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View all search resultsMistargeted subsidy
Forcing PT KAI to sell tickets below the market price will only endanger the company’s financial health and in turn will put the operation of its other regular train services at risk and disrupt its future railway development in many parts of the country.
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T
he Jakarta-Bandung high-speed railway (HSR) is not the type of project that deserves a subsidy regardless of the government’s concern that it may be difficult to attract enough ridership to keep the business alive and sustainable.
Kereta Cepat Indonesia China (KCIC), the consortium responsible for the high-speed railway, has proposed a ticket fare of around Rp 250,000 (US$16.31) for the early years of its operation, on par with the second most expensive fare for regular train Argo Parahyangan plying the same route, and below the initial, non-subsidized price of Rp 350,000.
With that ticket price, the high-speed train is destined to serve middle and high-income groups and is geared toward business trips. According to Transportation Law No. 22/2009 business trips are outside the classification for services that are entitled to a subsidy, which in fact is covered by taxpayers’ money.
Current estimates suggest the government would need at least Rp 1.1 trillion a year to subsidize the high-speed train, assuming it would carry 30,000 passengers per day as projected by the University of Indonesia’s modeling provider, Polar UI.
Pouring more taxpayers’ money to subsidize high-speed train passengers, who do not in need of a subsidy, constitutes yet another betrayal on the part of the government.
When launching the project in 2015, President Joko “Jokowi” Widodo made it clear the high-speed railway would not involve the state budget, saying it would follow a business-to-business (B2B) cooperation scheme.
Yet in 2021, the government broke that promise by allowing the involvement of the state budget through a state capital injection (PMN) and a government guarantee to ensure the project could be finished in time along with the necessary Chinese debts it would occur.
