Feb. 7 (Bloomberg) -- Indonesia’s state-owned companies will build a monorail linking Jakarta and surrounding areas as an expanding economy and rising vehicle sales threaten the capital city of 9.6 million people with traffic gridlock.
The 9 trillion-rupiah ($927 million) project will involve companies including PT Adhi Karya, PT Jasa Marga and PT Telekomunikasi Indonesia and be completed in two years after the license is approved next month, State-Owned Enterprises Minister Dahlan Iskan said in Jakarta today. The line will stretch 54 kilometers (33.6 miles) and link Jakarta, Cibubur and Bekasi.
“This project will be very beneficial for all of us as it will save on fuel,” Iskan said. “It will also reduce traffic congestion problems such as the impact of flooding yesterday.”
Jakarta Governor Joko Widodo, who was elected in September, pledged to improve the mass transit system as traffic growth is stretching the city’s road capacities, worsening congestion. Commuters in Jakarta trying to reach home from work were delayed for hours last night after heavy rains caused several areas to be inundated, bringing traffic and trains to a standstill.
Southeast Asia’s biggest economy expanded 6.1 percent in the three months through December, with Jakarta contributing about 17 percent of that growth, government data show. Domestic vehicle sales rose 23 percent to 1.1 million units last year, according to data compiled by PT Astra International, the nation’s biggest car seller.
Once completed, the monorail will carry as many as 191,600 passengers daily, saving about 573,000 liters of fuel each day and amounting to 1.5 trillion rupiah saved each year, according to a statement from Adhi Karya today. The project will be 70 percent financed with bank loans and the rest from internal cash, Iskan said.
The Jakarta government also plans to decide this month on whether to build a mass rapid transit system with Japanese investors contributing 49 percent of funding, from 42 percent previously, Sutanto Soehodho, Jakarta’s deputy governor for trade and transportation, said yesterday. Tender offers will be accepted one week after the decision is made, he said.
Construction of the MRT has been delayed since studies were first conducted in the 1980s, illustrating Indonesia’s difficulty to push forward with projects to build roads, bridges and ports. The country missed its 2012 budget deficit target amid lower-than-expected government spending as land clearances for infrastructure projects had been slow.
The deficit shortfall underscores President Susilo Bambang Yudhoyono’s challenge to sustain one of Asia’s fastest growth rates with spending on roads, ports and bridges. Infrastructure investment has fallen to about 4 percent of gross domestic product from more than 8 percent in 1995 and 1996, Theo Thomas, senior public sector specialist at the World Bank in Indonesia, said Dec. 6.
Jakarta ranked 181 out of 221 cities for personal safety in a survey conducted in 2011 by advisory company Mercer that ranked internal stability, crime levels and law enforcement effectiveness. The city ranked 140 in overall quality of life, below Singapore, Kuala Lumpur, Bangkok and Manila.
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