The government should always encourage the use of public transportation and improve the quality of the systems. — The Jakarta Post
THE Commuter Line’s progressive pricing scheme, which is based on distance in the Greater Jakarta area (Jabodetabek), will change to a system that is based on passengers’ national identification numbers (NIK).
This plan, cited in the 2025 draft state budget statement, could become one of the clumsiest policies in recent years.
This misguided policy supposedly stems from the assumption that existing public transportation subsidies are mistargeted.
With the new scheme, the allocation of the subsidy must be selective using NIK profiling. However, the paradigm used when discussing public transportation subsidies should include service orientation and public welfare.
The main goal is to encourage more people to use public transportation. In other words, this subsidy is indeed an incentive for the entire community.
There should be no income-based segregation for beneficiaries of the subsidy. The phrase “mistargeted subsidy” should never be accepted.
Moreover, the trend to use the Commuter Line as a public transportation preference is becoming increasingly popular. The total number of Commuter Line passengers in the past four years has increased steadily from 131 million in 2021 to 242 million in 2022 and 331 million in 2023. By July 2024, the number of passengers reached 191 million, up 15.89% from the same period in 2023.
This trend means that the public has trusted the Commuter Line as a reliable form of public transportation. This positive trend shows momentum that should be continued, not crushed with a sledgehammer.
In comparison, most of the similar public transportation systems in the world such as the tube in London, the subway in New York, the Singapore Mass Rapid Transit system and the Metro Line in Japan do not set fares based on passenger profiles. Thus, establishing the use of the NIK to create different fares will only add significant troubles and complexity.
In theory, subsidies should be used as a form of government intervention to correct market failure and externalities. It is indeed true that subsidies should only be provided to those in need.
However, in the case of the Commuter Line pricing system, the subsidy scheme is not only to serve the public good, but also to amplify the positive externalities of using public transportation, including less air pollution and less traffic congestion.
Therefore, the government should always encourage the use of public transportation and improve the quality of the systems. With that in mind, the government should spend big on public transport subsidies.
Subsidies for public transportation, such as the Commuter Line, buses and MRT, are not that large. The subsidy for the Jabodetabek Commuter Line in 2023 was only around 2.5 trillion rupiah.
Based on the 2024 fiscal year outlook, the total public service obligation (PSO) subsidy is estimated to reach 7.88 trillion rupiah, a slight increase from the 2023 fiscal year PSO subsidy of 5.09 trillion rupiah. Another fact is that even with existing subsidies, our public transportation costs are still relatively high. According to the Jakarta Transportation Council, most Jabodetabek residents allocate 500,000 rupiah to 1,000,000 rupiah per month for public transportation, which is equivalent to 10% to 20% of the minimum wage.
This percentage is much higher than in Singapore, where public transportation costs, at S$120 to S$150 per month, are only around 5% to 7% of the minimum wage of S$2,200.
So, compared with fuel subsidies in Indonesia, this amount is just a drop in the bucket. In 2023, fuel subsidies reached a whopping 502.4 trillion rupiah, or almost 17% of total government expenditure.
Unfortunately, this fantastic subsidy allocation has not yet been effective as a big chunk of it was enjoyed by rich people. Therefore, the more sensible policy option is to cut fuel subsidies rather than to cut PSO subsidies.
By increasing PSO subsidies, the government can encourage people to switch to low-cost public transportation. In the long run, this will have many economic benefits. — The Jakarta Post/ANN
Meidiawan Cesarian Syah is a public policy analyst at Prodeep Institute and Nopriyanto Hady Suhanda is a policy analyst at the Fiscal Policy Agency at the Finance Ministry. The views expressed here are their own.
