Jakarta is Indonesia’s capital city and the nation’s largest city. Over the 10 years to 2010 it experienced significant population growth, growing from a total metro area population of 21 million in 2000 to 28 million in 2010.
Over this decade, Jakarta’s transport system underwent significant growth, including:
The number of daily commuters from Jakarta’s suburbs to centre growing from 743,000 in 2002 to 1.1 million in 2010
The number of registered vehicles in the metro area growing from 2.7 million in 2000 to 9.6 million in 2010.
In 2006 only 2% of residents used a rail service, owing to the insufficient number of trains, limited network, and significant congestion – instead relying on buses, private vehicles, and motorcycles for transport.
Traffic congestion, air pollution, and environmental degradation has become a severe problem in Jakarta, with the average bus driving speed dropping to below 10 km/h during the evening peak in 2006.
The Mass Rapid Transit (MRT) project aims to increase passenger transport capacity of the public transport system, reduce air pollution, and by extension improve Jakarta’s investment climate by delivering a system that accommodates short-distance transport in Central Jakarta.
Phase 1 – a 15.7 km line from Lebak Bulus Station to Bunderan HI Line with 15 stations and one depot
Phase 2A – a 5.8 km extension from Bundaran HI to Kota with seven stations
Phase 2B – a 5.2 km extension from Kota to Ancol with three stations and one depot.
Phase 1 – a 20.1 km line from Kali Deres Station to Cempaka Baru Station.
There was a lack of local knowledge in implementing the first subway in Indonesia from design, technology, and construction through to operations and maintenance. Funding was an issue with early feasibility studies concluding that private financing was not an option given the farebox revenue would only cover 15% of the costs.
The MRT featured the first signal system in Indonesia, the Communications-Based Train Control (CBTC), and an automatic-driving system all of which required significant specialist capability. PT MRT Jakarta, the local operating company had no prior experience in subways.
There was a challenge in convincing users, investors, and stakeholders that a reliable public transport system in Jakarta was achievable.
Land acquisition was expected to cause potential delays in addition to perceptions that the project would cause a fall in property values around the elevated sections of the line. The status of land ownership posed a challenge with privately-owned and government-owned properties requiring different approaches.
The first two phases of the project were financed through a series of soft loans from the Japan International Cooperation Agency (JICA) (previously Japan Bank for International Cooperation), that mandated tied procurement. Under the JICA Special Terms for Economic Partnership (STEP) that applied to these loans, the provision of funds was tied to a minimum use of Japanese content in the project’s procurement. The provisions covered the minimum use of a Japanese main construction contractor in addition to other Japanese technology and expertise. The interest rates and repayment period were structured to satisfy the OECD rules on tied aid.
Land acquisition strategies included offering slightly higher compensation for land to be acquired but when this was deemed inadequate by residents, the Jakarta Government offered to allow residents on partly acquired land to construct multi-storey dwellings on their remaining land. Residents who had their land wholly acquired were provided permits to develop new houses in other parts of the city.
Non-farebox revenues have helped contain government subsidies, and include advertising at stations and on trains, station naming rights, and retail rents.
Ministry of Transportation, Directorate General of Railways
Provincial Government of DKI Jakarta
PT MRT Jakarta
Constructors of Underground Sections
Consortium of Shimuzu, Obayashi, Wijaya Karya, and Jaya Construction
Joint Venture of Sumitomo Mitsui Construction and Hutama Karya
Constructors of Elevated Section
Joint Venture of Sumitomo Mitsui Construction and Hutama Karya.
November 2006 – Loan for engineering services of North-South line Phase 1
October 2013 – Construction commenced on North-South line Phase 1
March 2019 – North-South line Phase 1 opened
June 2020 – North-South line Phase 2A construction commenced.
Results / impact
The experienced Japanese workforce shared their expertise in project management and technical skills, and in the new technology with local workers through the project.
A study by JICA from previous projects recommended early consultation with residents who would be impacted by the land acquisitions, and these led to open consultations with the affected residents prior to the environmental impact assessment approvals for the project.
Non-farebox revenues grew substantially and exceeded the farebox revenue in 2019 and 2020 and contributed to a financially sustainable service. Using non-farebox revenue in its commercial model has allowed PT MRT Jakarta to maintain its workforce with customer satisfaction being maintained.
Patronage achieved an average daily figure of 89,645 passengers in 2019 which was above the initial target of 65,000 passengers per day. Similar levels were achieved in early 2020 prior to the COVID-19 pandemic impacting patronage.
Despite the consultations with residents, the land acquisition process caused issues in the southern portion of the project and led to some delays in construction.
Key lessons learnt
Official development assistance can provide specialist technical knowledge and guidance through the feasibility and planning process, in addition to expertise through the delivery of the project. This is particularly useful with the introduction of new types of infrastructure into developing countries.
There was a limited field of bidders due to the conditions of the soft loans provided through JICA which required the main contract to be Japan tied. Although the main contract allows a joint venture with the borrowing country in addition to the Japanese company and its subsidiary with an overseas presence, the Japanese company was required to be the leading partner in such an arrangement. There are also JICA loans that are non-tied and would have allowed a wider choice of technology to be selected from other countries.