Indonesia LRT Prospects | Indonesia Research Institute Japan
“This post is written by Moh Mahrus Ali, Market Research & Business Development at PT Indonesia Research Institute Japan Jakarta, a global management consulting firm on business strategy”
The government is intensively fixing public transportation. The construction of Light Rail Transit (LRT), Mass Rapid Transit (MRT) and an increase in the number of buses, fast trains, and other modes of transportation have been intensively carried out to encourage people to switch to public transportation. It is hoped that the development of a number of infrastructure projects in the transportation sector will reduce road density. So, what about the future prospects for LRT in Indonesia?
The Light Rail Transit (LRT) project that will be developed in Jakarta and Palembang should be followed by other cities in Indonesia. The LRT system is more suitable for big cities in Indonesia than the monorail system. The national railway is now undergoing a transformation in all lines. The government of President Joko Widodo has paid great attention to railroad development in the country, among others, by increasing the budget and actively seeking foreign investors.
The increase in the number of urban train passengers in recent years has to be overcome by increasing the frequency of trips and the addition of carriages. This addition had an impact on the need to prepare various supporting facilities, among others, the thousands of crossing gates. That’s why there must be a solution for this, one of which is by building the LRT. President Joko Widodo has issued Presidential Decree No. 116/2015 which appointed PT Waskita Karya Tbk to build an LRT project in Palembang, South Sumatra.
In addition to realizing a mass transportation system, the project is also to support the 2018 Asian Games sports event. The Palembang LRT will be 24.5 km long with 23 stops. The route starts from Sultan Mahmud Badaruddin II Airport to the Jakabaring Sports Complex. The investment value of the Palembang LRT is estimated at IDR 7.2 trillion. The initial plan for funding the project relied on private investors. However, because there were no private investors willing to invest, the government assigned BUMN Waskita Karya to work on the project.
Worth and Cheaper
Railway development is now a national concern. The government’s enthusiasm to develop railways can be seen, among others, from the plan to build a super fast train and the start of the construction of an integrated LRT in the DKI Jakarta, Bogor, Depok and Bekasi areas. The passion for railway development has also accelerated the process of building airport trains that are integrated with commuter trains. The railway transformation which is now the government’s determination should also be combined with local government steps to fix public transportation, develop areas, and the logistics system in the regions.
For this reason, there is nothing wrong if the concept and plan for the development of the LRT mode of transportation is implemented in several regions in Indonesia, one of which is the reactivation of the monorail in Bandung, which until now has been neglected, is converted into the LRT transportation mode. Monorail is not sufficient or feasible to be developed into mass transportation. The monorail is less effective for spatial planning and the investment is very expensive, nor can it solve the volume of mass transport. We recommend that the West Java Provincial Government and Bandung City Government switch from the monorail to the LRT by utilizing the currently inactive train lines, such as the Bandung-Ciwidey train line. LRT investment is more feasible and cheaper because the infrastructure already exists, only the procurement of a series of LRT trains, infrastructure renovation and clearing of land which is now being taken over by irresponsible parties.
It is time for local governments to coordinate with PT Kereta Api Indonesia (KAI) as the most competent institution in the mass transport sector, especially railways. Now the direction of developing national railways is focused on producing modern and effective solutions for public transport and logistics.
Railway lines that have been inactive have to be revived with a railway system with more modern technology such as the LRT. The LRT system has many advantages over other modes. LRT or so-called city tram is an alternative in overcoming city congestion. LRT is very appropriate to adjust to the existing city road environment. LRT can blend with other city traffic modes. Usually the LRT consists of four series of trains or called heavy rail transit (HRT) as a set (4 carriages).
Various technical advantages of LRT include light vehicle weight and can be made by the KA Yasa, INKA and even the bus body company. There are no emissions on the road and the sound is quiet. In addition, the LRT is a versatile transport that can run at high speed on separate roads and can penetrate narrow roads and can overcome steep gradients and sharp turns.
Economic Value Added (EVA)
In addition, LRT can also act as a transportation solution for the needs of a metropolitan city. We need to learn and be able to reflect on the past where the Dutch colonial heritage railway played a role in accelerating the flow of population mobility. Local governments should also learn and reflect on Singapore with its commuter rail line or more popularly known as the north east line (NEL). Apart from being a cultural icon, the train is also a solution to urban transportation problems. The existence of NEL also has many features in Singapore, both in terms of the technology of the carriage circuit and the operating system. There is also an interesting side where the NEL station also functions as a gallery of art works. With this, the atmosphere of the 14 NEL stop stations has added value to the creative economy as well as a very charming cultural exhibition venue.
The prospect of this LRT will continue to grow along with the seriousness of the Indonesian government in supporting this project. The Indonesian government will certainly continue to attract many domestic and foreign investors to participate in this big project. Of course, this opportunity is a very big opportunity for investors, but of course, to get into this big business, adequate research is needed in this field.
We, Indonesia Research Institute will provide services for investors in relation to carry out further research on such related investment business opportunities in Indonesia. Indonesia Research Institute Japan offers all services from desk research, in-depth interviews, to market surveys for a better understanding and provide a deeper insight of the topic that you want to further understand on how this business works.
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References
Jawapos. (2021, April 15). Automotive. Retrieved May 21, 2021, from Jawapos.com: https://www.jawapos.com/oto-dan-tekno/otomotif/15/04/2018/transportasi-umum-terus-dibenahi-gimana-prospek-industri-otomotif/
Kompas.com. (2020, November 26). Megapolitan. Retrieved May 21, 2021, from Kompas.com: https://megapolitan.kompas.com/read/2020/11/26/07470231/utak-atik-rute-lrt-jakarta-dianggap-langgar-perpres-hingga-dikritik?page=all
Kontan. (2021, April 2021). Industry. Retrieved May 21, 2021, from Industri.kontan.co.id: https://industri.kontan.co.id/news/proyek-mrt-dan-lrt-membuat-hunian-tod-semakin-diminati
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Authored by : Fitri Aulia | 22 December 2020
Recent Property Development
The Covid-19 pandemic has dealt a quite severe blow to the property business sector in 2020. During the PSBB period, business activities were very sluggish and it can be said that some business actors suffered severe losses.
However, entering the new normal period, the economic activity in several sectors including property has begun to revive from the previous period. The role of the government triggers the revival of Indonesia’s property business activities.
Government Stimulus
The assistance provided by the government is in the form of subsidies or incentives for interest subsidies to debtors of public housing credit (KPR), which is contained in the Minister of Finance Regulation (PMK) Number 138 / PMK.05 / 2020 and amendments to PMK 85 / PMK.05 / 2020 regarding the guidelines for providing interest subsidies in the effort to implement the National Economic Recovery program.
In early March 2020, the Government decided to increase the allocation of housing financing assistance by IDR 1.5 trillion for Low-Income Communities (MBR). This was stated by the Director General of Infrastructure Financing of the Ministry of Public Works and Public Housing (PUPR) Eko Djoeli Heripoerwanto in a webinar, Wednesday (29/7/2020).
In addition, the Government also has Bank BTN as their partner-collaboration to implement their OMH Program aimed at Low-Income Communities (MBR) with low interest rates and low installments for the purchase of a prosperous tread house and a welfare apartment.
Bank BTN noted, in 2015 they have provided housing financing assistance totaling 474,099 units. Then in 2016 as many as 595,540 units, in 2017 to 666,806 units, in 2018 to 755,093 units, and in 2019 to 735,749 units.
As of September 2020, BTN has provided home ownership credit support (KPR) of 93,448 units which cost as much as Rp. 15.6 trillion. These support provided by BTN is significant for the survival of the business property sector.
BTN commitment on supporting business property has not slackened. In fact, during the pandemic, BTN continuously provides support for the government program.The distribution of subsidized KPR is still a mainstay of BTN for the One Million Houses program.
Source : Bank BTN (visit : https://www.btn.co.id/id/Conventional/Product-Links/Produk-BTN/Kredit-Konsumer/Pinjaman-Bangunan/KPR-BTN-Subsidi)
Positive Trend in Q3 2020
There is a positive trend during Q3 2020 after it drastically dropped earlier in the year, indicates there is potential for the revival of Commercial Property Demand in Q4 2020 and the next Q1 2021.
Source : Bank Indonesia
Hotels and convention halls are two sectors whose demand has risen quite drastically in the Q3 after falling badly in the previous quarter. This demonstrates positive potential for its development in the future. Meanwhile, the demand of apartment remains low and still struggles to revive until now.
Growth of Commercial Property Demand in Jabodetabek
Overall in Jabodetabek, the commercial property sector also experienced a positive increase during Q3 2020.
In Jakarta, all commercial property demands show positivism with hotels being the most prominent in their development at Q3 2020. After previously shows a negative number, the total index in Q3 has at least increased to be positive.
Source : Bank Indonesia
Meanwhile, the growth in the total commercial property index jumped drastically in Bogor, Depok and Bekasi. Same case with Jakarta, its hotel sector are also the most prominent in reviving, at least in the Q3 2020.
Source : Bank Indonesia
As we can see on charts above, the hotel segment shows a great improvement in demand. This was driven by various kinds of promotions offered by hotels to adapt in this situation such as providing huge discount, staycation packages, working from hotels offer, and wedding reception packages.
Why Hotels?
As Indonesia gradually eases lockdown restrictions, the hotel occupancy rates across the country including Jakarta, have slowly started to pick up. However this is not without several efforts and sacrifices driven by people in the hotels sector to improve and revive the hospitality business sector in Indonesia.
To get through this hard times, efficiency and innovation are the main keys. Therefore, there are several trends created specifically to adapt to this era. Hotels competing with each other to offer a flood of discounts. To further intensify its sales strategy, there are several e-commerce platforms that is becoming a great place to advertise rooms and staycation packages, such as Traveloka. The Buy Now Stay Later also sticks to this trend.
Hotels discounts on Traveloka (Source : Traveloka)
Another new trend is the Work From Hotel (WFH). As you might know, the abbreviation of WFH was initially stands for Work From Home. To connect the dots, Working From Hotel then exist and created because there are more and more office workers are getting bored with the atmosphere of their house and desperate to look for a new atmosphere. It’s a trend where hotels prepare rooms, complete with equipment and facilities to work (e.g : Wi-Fi , stationer, and free printing facilities,etc).
Source : Instagram @harrisfxsudirman and @arunasenggigi
During the transitional PSBB period, indoor wedding receptions are allowed to be held again after previously was banned temporarily due to the massive increase of the Covid-19 spread. This becomes the opportunity that triggers the revival for the hotel business.
However, this permission is also accompanied by the requirement to fulfill and comply with the health protocols made by the government. These includes the limitation of attendees to a maximum of 25 percent of normal capacity. Then, the seating distance for visitors is set at least 1.5 meters. Visitors are also prohibited from passing by or changing seats. The eating and drinking utensils must be sterilized, while the serving of food is prohibited from using a buffet. Last but not least, the wedding staffs are required to wear a mask, face shield and gloves.
One of the breakthrough in this trend was the make of “Virtual Wedding” ever since June 2020. As this was the case held by The Sunan Hotel Solo, which offer a virtual wedding service package for 44.5 million. The event is only attended by the couple and their family members, meanwhile guests are able to attend the wedding virtually through various platforms such as Zoom, YouTube, Facebook and Instagram, while enjoying food sent by the hotel to their residences.
Source: The Sunan Hotels Solo
Finally, we might conclude that the property business in Indonesia has the potential to develop more despite the massive impact it has taken from pandemic outburst. Combining the stakeholders effort and the government’s support to stimulate this sector are expected to help revive the business sector in the future.
References
Bank Indonesia. (2020). Perkembangan Properti Komersial (PPKOM).
Kementerian Pekerjaan Umum dan Perumahan Rakyat. (2020, November 3). Tingkatkan Kepemilikan Hunian Layak, Realisasi Program Sejuta Rumah Hingga Akhir Oktober 2020 Capai 601.637 Unit. Retrieved from https://www.pu.go.id/berita/view/18970/tingkatkan-kepemilikan-hunian-layak-realisasi-program-sejuta-rumah-hingga-akhir-oktober-2020-capai-601-637-unit
Kementerian Pekerjaan Umum dan Perumahan Rakyat . (2020, January 3). Capaian Pembangunan Rumah Tembus 1,25 Juta Unit. Retrieved from https://perumahan.pu.go.id/berita/view/227/capaian-pembangunan-rumah-tembus-1-25-juta-unit
Kompas. (2020, July 29). Alokasi Tambahan Rp 1,5 Triliun untuk Perumahan Terkait 3 Program. Retrieved from https://properti.kompas.com/read/2020/07/29/191334021/alokasi-tambahan-rp-15-triliun-untuk-perumahan-terkait-3-program?page=all
BUMN inc. (2020). Target Penyaluran KPR Bank BTN Naik Menjadi 300.000 Unit Per Tahun. Retrieved from http://bumninc.com/target-penyaluran-kpr-bank-btn-naik-menjadi-300-000-unit-per-tahun/?more=2