Wednesday, 19 November 2008

Road and Toll Road Sector Framework

Non Toll Road Framework
The policy of the MPW is in line with the general transport policy in RPJM (National Midterm Plan). The RPJM recognizes that infrastructure required long term and enormous amount of investment. For sustainable road development, cost recovery should be a norm rather than an exception. Main feature of the MPW’s policy are: A Road Fund will be the mechanism to finance non toll roads. At this stage there is no legal basis for establishing road user charges that accrue directly to an account for dedicated for cost recovery of new road and maintenance. Under law PP 65 and 61 (2001) vehicle and fuel taxes are channeled directly to local govern ments and are not recorded in national taxes. The taxes are calculated by MOT and imposed by the Ministry of Home Affairs (MOHA). Further more, under the Revenue Law 17 (2003) all revenues accrue as general tax revenues and cannot be earmarked for special purposes such as financing a road program.
Contracts will be introduced for road main tenance. A pilot project on a section of the Java Northern road corridor in Semarang has been proposed. The GOI policy to attract private sector participation includes, increasing transparency in procurement, minimizing economic rent, and abolishing unnecessary fees. The MPW has initiated e-procurement to improve efficiency and equal opportunity of information.
Safety is a major sector issue as more than 36 thousand people were killed in road traffic accident last year. The MPW and the Ministry of Transportation (MOT) have recently initiated a program on road safety audit before construction and during operation.
There is general consensus on a “High-Grade Highway” concept network of high-capacity limited-access highways, including both tolled and un-tolled, and some of which would be implemented as Public-Private Partnership (PPP).
The concept is address the socioeconomic system, not the road or transport systems alone, i.e. including the land use and spatial planning, economic centers, energy considerations, social aspects. The current DGH plan of the freeway network has not been supported by this level of economic analysis. The plan findings would be useful for guiding further development of the high-capacity network and in particular the capacity expansion of the existing primary (national and provincial) road network.
There are many opportunity for domestic and international business community to accelerate the development and maintenance of road infrastructure in Indonesia The non toll road government projects need private sector contractors. Information on various projects is available in

Toll Roads Framework
The toll road master plan is developed by the MPW as a guidance for toll road development. The Directorate General of Highway (DGH) is responsible for the roads until a Ministerial decree is issued designating them as toll roads and potential to be a Private Sector Participation (PSP) project.
Clearly, PSP is a strong policy directive in the RPJM for the transport sector overall. The rationale for this is (a) a need for private finance, and (b) efficiency gains from better technology and management skills imported from the private sector.
The governing legislation for toll roads are Law 38/2004 on road and PP 15/2005 on Toll Roads. The implementing regulation have been developed, among others are Ministerial Regulation 295/PRT/M/2005 on Badan Pengatur Jalan Tol (Toll Road Authority); Ministerial Regulation 392/PRT/M/2005 on Minimum Service Standard of Toll Road; Ministerial Decree 369/M/KPTS/2005 and 280/KPTS/M/2006 on Master Plan of National Road Networks, which is included the in Toll Road Network Master Plan.
Ministerial Regulation 10/PRT/M/2006 on Procedure of Using Business Entity Fund for Acquiring Land. The MPW recognizes that to attract private investor, full cost recovery on investment is a must. Through efficiency and an affordable tariff, full cost recovery might be achieved.
According to the government regulation PP 15/2005, tariff is to be determined by a combination of factors: ability to pay, the savings in vehicle operating costs and travel time from using the toll road, and investment viability. Tariff shall be adjusted biennially, based on the change in regional CPI. The government regulation on toll road allows for unsolicited proposal, as in Perpres 67/ 2005.
According to Law 38/2004, BPJT is the regulator and contracting authority, and its tasks include: To recommend the initial tariff and its subsequent adjustment to the minister; To take over toll roads upon expiry or revocation of the concession; To prepare the feasibility study and tender investment; To assist in the land acquisition process; and To monitor the concessionaire for compliance with the terms and conditions of the concession.
BPJT is funded from the MPW budget and is appointed by the Minister. The chairman of BPJT must be a civil servant, who has been released from his/her official duties. The MPW has proposed to create a Public Service Agency (BLU) to manage land revolving fund for toll road projects and now is waiting for approval by Ministry of Finance.

Source: KKPPI, Sector Review 2006

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