T

he government will soon introduce a regulation paving the way for the liberalization of the railway sector, with an analyst highlighting the need for equal treatment among players, to attract private companies and investment.

The Ministry of Transportation has submitted a draft regulation on the railways to the State Secretary for the approval of the President.

Tunjung Inderawan, the director general of railways at the ministry said Monday that when approved, (expected to be effective in June) it would serve as a technical regulation to facilitate implementation of Law No. 23/2007 to end the monopoly of PT Kereta Api Indonesia (PT. KAI) as the sole operator of railways.

He did not elaborate on when the regulation would officially be signed.

While welcoming the much-awaited implementing regulation, Taufik Hidayat, a railway analyst of the Indonesian Institution of Science (LIPI), said the regulation should also address matters such as safety, integrity of track and rolling stock, and standardization, as well as tariffs, equal treatment of all players, and competition in the sector.

"Don't expect private enterprises to enter the business if such matters are not regulated clearly," he said in a phone interview on Tuesday.

He pointed out that the government should first make it clear whether it aims to have the railway system on a viable commercial basis or as a public services that can always be subsidized. If it is also to be commercially viable, then government should create conditions based on equal treatment for all players.

"For example, if the government wants to invite private enterprise to run services on the existing tracks then it should not allow KAI to become the operator of the railway tracks, in addition to providing railway services on the same tracks.

"It should establish a new operator that does not provide railway track services. It's like Garuda Indonesia. It only provides flight services, while the airport is operated by PT Angkasa Pura. That way Angkasa Pura can provide equal treatment to all airline companies," he said.

According to him, the government should also make a regulation to cover new railway development projects that would be attractive for private companies under build operate and transfer (BOT) schemes.

According to the ministry's data. the total railway network in Indonesia stands at just over 6,000 km.

Taufik pointed out the ministry had to re-tender a Rp 4.6 trillion railway contract linking Manggarai station and Soekarno-Hatta airport due to insufficient bids.

"I suspect the lack of clarity in the regulation might have discouraged private enterprises to participate in the development of the Manggarai-Cengkareng Airport Railway track project," he said, pointing to this example of a disincentive effect.

Bambang Susantono, deputy in charge of infrastructure at the coordinating ministry of the economy, said however that the Law no. 23/2007 as well as the draft presented to the state secretary, had already made things clear on these matters.