesit, a professor at Universitas Gadjah Mada in Yogyakarta, and chairman of the Indonesia Transportation Society. “What can you do if you don’t have the public funds to manage your mobility projects?” This leads to absurd situations such as the fact that the main road between the country’s two largest cities, Jakarta and Surabaya, is mostly a pothole-laden, windy, narrow route that is clogged day and night with trucks, buses, cars and, often, horse-drawn carts crawling across Java. On other islands, even two-lane roads are scarce. This is a big contributor, according to the International Finance Corporation (IFC), to the fact that 55 million people q Sea GLOBE
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