Transportation subsidies and infrastructure equalisation
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Subsidi transportasi dan pemerataan infrastruktur
16 August 2024
The development of transportation infrastructure through the provision of facilities by the government over a decade of administration has had a significant effect on land, sea, and air connectivity.
Transportation observer from Unika Soegijapranata in Semarang, Djoko Setijowarno, stated that the availability of transportation facilities and infrastructure is not just about monumental physical assets. It requires financial support in the form of subsidies to ensure transportation access for all groups, which is the right of the public.
"Whatever the form of subsidy is, the government must always be present to provide transportation access. Not only for urban communities, but also for those in outermost regions. Because, after all, infrastructure and transportation are built and provided using taxpayers' money," he told Investor Daily.
In other words, the government must be present not only to build roads, airports, terminals, train stations, and ports. When toll roads, for example, are already available, there is a need for public transportation by providing buses or other affordable public transport options for the community.
The government has provided many subsidies for urban transportation in various regions and cities in Indonesia. These are provided by the central government, city and regency governments, or a combination of the three. Similarly, subsidies are given for sea and air transportation through pioneer transport subsidies, sea tolls, or subsidies in the form of a public service obligation (PSO).
Transport subsidies are crucial to maintaining many aspects, including education, economy, even health, which can be facilitated by the availability of connectivity and transportation.
The question is, will it be enough? Certainly, it will not be sufficient considering the vast land, sea, and airspace of Indonesia. The challenges will grow along with the increasing population growth and the migration of people to promising economic hubs.
When regions with large economic hubs attract massive migration from villages to cities, there is a need for more massive distribution to create new economic hubs.
Urban infrastructure observer from Universitas Trisakti, Yayat Supriatna, stated that the government has been promoting equal distribution of economic hubs over the past ten years through infrastructure development that attracts many industrial sectors to invest.
"It has been massive but not very equitable, as infrastructure development to build economic hubs through industries is still concentrated in central regions. In eastern regions, the industries being built are mostly mining industry in Sulawesi. Meanwhile, Kalimantan and Papua have long been centres of mining extraction."
If there is an industry in a region, then through government regulations, the industry must contribute economically to the area where it is located. They may include the processing industry, services and trade, and the tourism sector.
By doing so, economic hubs will not only belong to a few regions but will eventually provide balance, where people will cease to follow urbanisation from villages to cities but can instead reverse the flow from cities to villages. The requirement is the support of basic and supporting infrastructure as well as adequate and available transportation access.
