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UNU-IAS Working Paper No. 168 Policy Elements to Upscale the Contribution of Urban Transit Initiatives on Sustainable Urban Transport: The Case of Bus Improvement Initiatives in Indonesia Puspita Dirgahayani February 2012

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UNU-IAS Working Paper No. 168

Policy Elements to Upscale the Contribution of

Urban Transit Initiatives on Sustainable Urban Transport:

The Case of Bus Improvement Initiatives in Indonesia

Puspita Dirgahayani

February 2012

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Abstract

Promoting public transport use is one of the entry points towards sustainable urban transport,

on the condition that the public transport system is planned and developed in a sustainable

manner. This study develops a conceptual framework, based on a critical review of transit

policy elements, to ensure sustainable urban transit projects. The framework is applied to

review the progress of bus improvement initiatives in Indonesia, by looking at four cities as

case studies. The analysis suggests that the integration of transit policy instruments (physical

and “soft” measures) and regulatory reform to create a cost-effective transit industry is

essential in gaining larger benefits from urban transit projects.

Keywords

public transport governance, bus system, regulatory reform, sustainable urban transport

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1. Introduction

A well functioning and efficient public transport system is an important element in building

sustainable urban transport (SUT). It falls into the “shift” strategy of the holistic “avoid-shift-

improve” policy framework for achieving SUT (see Dalkmann and Brannigan, 2007). In

order to achieve greater impact, ideally, the “shift” strategy should be integrated with the

other two strategies. However, in developing countries where in most cases transit systems

are poor and have not adequately served their cities, it is quite challenging to prevent public

transport users from leaving public transport and shift to private modes. Given this

consideration, this study argues that making a transit system stand out among other transport

modes can be realized on the condition that the public transport system is planned and

developed in a sustainable manner.

This paper aims to review the progress of public transport improvement projects in Indonesia

as the first step to evaluate their sustainability. It looks at bus improvement initiatives

implemented in four Indonesian urban areas as case studies: Jakarta Metropolitan Area,

Greater Yogyakarta, Palembang City and Bogor City. The rest of the paper is organized into

four sections. The following section provides a critical review as the basis of the paper to

develop a framework conceptualizing transit policy elements that would ensure a sustainable

public transport project, which will be covered in the third section. Finally, it concludes with

lessons learned both specifically for sustaining the whole bus improvement project in

Indonesian cities and generally for other developing cities.

2. Delivering a Sustainable Urban Transit System: A Literature Review

The sustainability of urban transit system covers the entire span of input (transit policy

instruments), process (how transit is governed: the regulatory framework), and the

materialization of direct and indirect benefits (Takyi, 1993; Gwilliam, 2008). If these

elements are well considered from the initial stage of project implementation, urban transit

system improvements can be carried out cost effectively.

2.1 Transit Policy Instruments

There are generally two types of policy instruments adopted in the transport sector: physical

and “soft” measures (Steg and Tertoolen, 1999; Santos, Behrendt and Teytelboym, 2010;

Bamberg et al., 2011). The former measures modify the objective environment, which

includes the provision of public transport infrastructures and services, while the latter alter

both users and non-users’ perceptions towards the objective environment, or the complexity

of taking transit trips.

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2.1.1 Physical Measures: Transit Technology and Network Design

Cities with good transit planning generally make use of a greater variety of modes forming a

citywide transit network, since each mode type satisfies certain capacities and functions as

listed in Table 1. The network design affects customers’ satisfaction regarding travel times,

travel cost, comfort and safety (Vuchic, 2005). Both chosen technology and network design

should serve the municipal’s vision of its city development, influence the city’s economic

efficiency, secure its social equity, and, most importantly, also dramatically affect municipal

finances (Wright and Hook, 2007; Tang and Lo, 2008).

Table 1 Comparison of Public Transport Technology Options

Technology

System Capacity

(passenger per

hour per day)

Amount of

Investment

(million

USD/km)

Energy Source

CO2 Emissions

Reduction

Potentials4

Heavy Rail: Underground

Metro, Commuter Rail and

Elevated Rail1

30,000–80,000 45–350 Electricity,

Diesel

64–75%

Light rail transit (LRT)2

10,000–30,000 15–45 Electricity 57%

Bus Rapid Transit3 3,000–45,000 0.5–14 CNG 0–10%

Hybrid-electric 5–20%

Fuel-cell 30–75%

Conventional Bus Services 500–5,000 n/a Diesel, Natural

Gas, Hybrid

32%

Note: 1e.g. monorail and maglev train technologies

2LRT is electric rail-based technology operating at the surface level. Trams can also be considered a type of

LRT but typically utilize smaller-sized carriages 3Rubber-tired vehicles running on dedicated right of way (ROW) for all or part of a transit route. There are

various types of BRT systems (see Levinson et al., 2003; Wright and Hook, 2007) 4

In the case of heavy rail, LRT and conventional bus, the emissions reductions are compared to private car

based on estimated CO2 emissions in pound/passenger-miles, with 40% load factor (FTA, 2009). As for the

BRT, based on estimates of total CO2 emissions reduction (tonne over 20-year project life) (Wright & Fulton,

2005).

The other consideration in choosing transit technology is its potential in reducing emissions

— both air pollutants and greenhouse gas emissions. Rail transit obviously promises larger

impacts, but in the end the efficiency largely depends on the patronage. The Delhi Metro, an

underground rail with regenerative breaking system, is an example. The system has resulted

in 28,800 tons of CO2 reduction annually (Leather, 2009). However, it was lower than

expected due to a lower-than-forecast level of modal shift r tter, 2007). Another example

is Bogota’s Transmilenio BRT phase II project developed as one package with TDM and

non-motorized transport (NMT) improvement.1 From the estimated 318 tons per day CO2

1 TDM stands for “Travel Demand Management”. There are two kinds of TDM measures that have been

implemented in Bogota: (i) by restricting license plates that end with a certain number to be used on a particular

day during the morning (6:00–9:00) and evening (16:30–17:30) peak period; (ii) by controlling parking by

eliminating on-street parking.

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emissions reduction, only 10 per cent was gained from the bus renewal itself, while 90 per

cent was attributed to modal shift r tter, 2007). Therefore, a good combination of

technology and network design plays an important role in inducing more modal shift, and

thus, larger benefits.

2.1.2 “Soft” Measures: Managing Users’ Barriers from Using Transit

As mentioned above, “soft” measures are aimed to alter both users’ and non-users’

perspectives towards using public transport. There are two types of “soft” measures: one is by

reducing the convenience of using private modes to push people out of their private modes

and use public transport, while the other is by improving the convenience of public transport

to pull people to use public transport. The former belongs to the “avoid” strategy, which

involves wider aspects of transport policy including land use management and other travel

demand management strategies. This paper focuses on the latter considering that it lies within

the scope of public transport service delivery, but it puts emphasis on its proper positioning

against other transport policies at the strategic level of policy-making processes.

The most influential factor that often makes people reluctant to using public transport is its

complexity associated with having to interchange between modes. No matter how optimized

the network design is, it remains difficult to avoid making transfers, at least walking from

origins to the nearest transit stop, transferring between transit lines, and walking from transit

stop to the destination. Such complexity likely triggers three barriers that deter travellers from

taking transit trips.

The first barrier is the unavailability of access/egress modes.2 The willingness to accept

access/egress stage largely depends on the overall trip distance and travel time itself

(Krygsman, Dijst and Arentze, 2004). The second barrier is that perceived travel time is

greater than the actual time and transfer penalty tends to be higher, particularly for those in

the more vulnerable categories of urban population, including those with physical constraints,

those accompanying children, the disabled and the elderly.3 This is imposed by walking time,

waiting time, inconvenience, uncertainty, or other external conditions, such as unsafe or

insecure locations and unfriendly weather (Hine and Scott 2000; Wardman, Hine and

Stradling, 2001; Guo and Wilson, 2007; Iseki and Taylor, 2009). The third barrier is

individual trip inflexibility, such as the need to carry out complex trip or trip-chaining

comprising several intermediate stops, for instance, to drop-off/pick-up children at school,

2 Both modes are also termed feeder modes. For areas within the catchment area of transit terminal, non-

motorized modes, including walking and cycling, can be the ideal choice of modes, whereas for areas outside

catchment areas, smaller-sized buses or, in developing countries, para-transits (e.g. rickshaws, three-wheelers,

motorcycle taxi) are ideal. Private modes are also options for access modes (e.g. park-and-ride, kiss-and-ride). 3 Indicating how much travellers are willing to pay (in monetary term) or travel (in minutes) to save a transfer.

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and to run some errands in between trips (Hensher and Reyes, 2000; Gorham, 2002; Bhat and

Sardesai, 2006; Ye, Pendyala, and Gottardi, 2007; Currie and Delbosc, 2011).

Considering even only one of these three barriers, using public transport would significantly

compromise travel time, cost affordability, as well as the overall trip reliability and

convenience. Therefore, increasing transit patronage is no longer “merely” about providing

good quality service but about providing convenient door-to-door connectivity between

modes and services or “intermodality”. Failure to address these three factors will favour

private modes.

Thus, this study identifies three “soft” measures to ease those barriers and offer a higher

degree of “intermodality”. First is the hardware: interchange physical design including access

amenity, transfer path environment and waiting amenity. In view of the need for trip-chaining,

hardware design should also offer opportunities to carry out productive activities while

transferring by aligning transit stops’ connectivity with various public and commercial

services along the transit corridors. The second component is software: traveller information

systems including signage, timetable (Ceder, Golany and Tal, 2001) and traveller

information: unimodal or multimodal, pre-trip and at-stop, static or dynamic (Kenyon and

Lyons, 2003; Rehrl, Bruntsch and Mentz, 2007; Grotenhuis, Wiegmans and Rietveld, 2007;

Dziekan and Kottenhoff, 2007). The third is finware: fare structure (integrated or co-

ordinated), collection process, and media such as the use of electronic smart-card ticketing

systems (TCRP, 2006).

Although the effects of their improvements on people’s behaviour towards transit use are still

lacking (Iseki and Taylor, 2009), the application of at least one of these components has the

potential to, among others, enlighten the physical effort, reduce waiting time attributed to

real-time at-stop information systems (Dziekan and Kottenhoff, 2007), save time for

purchasing a ticket by using electronic ticketing (Cheung, 2006) or increase patronage by the

introduction of integrated fare systems (Abrate, Piacenza and Vannoni, 2009).

2.2 Urban Transit Governance: Regulatory Framework

The public transport industry involves a large number of stakeholders who are not always

aiming for coherent objectives, trading-off between commercial profitability and social

services. For example, from the perspective of private operators, modal shift to public

transport might not be their main concern. Instead, they are interested in attracting more

passengers from competing transit modes, not necessarily by drawing in private mode users,

and gaining financial security or at least minimizing financial risk from the business. In order

to achieve this, private operators may prefer to serve profitable lines, increase the fare in

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return for increased service quality or even disregard rider safety and comfort to maximize

profit. It results in fragmented services as was quite evident during the western deregulation

period in the 1980s reflecting failure in providing protection and benefits to the public at

large (Sohail, Maunder and Cavill, 2006). Unsurprisingly, many public transport systems in

the world are financially unsustainable with low productivity, high costs and the need for

large government subsidies. In view of this, cities worldwide are in search for an appropriate

governance mode. They seek an economically rational regulatory framework that can address

the potential market failures that might plague the transit industry, including pollution and

congestion externalities, network effects, the need to co-ordinate a large number of agents

involved, and interactions with other urban planning issues (Estache and Gómez-Lobo, 2005).

Building a sustainable public transport industry involves two directions of governances:

vertical and horizontal dimensions (Sørensen and Gudmundsson, 2010); and three levels of

decision-making processes: strategic, tactical and operational (or the STO framework

developed by van de Velde, 1999). The vertical dimension considers the framework of multi-

level government in strategic decision-making processes, for instance, in terms of

metropolitan-area multimodal integration as well as integrating between traffic management

and transit policy or transit policy and urban planning. The horizontal dimension covers

tactical and operational decision-making processes at the local level, which involves co-

ordination among public sector entities, public transport operators and other stakeholders.

Current regulatory frameworks of transit industry in developing countries have gradually

evolved from deregulated/unregulated to a hybrid model introducing competition for the

market (see Estache and Gómez-Lobo, 2005; Barter, 2008; Gwilliam, 2008).4 This hybrid

model typically contracts out public transport procurement to the private sector to gain

greater managerial efficiency and introduces competition mainly in order to sustain efficiency

improvement (Ongkittikul and Geerlings, 2006), while a standardized level of service quality

set up by the regulator and affordability can be maintained. It is obviously a serious challenge.

3. Integration of Transit Policy Instruments and Governance: A Conceptual

Framework and the Expected Benefits

The review above suggests the importance of putting intermodality measures and a regulatory

framework in place, in addition to thorough transit technology and network design planning,

for sustaining a public transport improvement project. It is also clear that to achieve a

synergic transit governance, the transit industry cannot be thrown into the market mechanism

and must be subject to some government intervention. Taking this into consideration, a

4 The hybrid model is a public-private partnership model with various degrees of regulation touch from the

regulator (public sector) involving operators (private sector) in the provision and management of public

transport.

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conceptual framework (Figure 1) that integrates the technical and institutional dimensions of

public transport service delivery is developed.

The framework identifies a spectrum of policy instruments at STO decision-making levels.

The effectiveness of a public transport improvement programme relies on its positioning

within urban transport systems at the strategic level. It involves local and higher authorities in

managing three interconnected elements of urban transport systems: flow, network and

activity. This framework suggests that public transport improvements should be placed at the

heart of urban transport policy-making which will not only affect the transport network but

also how the city manages travel flow and urban activities. Such positioning is expected to

give room to other supporting measures in the policy-making process, including public

transport priority system or other traffic management policy as well as stations upgrading and

further integration with travel demand and land use management policy.

Figure 1 Integrating Transit Policy Instruments and Governance: A Conceptual Framework

Furthermore, this framework separates the regulator and the operator role as a part of

regulatory reform. At the tactical level, the public transport regulator facilitates multimodal

integration both in terms of physical and “soft” measures. It sets up detailed public transport

service standards to be met by the selected operators. The form of horizontal separation and

the intensity of regulations (e.g. light touch or highly regulated) should vary depending on

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local circumstances. At the operational level, the operators are responsible for one or more

task(s) including fleet procurement and operation, infrastructure operation, fare-box revenue

collection, and information system management through a contracting system between the

regulator and the operator for a certain length of period.

A further question is what to expect from such framework. This study highlights four model

cities: London, Singapore, Seoul and Santiago. London, Singapore and Seoul are examples of

cities that have adopted good multimodal networks coupled with intermodality measures

which were followed by or carried out in parallel with regulatory reform (see Table 2). As a

result, London’s public transport share increased by 5 per cent since 2000. While in

Singapore, by 2003, 60 per cent of its inhabitants’ trips were made by public transport.

Seoul’s bus reform since July 2004 has resulted in higher penetration of low-floor CNG buses

and, more importantly, higher bus ridership of 100,000 passengers per day. It should be noted,

though, that London and Singapore’s achievements are also due to their travel demand

management measures London’s congestion charging; Singapore’s Electronic Road Pricing

and Vehicle Quota System), and the existence of multimodal bodies London’s Transport for

London and Singapore’s Land Transport Authority) that enabled integrated approaches to

manage the circulation of people, goods and services across both cities.

Similarly to Seoul, Santiago also introduced a radical change in its bus system, the

Transantiago, and adopted fare integration with the metro system. The difference is in their

business models. In Seoul, the business scheme was transformed into a semi-public operation

through a route tendering system and joint revenue management between the city and bus

companies based on vehicle-km records. Here, the Seoul Metropolitan Government (SMG) is

responsible for network management and facilities provision, while the private sector

operates the service. SMG provides subsidies for possible shortage in revenue. But in the case

of Santiago, Transantiago is expected to maintain the existing fare levels while meeting the

policy requirement to be self-financing (Muñoz and Grange, 2010). This led not only to the

cutting of capital budget but also cuts in surface transit infrastructures. As a result, based on

Santiago Panel survey (Yáñez, Mansilla and Ortúzar), it was found that the bus market lost

17.3 per cent mode share. The increase of bus-Metro share by 14.3 per cent is believed to be

attributed to the integrated fare and the fact that Metro routes, stops and frequencies did not

change.

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4. Bus Improvement Initiatives in Indonesia

Aiming to tackle the increased motorization in Indonesian cities, particularly

motorcycles, the Ministry of Transportation (MOT) of Indonesia enacted a decree No.

51/2007 promoting pilot cities for land transport improvement. The decree mandates the

pilot city candidates to reflect their commitments by providing documents declaring

their preparedness in terms of institutional capacity, funding capacity, human resource

availability and transportation master plan.

Figure 2 Locations of 11 Cities Adopting Bus System Reform: 2007 – 2010

Source: Public Transport Improvement Programme by 2014, Ministry of Transportation

Afterwards, the initiatives gained stronger regulatory support by the enactment of the

New Traffic Law No. 22/2009. The law specifically promotes pro-public transport

policy development in cities. In Article 158, it explicitly states that the government must

ensure the availability of land-based mass transit system to meet urban mobility needs.

As the implementation of the law, MOT provides technical assistance to promote smart

bus-based urban transport systems in order to gradually replace the old buses and

restructure the existing bus routes to create a more efficient city bus network. MOT

funds several bus vehicles and supports some of the infrastructures. From the target of

20 pilot cities by 2014, to date, 10 cities have signed MOUs with MOT and launched

such systems, in addition to Jakarta as the pioneer of the programme (see Figure 2).

The following subsections provide a progress review of bus improvement in four cities:

Jakarta, Yogyakarta, Bogor and Palembang. Data regarding the system’s characteristic,

performance and management were collected from questionnaire surveys to Trans

Pakuan (August 2010), Trans Jogja (February 2011), and Trans Musi’s August 2011)

transport authorities and operators, the presentation materials of BLU Trans Jakarta and

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Palembang Municipal Government at the KLRTC Training Course XXI5 on 11–13

April 2011 provided by Citynet; and reports from Sustainable Urban Transport

Improvement Program (SUTIP).6 The findings are summarized in Table 3.

4.1 Transit Policy Instruments: Physical and “Soft” Measures

The physical and “soft” measures include at least four main elements. First, bus route

restructuring and bus renewal relating to the aim of scrapping old buses with the new

system’s buses were implemented. In response to this scrappage policy, Yogyakarta,

Bogor and Palembang set up clear targets of scrappage ratio (see Table 3), following the

enactment of local regulation to stop issuing new bus licenses. In the case of Jakarta,

along with the development of 15 Transjakarta corridors, some overlapping large bus

routes have been abolished and/or restuctured.

The scrappage policy is considered a win-win solution that benefits both the

government and the operators. On one side, the initiative assists incumbents to replace

their old vehicles as mandated by local regulation and secure their revenue. On the other

side, it accelerates the process of public transport reform. However, in general, vehicle

procurement is financially challenging, as it depends on political commitment and

financial capability of the local government. Even in the case of vehicles funded by the

MOT, some administrative issues occured. For instance, there were prolonged legal

problems in changing the functional status of the buses from “red-plate” government

vehicle status) to “yellow-plate” public transport vehicle status) in the case of Trans

Jogja. Such problems significantly affect the system optimization and reliability,

particularly in cities with limited public funds.

Table 3 System Performances of Transjakarta, Trans Jogja, Trans Musi, and Trans Pakuan

Transjakarta

(data by 2010)

Trans Jogja

(data by 2010)

Trans Musi

(data by 2011)

Trans Pakuan

(data by 2009)

Urban Area Characteristics

Urban Area Jakarta Metropolitan

Area Greater Yogyakarta Palembang City Bogor City

5 http://www.citynet-ap.org/media-room/events/s/cifal-klrtc-xxi-sustainable-urban-transport/

6 Sustainable Urban Transport Improvement Program provides methodological and technical support in

the development and implementation of measures to improve urban transport in selected medium-sized

and large cities over 100,000 inhabitants including in Indonesia. It is a partnership between German

Technical Cooperation (GIZ) with the Ministry of Transportation, Government of Indonesia and in close

cooperation with several local governments. The output of this project can be accessed at

http://www.sutip.org/Home/outputs.

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Transjakarta

(data by 2010)

Trans Jogja

(data by 2010)

Trans Musi

(data by 2011)

Trans Pakuan

(data by 2009)

Area (km2) 661.25 234 400.61 118.5

Population (people) 8,523,157 1,900,000 1,417,047 905,132

Physical Measures

Year of establishment 2004 2008 2010 2007

No. of corridors (target) 8 (15 by 2014) 4 (15) 5 (8 by 2013) 3 (7 by 2020)

Length (km) 170 120 27– 35 28.5

Shelters

(provided by)

184

(Province)

76

(Province & City)

134

(City & PPP)

49

(City)

Fleet

Size Large & Articulated Medium Large & Medium Medium

Fuel CNG, Euro-II Euro-II CNG Hybrid (biofuel)

Operating Vehicles 524 54 85 18

Provided by Province, Operator MOT, Operator MOT, City,

Operator MOT

CNG stations 6 None 1 None

‘Soft’ Measures

Hardware: Transfer Facilities

Shelters High-floor, on-median,

interchange points

High-floor, roadside

shelters

High-floor,

roadside shelters

High-floor, roadside

shelters

Multimodal

integration P&R

Airport, P&R,

Bicycle rack on bus River bus None

Software: Information System

Timetable Scheduled

Information system Route map at shelter, leaflets, security/information offices, signage

Electronic board - - -

Finware: Fare and Ticketing System

Fare structure3

Flat (single trip, morning

peak hour 5–7 AM

discount), free transfer

Flat (single trip,

regular public &

student), free transfer

Flat

(single trip), free

transfer

Flat

(single trip), free

transfer

Ticketing system

Electronic (smart card,

multipurpose card

Jakcard) + Manual

Electronic (smart

card) Manual

Electronic

(multipurpose card

Flazz) + Manual

Off-board Off-board On-board On-board

Regulatory Framework

Regulator BLU UPTD Dishub

Dishub

Bus Operator 8 consortiums/ private

companies 1 consortium BUMD BUMD

Revenue Sharing Gross-cost contract Gross-cost contract Capital sharing Capital sharing

Scrappage Programme Restructuring

overlapping routes

2 old buses with 1

Trans Jogja bus

474 conventional

bus with 275

Trans Musi bus1

3 angkot with 1

Trans Pakuan bus

Operational Performance

Load factor (%) 47.832 42 75 85

Interval headway (mins) 5–15 5–10 5–10 n/a

Average speed (km/h) 18 28 20–40 n/a

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Transjakarta

(data by 2010)

Trans Jogja

(data by 2010)

Trans Musi

(data by 2011)

Trans Pakuan

(data by 2009)

Annual Ridership 86,937,488 5,834,976 2,500,000 1,102,542

Daily Ridership 340,000 13,000 7,500 3,000

% Farebox Revenue 62 71 91 65

% Subsidy 38 29 12 35

Note:

1Will also reduce the number of angkot from the existing 2,200 to 1,570 units and deploy them as feeders.

2Average load factor in 2007. In the case of corridor 1, the load factor during peak hours can reach 70–90%.

31 USD equals to around IDR 9,000. The fare ranges from 20–40 cents.

The new vehicles are air-conditioned and more fuel-efficient (Euro-II compliant diesel

bus). Some systems use environmentally friendly fuels such as CNG in Jakarta and

Palembang, and hybrid (a mixture of diesel and 20 per cent of used cooking oil) in

Bogor. The availability of city gas networks and CNG stations remains the major

limitation in expanding the deployment of CNG buses.

Second, the new bus system operates on dedicated lanes. To date, only Transjakarta

operates mostly on dedicated lanes, while others run in mixed traffic due to, among

others, technical barriers, such as narrow streets in Yogyakarta and Bogor. As an

alternative, the cities installed bus priority systems at intersections with traffic signals in

co-operation with local traffic authorities or applied colour-painted curbside bus lanes.

Third, designated shelters where off-board fare collection takes place were established.

The availability of shelters forces passengers to board and alight only at the designated

high-floor stations. These stations are located in the middle of the road as adopted by

Transjakarta’s system or on both roadsides as found in the other 10 pilot cities. This

type of shelter usually consists of an end-terminal where a corridor starts and ends,

intermediate shelters every 300–400 meters along the corridors, and some transfer

points connecting one corridor to another. Due to land availability concerns, instead of

building permanent shelters, some cities provide semi-permanent or portable mobile

shelters. The shelters are mostly equipped with off-board ticketing systems either

electronic or manual (e.g. ticket booth, e-card reader or ticketing officers, except

systems that apply on-board ticketing), simple information systems (e.g. real time

displays, route maps or security/information officers), and waiting amenities (e.g.

seating facilities). These shelters’ financing is shared between the municipal and the

central governments (through provincial government) and/or private-public partnerships

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schemes in return for commercial advertisement.

Fourth, each city is supposed to provide a feeder system that feeds passengers from

wider parts of the city to the new bus system and introduce multimodal integration.

Unfortunately, in this matter, most cities are still at the planning stage. Transjakarta has

long been operating without a functioning feeder system, although plans have been

made. Resistance from incumbent operators has been one of the reasons. Three feeder

routes are scheduled to start operating in 2011. In terms of multimodal integration,

Transjakarta has been integrated with several park-and-rides, Yogyakarta has integrated

Trans Jogja with airport, bicycle and pedestrian facilities, and will soon operate some

park-and-rides, while Palembang integrates Trans Musi with its river buses.

4.2 Regulatory Reform Progress

The regulatory reform is the bus industry reform. The bus industry in 11 cities is

currently in a transition period from an unregulated structure (Cervero and Golub, 2007;

CDIA, 2011) to a formal and efficient industry. They continue to search for the most

appropriate type of institutional arrangement to be established, which fits local

circumstances, aiming for improving the efficiency and productivity of public transport

service delivery.

Historically, in Indonesian cities, private operators have played a dominant role in urban

bus industry with little control by the government. Through the reform, a horizontal co-

ordination between the regulators and the bus operators is developed through the so-

called “buy-the-service” scheme. Here, the role of the regulator in planning,

programming and managing the entire bus system, including other supporting services,

is strengthened. The regulator (i) selects the operators preferably through tendering

processes to award quality licensing; (ii) monitors the implementation of minimal

service standards (SPM) by the selected operators based on the periodic contract of five

and seven years between the two parties and if the operator fails to fulfil the agreement

or violate rules, penalties will be applied.

The regulator is usually a local governmental unit. There are two types of entities that

have been introduced: local technical implementing unit (UPTD) and local public

service unit (BLUD). The two entities are different in terms of their flexibility in

managing their budget and adopting necessary business strategies. As a UPTD, it

reports to local transport agency (Dishub), while BLUD reports directly to the governor

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or mayor under the monitoring of Dishub. In short, BLUD is more independent than

UPTD and, therefore, is expected to be more efficient in making decisions. Among the

11 cities, only Transjakarta is managed by a BLUD.

For Transjakarta’s case, the regulator has evolved from a non-structural managing body

(Badan Pengelola)7

in 2003 to a structural UPTD in 20068

and, currently, it is

transforming gradually towards a full BLUD, which is a working unit under a

government institution that has the obligation to provide public services without aiming

to earn profits, but has the flexibility to manage its budget and fund, as well as to adopt

healthy business strategies to improve its efficiency and productivity.9 In the future, to

eliminate the subsidy, BLUD TransJakarta perhaps will be upgraded into a local

government-owned company (BUMD). As some requirements to be a full BLUD have

not been fully met, it is currently operating as a public service unit (BLU) under the

Dishub. Although it has a separate budget and is able to utilize the operating revenue

directly, the management is still less flexible.

Regarding the selection of operators, although it is intended to carry out tendering

processes, Jakarta and other cities prioritize invited incumbents, particularly those

whose bus services overlap with the new bus corridors, to join the Transjakarta

consortiums. This is a countermeasure to ease resistance from the conventional bus

incumbent operators who often perceive the new bus system as their competitor. If more

operators are needed, new entrants are then invited to participate in the tendering system.

To date, four consortiums and two operators are currently operating the ten corridors.10

Their services are compensated per vehicle-km to cover fleet procurement, operational,

maintenance, overhead costs, and some profits, except corridors 1, 9 and 10 whose

fleets were purchased by the government. The level of payment varies across corridors

according to the negotiated contracts. In principle, the level of payment should

guarantee the return on bus operators’ investment and reflect the level of service

performace. BLU Transjakarta also contracts out supporting services operators

(ticketing and revenue collection, provision of security services at the shelters, provision

7 Governor of Jakarta Provincial Government Decree Number 110 Year 2003.

8 Governor of Jakarta Provincial Government Regulation Number 48 Year 2006.

9 Government Regulation Number 23 Year 2005 regulates BLU’s financial management.

10 Namely Jakarta Express Trans, Ltd. (PT JET), Trans Batavia, Ltd. (PT TB), JakartaTrans Metropolitan,

Ltd. (PT JTM), Jakarta Mega Trans, Ltd. (PT JMT), Prima Jasa Perdana Raya Utama, Ltd. (PT PP), and

Eka Sari Lorena Transport, Ltd. (PT ESL).

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of feeder services, and infrastructure maintenance) and co-operates with DKI Jakarta

Bank as a trustee.

Figure 3 Fare Revenue and Subsidy of Transjakarta Busway, Jakarta, Indonesia

Source: Analysis from BLU Transjakarta data 2011.

The total number of Transjakarta passengers is increasing year by year, reaching

82,377,659 in 2010. However, the number of passengers per km decreased from 3.4 and

3.8 in 2004 and 2005, respectively, when only the first corridor was operating, to 2.4 in

2009 when all 8 corridors were operating. Figure 3 shows the financial situation of

Transjakarta Busway system where the share of fare-box revenue continues to decline.

The cost recovery rate decreased to 62.56 per cent and the subsidy is expected to

increase higher. In 2011, the total subsidy including payment for supporting services

was estimated to reach 52 per cent.

Trans Jogja system adopts a similar scheme to Transjakarta. Given that the system is

operating beyond Yogyakarta City’s administrative area, it is being developed under

close co-operation between the provincial government of Yogyakarta Special Region,

Yogyakarta Municipal Government and its neighbouring regencies (Sleman and Bantul

Regency). Each party shares the role of establishing the shelters, park-and-ride, and

other supporting infrastructures to optimize the system.

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In terms of bus operation, the current four corridors are operated by one consortium,

Jogja Tugu Trans, Ltd. (PT JTT), consisting of four co-operatives and one state-owned

bus company. UPTD Trans Jogja, under the authority of provincial transportation

agency of Yogyakarta Special Region, pays fee per vehicle-km travelled to the operator.

Trans Jogja’s fare levels are different for single-trip users, regular public users, and for

regular student users, with free transfers to the entire system. With this arrangement, the

ridership is quite high, reaching 13,000 passengers per day. Nevertheless, the main costs

remain higher than fare-box revenue and, by 2010, the cost recovery rate was only 31

per cent.

Different from Jakarta and reater Yogyakarta’s scheme, Bogor’s Trans Pakuan bus

system and Palembang’s Trans Musi bus system are operated by local government-

owned company or BUMD instead of a consortium. Here, local government plays the

shareholder. BUMD is expected to become a local revenue source, and, thus, earn profit.

Bogor’s Trans Pakuan operator, PD Jasa Transportasi (PDJT), was established in

2007.11

The company deals with transportation service businesses, covering not only the

operation of Trans Pakuan bus system but also other transport service divisions, such as

garage, tow truck, mobile toilet and parking services. So far, aside from the public

transport service division (Trans Pakuan), the other divisions have not been fully

operational. In the future, it is expected that cross-subsidy from those profit-oriented

divisions to finance public transport division will occur. Bogor municipal government

does not provide annual subsidy, but it shares a total amount of basic capital, as stated in

the local regulation No. 11/2008. By 2010, according to local regulation No. 7/2010,

more than half of the designated budget allocation had been paid to PDJT in form of bus

fleets, a tow truck and Trans Pakuan’s operational costs, while the remaining amount

will be paid within a five-year period.

Until 2009, the annual ridership of Trans Pakuan showed an increasing trend from

935,035 passengers in 2008 to 1,102,542 passengers in 2009. The daily ridership

reached almost 3,000 passengers. However, the three corridors have not been optimized

yet. From 30 vehicles available, only 18 buses are in operation, resulting in lack of

reliability, declining number of passengers per km. As the fare-box revenue is

decreasing, the subsidy further increased from 9 per cent in 2008 to 35 per cent in 2010.

11

Based on Local Regulation of Bogor City Government Number 5 Year 2007 which was amended by

Local Regulation Number 11 Year 2008.

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The Sarana Pembangunan Palembang Jaya, Ltd. (PT SP2J) which operates Palembang’s

Trans Musi has been established since 2006 with a vision to improve local economic

growth as the main reference for chanelling infrastructure investments in general, not

only transportation.12

Before being appointed as the managing body of Trans Musi in

2009, it was dealing with a wide array of business sectors, including public housing

(rusunawa), water transport (Kapal Putri Kembang Dadar) and environmentally

friendly hydrocarbon refrigerant (musicool).13

Palembang municipal government played a significant role in accelerating its bus

improvement programme, on account of its strong leadership, reflected in the rapid

progress in expanding the system. In one year (2010–2011), the city managed to operate

68 of the 85 available buses, serving 5 out of the 8 corridors planned by 2013. As a

result, the load factor reached 75 per cent and the annual ridership increased from

2,130,000 passengers to 2,500,000 passengers this year. On average, the daily ridership

is 7,500 passengers. The operational cost recovery rates were quite high at 94 per cent

in 2010, although it decreased to nearly 75 per cent during the first semester of 2011. To

cover the operational costs of which drivers’ salary constitutes the largest cost share, the

authority plans to increase the fare level by 30 per cent.

5. Conclusions

This study developed and applied a conceptual framework highlighting three transit

policy elements—physical measures, “soft” measures, and regulatory reform—to

review the progress of bus improvement initiatives in Indonesian cities. The three

elements are considered critical in ensuring the effectiveness and sustainability of public

transport improvement initiatives. As its case studies, this study observed four cities:

Jakarta, as the pioneer of bus improvement initiative, and three pilot cities of a

nationwide bus improvement programme initiated by the central government

(Yogyakarta, Palembang and Bogor).

In general, Jakarta’s independent initiative and the stimulus given by the central

government through nationwide bus improvement programmes to the other three cities

have laid the groundwork for better land transport management at the local level, even

12

Based on Local Regulation of Palembang City Government Number 4 Year 2006. 13

Based on Mayor of Palembang City Government Decree Number 1745 Year 2009 regarding route

licensing of Trans Musi BRT.

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though the performance of each city varies widely and there are many shortcomings

with which to deal. Regarding the physical measures, the four cities are encountering

difficulties in expanding the service capacity in terms of increasing the number of

vehicles, providing bus priority systems, and optimizing the network. Financial sharing

among multi-level governments and public private partnerships (e.g. shelter

construction) are among the solutions taken to tackle this issue. Nonetheless, technical

barriers such as land availability, narrow roads, among other issues, remain a challenge,

particularly in providing dedicated lanes, which are a crucial element for bus-based

transport in ensuring punctuality in travel time. In response to this dedicated lane issue,

some cities installed traffic signal priority systems as an alternative measure, but better

co-ordination with traffic authorities is necessary. Whilst social resistance from the

citizens against shelter locations can be solved through technological innovation, such

as portable shelters, it may disadvantage the system image. Participatory approaches to

obtain people’s co-operation have also been carried out. Such negotiated approach is

also adopted in managing resistance from incumbent operators who foresee the new bus

system as a competitor, by prioritizing them in the operator selection process for the

new bus system at an earlier stage.

The implementation of “soft” measures is still lacking, particularly multimodal

integration and improvement in “intermodality”. The bus system has been seen as an

effective entry point, particularly towards restructuring and scrapping the conventional

public transport, considering Indonesian cities’ circumstances. However, more efforts to

integrate the bus system with other modes of transport are needed as a key element to

enhance the system capacity through expanding service coverage as shown by London,

Singapore, Seoul and Santiago. More importantly, the positioning of each new system

within the urban transport system at the strategic level remains weak, and, thus, the

initiatives seem more incremental in nature rather than a part of a comprehensive and

long-term planning. A good positioning is demonstrated by Curitiba’s experience in

Brazil in relation to land use planning and traffic management policy (Rabinovitch,

1992; Santoro and Leitmann, 2004). Such clear vision is needed to enable bus systems

to reach higher capacity through citywide system coverage.

Despite this, the current fare structure seems to be quite effective in attracting

passengers for using the new bus system since it is relatively lower than the other

conventional bus fares due to subsidy, flat rate, and free transfers to the entire system. In

the short-term, such fare structure might have been useful for gradually influencing

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public perspectives towards public transportation. In the long run, as the network

expands, maintaining such fare structure may risk the system’s financial sustainability

due to the need for increasing subsidy.

In response to the challenges encountered, the four cities explored regulatory reform

from unregulated to a hybrid model, introducing competition with a certain degree of

regulatory touch. Such change is essential, particularly in managing financial barriers to

improve service reliability and wider system coverage. The reform strengthened the

capacity of regulators in land transport planning and management and allowed the

operators to focus on improving the service to meet standards. The capacity of bus

operators in delivering standardized services of one or more bus lines improved and the

prevailing daily sublet system between bus owner and bus crews (driver and conductor)

was abolished. Local governments became fully responsible for the provision of their

new bus networks and, basically, bear all the risks associated with it. Hence, it

minimizes the operators’ financial risks since they no longer have to pursue more

passengers to earn more revenue.

In conclusion, effective transit governance is critical to ensure smooth delivery of both

physical and “soft” measures as demonstrated by Indonesian cities in an attempt to

improve their urban mobility. The lack of one of the elements imposes higher risks in

jeopardizing the effectiveness of the whole system. It also determines the capability of

providing reliable transit services and, thus, to what extent a public transport

improvement initiative can actually contribute to sustainable urban development. To

provide more evidence, an application of the framework to similar initiatives in other

developing countries would be useful to comprehend the effects of other locality

settings. Further work should identify performance indicators beyond the project

implementation scope and evaluate the intangible co-benefits of the initiatives at the city

scale.

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