Chapter 1 Introduction

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Chapter 1 Introduction Chapter 1 Introduction The Study on Integrated Transport Master Plan for JABOTABEK (Phase I) Final Report Volume IV (Review of Jakarta Outer Ring Road Project) Chapter 1 1. Introduction The terms-of-reference (TOR) for “The Study on Integrated Transport Master Plan for JABOTABEK (Phase I)” call for a review of the Jakarta Outer Ring Road (JORR) project, comprising some 65.1 km toll road located mainly in DKI Jakarta, with the alignment of a minor stretch going through Bekasi.1 The history of the JORR concept goes back to the late 70s, when the Government of Indonesia (GOI) requested the Government of Japan (GOJ) to assist in the preparation of a master plan 2 for the JORR. The master plan study was subsequently followed-up by a planning3 and a preliminary design study4, both of which constituted the basis for further Government planning and JORR implementation. PP No.8/19905 paved the way for private sector participation in the construction and operations of toll roads. In fact, construction and operations of toll roads under BOT schemes commenced in 1994 in accordance with the then prevailing Government policy. Concessions for the JORR toll way 6 were awarded to four private sector companies and Sections S and E2 were almost completely constructed. The sections were opened to traffic in August 1995. The 1997 financial crisis, which resulted in a severe economic and political crisis, brought full realization of the JORR under the then existing BOT-based concessionaire agreements to a practical standstill, due to the actual and/or legal bankruptcy of the concessionaires. Hence, the JORR, with the exception of Sections S and E2, remains uncompleted to date. The JORR project, as a consequence of such unusual circumstances, has to therefore be classified as an “on-going” project, the realization of which has been suspended temporarily, due to unforeseen and unforeseeable circumstances. In fact, the GOI continues to attach high priority to the completion of the JORR, manifested in the fact that the it has requested the GOJ to assist in the JORR’s realization through the provision of a “Special Yen Loan- SYL”. The Final Report (F/R) presents the results of an in-depth review and assessment of the JORR project from a technical, economic, and financial point of view, taking full account of the impacts caused by the special circumstances inhibiting any timely realization of the JORR. The DFR is structured broadly along a standard format for road and/or toll road related feasibility studies. However, particular attention has been paid to: 1. Uncertainties in the political, economic, institutional and legal frameworks, which may constitute impediments to JORR realization 1 ) For a discussion of the JORR system configuration see later in Chapter 2 and Chapter 5. 2 ) Outer Ring Road Master Plan Study, JICA, 1978. 3 ) The Consulting Engineering Services for Jakarta Outer Ring Road Project, Phase I Report; OECF 1988 4 ) The Consulting Engineering Services for Jakarta Outer Ring Road Project, Phase II Report, OECF 1990. A more comprehensive list of relevant urban and public transport studies over the past two decades is attached in Annex 1-1. 5 ) PP stands for “Peraturan Pemerintah” or Government Decree, which has a status below law, but above Presidential or Governor Decrees. 6 ) For details see Chapter 2. 1-1 The Study on Integrated Transport Master Plan for JABOTABEK (Phase I) Final Report Volume IV (Review of Jakarta Outer Ring Road Project) Chapter 1 2. Uncertainties in Indonesia’s short to medium-term economic performance prospects and their likely short, medium to long-term impact on traffic demand on the JORR, and 3. Short to medium constraints on public investment funds (development budget) in general and for road transport related infrastructure development in particular. Chapter 2 presents an in-depth review of JORR project history, the JORR project profile, its current implementation status and the assessment approach adopted in this report. Chapter 3 identifies the problem hierarchy and the major obstacles, which have prevented further realization of the JORR since the 1997 crisis. It elaborates on major economic, financial and institutional factors, which must be taken into full account in interpretating the economic and financial viability results. Chapter 4 briefly introduces major socio-economic and the traffic demand parameter, which were used as the criteria in the viability assessment of the project. Chapter 5 reviews and evaluates JORR engineering aspects and Chapter 6 JORR environmental related issues. The deliberations in Chapters 5 and 6 are guided by the fact that major engineering and environment related issues were already decided and approved by GOI in the past. Chapter 7 assesses the economic and financial viability of the JORR. This chapter pays particular attention to the appropriate up-dating of unit costs, base prices and economic and financial net-benefits, in order to arrive at investment requirements, which are realistic and in line with “best-practice” engineering standards. Chapter 8 elaborates on potential realization scenarios for the JORR taking into full account the results of the economic and financial viability calculations. The GOI has, as is almost always the case with infrastructure projects of JORR’s nature, not unlimited, but only a maximum of four (4) options on how to proceed with the JORR, out of which three (3) are classified as rather unlikely or unrealistic. Other essential factors, which should go into the deliberations on the “pros & cons” of further speedy JORR realization, are related to a suitable long- term toll road policy, and an appropriate legal and institutional set-up, including such essential issues as toll levels and their adjustment mechanisms. The Chapter touches also briefly on issues of practical importance, such as the function(s) of the project implementing entity, the merits and demerits of different construction methods and the merits and demerits of alternative implementation options. Finally, the Chapter identifies the most suitable of these options, and recommends an implementation and time schedule tailored around that option. Essential documents, statistical data and computation tables that are important to support the line of argumentation presented in this DF/R are attached to this document in various annexure. 1-2 Chapter 2 JORR Project History & Implementation Status The Study on Integrated Transport Master Plan for JABOTABEK (Phase I) Final Report Volume IV (Review of Jakarta Outer Ring Road Project) Chapter 2 2. JORR Project History & Implementation Status 2.1 General JORR Background The Indonesian economy grew over the 27-year period from 1970 to 1997 at a compound real growth rate of 6.6 percent. In 1997, the year in which the financial crisis was triggered, Gross Domestic Product (GDP) reached a level of Rupiah 624 trillion1. Per Capita GDP increased from US$ 400 in the seventies to a 1997 pre-crisis level of US$ 1,2852. Accelerated economic growth was accompanied by rapid urbanization and strong motorization processes. Urban population growth averaged 4.6 percent per annum, i.e. 2.9 percentage points above the country’s natural population growth rate. The stock of the motor vehicle fleet at national level grew from a total of some 3.87 million vehicles in 1980 to about 16.54 million in 1997, equivalent to a compound growth rate of 8.92 percent per annum over that period. DKI Jakarta is Indonesia’s administration, education, service, financial and business center, and also her single largest urban agglomeration. DKI Jakarta in combination with Bogor, Tangerang and Bekasi forms the “Jabotabek” region, which in 1995 already had an urbanization level of about 83 percent and a population density per km2 of 3,063 people. It is estimated that about 30 percent of the total national vehicle fleet operates within the Jakarta metropolitan area and its surroundings. The GOI already recognized in the late 1970s the need to address the drastic increases in vehicle motor traffic in the Jabotabek region through the adoption of road infrastructure development measures. The GOI decided to develop the Jakarta-West Java Toll Road system, comprising radial toll roads in the major transportation corridors. The toll way and arterial road system in West Java is depicted in Figure 2.1.1. It was decided by the GOI to develop the corridors extending from Jakarta together with the inner ring road and the Jakarta Outer Ring Road (JORR). The existing toll roads in operations as of October 2000 within the Jakarta West Java Toll-road system, their respective lengths, toll rate system and presently prevailing ownership are summarized in Table 2.1.1. Six toll roads within the toll road system network are directly relevant to the JORR. The Jakarta Intra Urban Toll Roads and the Jakarta Harbor Road, which together constitute the Jakarta Intra Urban Toll-road (JIUT or inner ring road), are located inside the JORR. DKI Jakarta and its outlying satellite cities of Bogor, Tangerang and Bekasi have a toll road network. On the western side of DKI Jakarta, there are the Cengkareng Access Toll Road connecting to Soekarno- Hatta International Airport and the Jakarta-Merak Toll Road connecting DKI Jakarta with Tangerang and Merak. On the south side there is the Jagorawi Toll Road connecting DKI Jakarta with Bogor. On the east side, there is the Cikampek Toll Road connecting DKI Jakarta with Bekasi and Cikampek. These four radial toll roads assume a connector function among the major urban
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