Friday, March 29, 2024 | 18:49 WIB

Debunking Indonesia’s national strategic projects: Will the country fall into a debt trap?

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Airport
A glimpse of Kertajati Int’l Airport Terminal in West Java, has remained quiet since it first commenced operation in July 2018, now one of the two largest airports in the country by area (similar to Soekarno-Hatta Int’l), located in Majalengka Regency, 68Km east of Bandung. (Source: SINAR HARAPAN)

Lack of Demand and Interest 

According to Keynes, the supply side cannot be considered in isolation but is likely to be affected by consumer demand. Keynes’s theory was not considered by the government in the development of several national strategic infrastructure projects which turned out to lack demand. Case in point, the Kertajati Airport in West Java. The airport in Majalengka regency, West Java, was completed back in 2018. However, it has yet to run optimally. During the pandemic, number of arrivals and departures plunged 66.6% and 66.8%, respectively. Even prior to the pandemic, the number of passengers using Kertajati Airport were in the low. The decline in traffic at Kertajati Airport was deeper than that experienced by Husein Sastranegara Airport in Bandung. (FIGURE-2) 

The lack of passengers disincentivizes airlines to serve the routes to and from Kertajati Airport. In 2020, it had only 11 routes and is currently used for cargo traffic and aircraft maintenance. Since the end of 2021, Kertajati Airport has not served passenger flights. Despite costing a staggering Rp4.9 trillion to build, it does not yield positive effects to the national or regional economy. 

Kertajati Airport is deserted in part because its passenger base, which is largely from Greater Bandung, West Java’s capital, considers it too far away. By toll road, the distance between Bandung and Kertajati Air – port might take three hours. Of course, flying from Husein Sastranegara airport is preferable for passengers. 

Another planned airport, the New Yogyakarta International Airport (NYIA) in Kulon Progo, Yogyakarta, could face the same fate as Kertajati Airport. It cost Rp10.5 trillion, more than twice as much as Kertajati. The pandemic, has caused the airport to struggle to reach its passenger targets. It barely managed to achieve 10% of the 10 million passenger volume objective in 2021. 

Palembang’s light rail transit (LRT) and SHIA rail link, which both have low occupancy rates, have met the same fate. The LRT’s management aims for 30,000 daily passengers, which is a long cry from the 3,393 passengers it currently carries — a 86 percent miss. It certainly does not justify its construction cost of Rp12.5 trillion. 

Figure 2

The LRT’s occupancy rate was only 8.3 percent in its first year of operation, averaging 2,513 people per day. This had reduced to 3.3 percent by the beginning of 2021. There were only five persons on board when the author boarded it from Palembang’s Sultan Mahmud Badaruddin Airport in early 2022. (including the author). 

Meanwhile, the SHIA train link set a daily passenger target of 11,000 people. The average daily occupancy rate was only 2,011 passengers (23.8 percent) between 2018 and 21. It was only 162 passengers per day in early 2021. The project cost: Rp24.5 trillion. (FIGURE-3) 

Because of their lack of interaction with other modes of public transit from the station to passengers’ destinations, both airport trains are in short supply. People prefer to take shuttles or traditional taxis, such as ride hailing. Because it is connected to MRT, commuter trains, and TransJakarta BRT, the SHIA rail link now has better access. However, the support infrastructure for Palembang’s LRT is still lacking. 

Another national strategic project, the Rp113.1 trillion price tag Jakarta-Bandung high-speed railway (KCJB) may also face the same predicament of low demand for two reasons. First, its fare – which is likely to cost between Rp150,000 to Rp300,000 is considered too expensive, almost doubles other modes of transportation. 

Second, the construction of the southern segment of the Jakarta-Cikampek toll road (costing Rp13.4 trillion), which will cut travel time from 3-4 hours to just 1-1.5 hours will make it difficult for the government to woo expressway users into using the KCJB. State losses could be even greater considering that the bulk of the construction (75%) is financed by China Development Bank (CDB). The remaining 25% comes from a consortium, PT Kereta Cepat Indonesia China (KCIC). 

Incompatible Needs 

In line with the Say’s law, the government believes that the construction of national strategic infrastructure projects, such as Kertajati Airport, Palembang’s LRT, SHIA rail link, and KCJB will generate demand by themselves. However, the results have not met expectations. 

Kertajati Airport, passengers living around the airport such as Cirebon city/regency or Majalengka regency prefer to make a trip all the way to Jakarta when they plan to fly as it has more scheduled flights and easier access. The people of greater Bandung also still prefer to use Husein Sastranegara Airport. 

As for KCJB, the lack of connecting public transportation serving the route is the main reason why it can potentially suffer loss for more than a hundred years. A feasibility study conducted by the Boston Consulting Group (BCG) at the request of the government concluded that KCJB project is not feasible because it is too expensive. With a fare of Rp300,000 per pax, people will tend to cheaper modes of transportation. Although they can get to Bandung much faster using the fast train (about 40 minutes), the distance from the last station to downtown Bandung is still quite far. 

In Palembang, the LRT does not meet the needs of the people because of poor support services such as lack of city buses in the area. The system is not seamlessly integrated with each other. Therefore, people prefer to use ride hailing service, which is more cost effective. 

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