One of the challenges of urban transport in Indonesia is congestion caused by the high modal share of private vehicles. This condition is also exacerbated by the limited budget allocation for public transport infrastructure and services. Thus, there is an urgent need for funding to support the development of urban public transport infrastructure and services. One of the funding sources comes from the newly ratified Law No. 35 Year 2023 on General Provisions for Regional Taxes and Regional Levies which can provide the opportunity to fund public transport development through tax revenue. Article 25 of Law No. 35 stipulates that the proceeds from motor vehicle tax revenues be allocated to at least 10 percent for road construction and/or maintenance and improvements of public transport modes and facilities.
Realising the potential of Law No. 35 to be an entryway of public transport development funding, the Ministry of Transportation collaborated with Indonesian Policy Analysts Association (AAKI) supported by SUTRI NAMA & INDOBUS held a socialisation seminar to support the acceleration of urban mass transport implementation in Indonesia. The event was held on 30 January 2023 in Jakarta, attended by representatives of the Regional Development Agency and Transportation Agency of SUTRI NAMA & INDOBUS pilot cities from Bandung, Batam, Makassar, Pekanbaru, Semarang, and Surabaya, as well as other Municipal Government across Indonesia, Ministry of National Development Planning, and media who were also present online.
Suharto, the Director of Land Transportation disclosed that on average, the growth of private vehicles in Indonesian cities is 8 to 13 percent compared to the infrastructure development with only 0.1 to 1 percent. He also added that cities in Indonesia only allocated around 0.22 – 3.1 percent of their Regional Budget for the Transportation Agency, an amount that would later be divided into various needs, not only for public transport.
The first session of the event delved into the financial challenges faced by the regional government in developing public transport. Lily Kuntratih from the Ministry of Finance added that regional governments tend to allocate the transport sector budget for road repair and road widening, not for public transport. In the same sentiment, Suprayitno of the Ministry of Home Affairs further elaborated that several regional governments do not see public transport as a basic mandatory service. Thus, increasing budget allocation for public transport becomes imminent for a better public transport service for the community.
Lead Advisor SUTRI NAMA & INDOBUS, Achmad Zacky Ambadar, in turn, presented a list of potential sources of funding that can be utilised by regional governments. The list includes General Allocation Fund (DAU), Revenue Sharing Fund of Tax, Revenue Sharing Fund of Natural Resources, and others. He also reiterated that the list still needs feedback from the regional governments so that it can be an actionable item.
One of the challenges of urban transport in Indonesia is congestion caused by the high modal share of private vehicles. This condition is also exacerbated by the limited budget allocation for public transport infrastructure and services. Thus, there is an urgent need for funding to support the development of urban public transport infrastructure and services. One of the funding sources comes from the newly ratified Law No. 35 Year 2023 on General Provisions for Regional Taxes and Regional Levies which can provide the opportunity to fund public transport development through tax revenue. Article 25 of Law No. 35 stipulates that the proceeds from motor vehicle tax revenues be allocated to at least 10 percent for road construction and/or maintenance and improvements of public transport modes and facilities.
The first session of the event on the challenges faced by the regional government on public transport development with speakers from SUTRI NAMA & INDOBUS, the Ministry of Home Affairs, and the Ministry of Finance who was present online
Realising the potential of Law No. 35 to be an entryway of public transport development funding, the Ministry of Transportation collaborated with Indonesian Policy Analysts Association (AAKI) supported by SUTRI NAMA & INDOBUS held a socialisation seminar to support the acceleration of urban mass transport implementation in Indonesia. The event was held on 30 January 2023 in Jakarta, attended by representatives of the Regional Development Agency and Transportation Agency of SUTRI NAMA & INDOBUS pilot cities from Bandung, Batam, Makassar, Pekanbaru, Semarang, and Surabaya, as well as other Municipal Government across Indonesia, Ministry of National Development Planning, and media who were also present online.
Suharto, the Director of Land Transportation disclosed that on average, the growth of private vehicles in Indonesian cities is 8 to 13 percent compared to the infrastructure development with only 0.1 to 1 percent. He also added that cities in Indonesia only allocated around 0.22 – 3.1 percent of their Regional Budget for the Transportation Agency, an amount that would later be divided into various needs, not only for public transport.
The first session of the event delved into the financial challenges faced by the regional government in developing public transport. Lily Kuntratih from the Ministry of Finance added that regional governments tend to allocate the transport sector budget for road repair and road widening, not for public transport. In the same sentiment, Suprayitno of the Ministry of Home Affairs further elaborated that several regional governments do not see public transport as a basic mandatory service. Thus, increasing budget allocation for public transport becomes imminent for a better public transport service for the community.
Lead Advisor SUTRI NAMA & INDOBUS, Achmad Zacky Ambadar, in turn, presented a list of potential sources of funding that can be utilised by regional governments. The list includes General Allocation Fund (DAU), Revenue Sharing Fund of Tax, Revenue Sharing Fund of Natural Resources, and others. He also reiterated that the list still needs feedback from the regional governments so that it can be an actionable item.
Left to Right: Ministry of Transportation, Ministry of National Development Planning, Asosiasi Analis Kebijakan Indonesia (AAKI), Pekanbaru Transportation Agency, and Ministry of Home Affairs
The event continues to the second session on funding management for the development of sustainable public transport. Yuliarso, the Head of Pekanbaru Transportation Agency, stated that it is important to get the support of the Regional Legislative Council to continue public transport development, thus pushing public transport to become a basic mandatory service. This way of thinking has brought Pekanbaru to successfully ratify a regional law on mass public transport. It laid down that the regional government of Pekanbaru is obliged to provide financing for the mass public transport implementation with a maximum of 5 percent of the Regional Budget.
Horas Panjaitan of the Ministry of Home Affairs also reiterated that to support the implementation of Law No. 35, the motor vehicle tax revenue should be planned and allocated appropriately according to the needs of every regional government. In a similar statement, Iman Sukandar of the Ministry of Transportation stressed the importance of preparing a comprehensive Regional Budget and the Regional Medium-Term Development Plan with an affinity to public transport. Trubus Rahardiansah of AAKI further commented that the development of road infrastructure and mass transport systems should be proportionate, with collaboration with the private sector as one of the means.
It is hoped that this event will ignite more inter-ministerial and inter-regional discussions on public transport financing that will encourage the regional government’s role in improving public transport as a basic mandatory service for the community. Through the progression of the implementation of Law No.35, it is envisioned that the regional governments in Indonesia would be empowered to provide reliable public transport for the community.
Contact Person
Puput Rashati
Key Buzzwords
Sustainable, Transport, Infrastructure, Indonesia, Urban, Mobility, BRT
