Transport policy environment in indonesia

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Transport policy environment in indonesia

  1. 1. The Transport Policy Environment in Indonesia:<br />Policy Framework and Regulatory Options from International Rail Reform Experience<br />
  2. 2. Indonesia’s Pre-Reform Policy Framework<br />State direction of rail transport; extensive State role in other sectors<br />Policy determined at senior levels supported by strong State planning authority<br />Transport Ministry both an implementing agency and policy determination body<br />Railways a department of a broader general directorate for land transport<br />Rail managers and workers employees of a governmental department (Perjan)<br />Technical regulation essentially internal departmental rules<br />Economic regulation unnecessary without multiple participants in rail sector<br />
  3. 3. Prior to the 1990s many economies had a similar Transport Policy Environment to Indonesia, dominated by a single public rail carrier. <br />Almost all, like Indonesia, have now entered a transition path to bring the benefits of private investment and market competition to the transport sector.<br />This international experience is instructive…<br />
  4. 4. International Experience in Railway Reform Transition<br />Inevitable Controversies:<br />Liberalization of transport pricing<br />Income distribution effects<br />Corruption potential<br />Need for work force reduction vs. labor protection<br />Changes in legal form alone insufficient to create market competitive rail service <br />Private sector operation not certain success. May be undermined by: <br />Jurisdictional conflicts<br />Constraints on pricing or operating freedoms<br />Exaggerated promises to acquire franchise<br />Lost markets for original network<br />
  5. 5. Transport Policy Transition for Rail Sector<br />Positive Changes<br />The Transport Ministry to rely more on SOEs, private sector and regional authorities to implement transport services<br />Rail sector’s unique policy issues given greater recognition<br />Formation of DGR<br />Adoption of Law 23 (2007) on Railways<br />Requirement for Railway Masterplan<br />Vertical separation mandate<br />Legally, railway given greater commercial independence <br />SOE conversion from Perjan to Perum to Persero under BUMN<br />Pricing freedom in freight and premium passenger services<br />
  6. 6. Transport Policy Transition for Rail Sector<br />Continuing Issues<br />Role of DGR relative to rail operator(s)<br />Form and timing of establishing an Infrastructure Manager <br />Functions of Infrastructure Manager and DGR regarding access terms and charges<br />Form, functions and location of economic regulator (dispute resolution authority)<br />Further steps toward rail sector privatization<br />Perjan to Perum to Persero under BUMN. Ordinary PT next?<br />Exceptions to vertical separation<br />
  7. 7. Regulatory Framework Status<br />The DGR departmental structure provides a suitable structure for <br />Setting technical standards<br />Administering safety regulation<br />Certification of operators and similar functions<br />Economic regulatory functions and structures remain wholly undeveloped<br />No decision on form of economic oversight/dispute resolution<br />Status of board or agency undetermined <br />Regulatory requirements for multiple operators on railway infrastructure largely unexplored <br />
  8. 8. Regulatory Framework: International Experience <br />Technical regulation and economic regulation must be separated <br />Necessary to avoid conflict of interest<br />Different expertise required<br />Many organizational models for economic oversight:<br />Independent transport or railway-specific body (UK, other Europe, USA formerly) <br />Quasi-independent body under the transport ministry (USA currently, Greece, other Europe)<br />General public utility regulator (Germany, Latvia, other Europe)<br />Judicial body administrating competition law (Former Soviet Union, Canada, Mexico, much of Europe)<br />Complaint-based, quasi-judicial systems are more efficient than interventionist and anticipatory economic oversight.<br />
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  11. 11. Rail Masterplan Options to Consider<br />Focus DGR on <br />technical standards and regulation<br />government support to infrastructure <br />access charge approval<br />Establish Economic Regulator as Dispute Resolution Agency within MOT<br />Functions too limited for wholly independent status<br />Model works well in US, some European countries<br />Absence of competition law judicial framework in Indonesia<br />Adopt European Model of Access Regulation<br />Infrastructure manager responsible for annual network statement, access terms<br />DGR to approve access charge provisions<br />Dispute Resolution Agency to settle access disputes<br />
  12. 12. Possible Structure in Indonesia?<br />Transport Policy<br />Economic regulation Accident<br /> Investigation<br />Technical Regulation<br />& Standards, PSO,<br />Access Charges<br />Access terms (Network<br />Statement), capacity <br />allocation<br />
  13. 13. Cautions from International Experience<br />Simpler models often most successful<br />Multi-jurisdictional services at the regional-municipal level are challenging<br />National-regional-local jurisdictional conflicts can result in over-regulation<br />Conflicts in carrier priorities between inter-city and commuter-urban operations can adversely impact service<br />In some cases, freight -passenger service separation is more productive than infrastructure-operations separation<br />Providers of both passenger and freight service typically under-support either passenger or freight<br />Transfer of commuter services to regional operators often successful <br />
  14. 14. Cautions from International Experience<br />Separation of rail infrastructure–operations rarely creates competition like highway transport model<br />The former State railway typically remains dominant<br /><ul><li>Continues to carry majority of intercity rail traffic
  15. 15. While legally separate, remains closely affiliated with infrastructure manager</li></ul>The most successful third party operators are specialists serving narrowly defined markets<br /><ul><li>Freight haulers affiliated with major industries
  16. 16. Trans-national passenger services
  17. 17. Commuter services
  18. 18. Expedited trans-national freight</li></li></ul><li>Cautions from International Experience<br />Uniformity is the enemy of efficient solutions<br />Multi-carrier access<br /><ul><li>Most appropriate for key multi-purpose rail corridors
  19. 19. Undermines value of franchise & discourages investment in new lines
  20. 20. Exclusive concessions are valid alternatives to open access as means of attracting private capital</li></ul>Municipal rail services<br /><ul><li>Must be adjusted to urban design, mix of public and private transport services
  21. 21. Municipalities may require different public-private partnership arrangements
  22. 22. Multiple rail operators generally not practical.</li></li></ul><li>Thank You<br />

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