Trans-Sulawesi Railway to Boost Local Economy Without Private Investment

The Government will fund the Trans-Sulawesi railway project entirely, without private investors, in hopes in which the idea will pull foreign money to the region later.

The construction of 4,679 kilometres of railway along the coastline of Sulawesi, known as the Trans-Sulawesi railway project, is actually supposed to stimulate Indonesia’s economy in coming years, even as the Government deems the project unattractive to foreign investors.

According to the Transportation Ministry’s Director General for railways Hermanto Dwiatmoko, the project will be funded entirely coming from the Government’s coffers, as public railway transportation projects rarely bring in enough revenue to entice private investors.

“All [of the initiatives] will be funded with rupiah because This specific is actually not commercial, the idea’s not benefitting [investors],” Dwiatmoko tells Indonesia Expat in an interview. “This specific project is actually strictly the responsibility of the Government.” Dwiatmoko says the Government never planned to attract private backers to the Trans-Sulawesi railway, as the idea knew coming from the start the idea would certainly be a tough sell.

The rural island has far less economic activity than its more urban neighbouring islands of Sumatra along with Java. due to This specific reason, Dwiatmoko believes the idea will still be years before private capitalists take a serious interest in Sulawesi’s infrastructure.

“When the idea comes to building infrastructure, we can’t [think too much about] doing money or not. We are thinking for the next 50 to 100 years,” explains the Director at his office in Central Jakarta. “If the railway doesn’t exist at This specific point in Sulawesi, the idea might be alright. yet what if we’re too late in building railways [there] like [we were] in Jakarta? We’re too late in building an MRT here along with look how bad the traffic is actually at This specific point.”

The Trans-Sulawesi railway project is actually estimated to cost Rp.216 trillion (US$15 billion), along with if construction is actually carried out according to plan, the line is actually scheduled to begin operating in 2018. However, Dwiatmoko says This specific year’s budget for the project stood at a mere Rp.971 billion (US$69 million), consisting of Rp.200 billion (US$14 million) for land acquisition, Rp.52 billion (US$4 million) for concrete installations, along with Rp.719 billion (US$51 million) for the railway construction.

“We’re targeting to install 16.1 kilometres of railway by December 2015,” says Dwiatmoko. However, the project is actually already behind schedule. The first phase, construction of a 145-kilometre line coming from Makassar to Parepare — both cities in South Sulawesi — was supposed to begin in July, yet was ultimately postponed.

Local administrations failed to complete land acquisition for an initial 30-kilometre stretch of land in June. Dwiatmoko says he is actually sure local administrations will be able to acquire the rest of the required land by the time President Joko Widodo inaugurates the construction stage of the Trans-Sulawesi railway come mid-October. “Jokowi has planned to be there [for the groundbreaking ceremony],” says Dwiatmoko, adding in which the rails will be imported coming from China along with Japan. Both nations are also currently vying for the opportunity to help build the bullet train coming from West Java.

As of August, out of 871 different plots of land in which needed to be acquired, only 458 have been secured, says Dwiatmoko. The plan is actually in which these important 30 kilometres of land will be purchased using the regional government’s budget within the amount of Rp.100 billion (US$7 million).

“Payment for the land acquisition [using the regional budget] has reached 60 percent along with the rest will be finished This specific month,” South Sulawesi transportation, communication, along with information bureau head Masykur Sulthan told the public in August. at This specific point, Dwiatmoko says the rest of the first phase will be funded by the state budget, with the central government claiming to have allocated Rp.200 billion (US$14 million) in an effort to acquire 70 more kilometres of land. “to ensure in which leaves us with 45 kilometres of railway left [with no allocated budget yet],” he explains.

Despite what the director general says about a groundbreaking ceremony, the Trans-Sulawesi railway, in fact, already had one in 2014. The then-coordinating economic minister Chairul Tanjung was in attendance. yet alas, the project has been stalled since the ceremony, primarily due to a lack of funding, along with ongoing land acquisition conundrums in which are all too common within the archipelago.

Trans-Sulawesi falls under Jokowi’s nation-wide railway project in which’s looking to lay down 12,100 kilometres of track across the nation along with utilise US$60 billion between 2015 along with 2030. Dwiatmoko says the Ministry will need Rp.19.84 trillion (US$1.4 billion) to start all the railway projects This specific year.

Although no private investors will be involved within the projects This specific year, he says, private sectors were supposed to contribute at least 70 percent of the funds needed for railway projects over the next 15 years.

This specific is actually optimistic, considering foreign investors like Japan along with China will need to come into play, along with many Government policies run counter to such efforts — some legislations encourage foreign private investments while others seem protectionist along with nationalistic.

“due to This specific year, the nationwide projects will be exclusively financed by the state budget because a public-private partnership [PPP] mechanism for Kalimantan along with Sumatra will not be feasible along with profitable,” the Director General reaffirms.

Diesel_locomotive courtesy of Wikipedia Commons

A diesel locomotive in Indonesia. Courtesy of Wikipedia Commons

With such a large budget at stake, anti-graft activists have also raised concerns in which a mega project like the Trans-Sulawesi railway is actually ripe for corruption within the form of embezzlement. A recent study by the Indonesia Corruption Watch (ICW) shows infrastructure along with regional budgets are the sectors where cash is actually most often siphoned coming from. the idea places local administrators at the top of the list when the idea comes to This specific form of corruption.

The Ministry’s railway directorate-general secretary Imran Rasyid says all transactions within the Trans-Sulawesi project are sure to be transparent along with accountable. “No hard cash will be involved. All transactions will go through bank accounts. Moreover, the documents within the land acquisition process have to be clear, such as the original owner of the […] land along with whether in which person truly owned the land before or not,” explains Rasyid.

Apart coming from Sulawesi, the country’s various other big railway projects will take place in Sumatra, Kalimantan, Java, Bali, along with Papua. The Government hopes to cut Indonesia’s high logistics costs, which often result in a lack of competitive goods prices when pitted against those of various other ASEAN countries.

in which said, Dwiatmoko says a railway project like Trans-Sulawesi is actually supposed to boost the local economy by doing the idea faster along with easier for people to transport goods, thus doing a less dense population in Sulawesi more attractive to private investors. “What’s important is actually for the railway to exist first, then the demand [for businesses] will start coming in,” he adds.

Railways are also an integral part of Jokowi’s “sea toll road” maritime programme, in which as many as 11 major along with feeder ports are currently being modernised. The push is actually an effort to ease passenger traffic coming from the eastern to western parts of the archipelago, along with vice versa.

Aside coming from personal transport terminals, however, 13 ports will be specially designed to facilitate cargo handling. The ports are in two of the working regions run by state-owned port management firm PT Pelabuhan Indonesia (Pelindo). Cities in Sulawesi, such as Makassar along with Parepare, are also included in Jokowi’s maritime programme.

Dwiatmoko suggests the fates of railway along with maritime infrastructure projects are in fact intertwined. He says, “If there are ports yet no inter-land connection [to transport goods to along with coming from the ports], the maritime programme will simply go to waste.”