Modernising the National Road Network: A Planning Framework to Improve Connectivity and Development

Transcription

1 Modernising the National Road Network: A Planning Framework to Improve Connectivity and Development

2 Modernising the National Road Network: A Planning Framework to Improve Connectivity and Development CONSULTANT November 2012

3 INDONESIA INFRASTRUCTURE INITIATIVE This document has been published by the Indonesia Infrastructure Initiative (IndII), an Australian Government funded project designed to promote economic growth in Indonesia by enhancing the relevance, quality and quantum of infrastructure investment. The views expressed in this report do not necessarily reflect the views of the Australia Indonesia Partnership or the Australian Government. Please direct any comments or questions to the IndII Director, tel. +62 (21) , fax +62 (21) Website: ACKNOWLEDGEMENTS This report has been prepared by William D. Paterson, Senior Policy Adviser, who was engaged under the Indonesia Infrastructure Initiative (IndII), funded by AusAID, as part of the Activity 248. The support provided by Dir. Haris Butabara, Ir. Slamet Muljono and Dedy Gunawan (Planning and Programming Division (Bipran), Directorate General of Highways), David Foster, Philip Sayeg, Davey Kusmayadi and Max Antameng, and the guidance and reviews by David Shelley, John Lee and David Ray are all gratefully acknowledged. The report draws on consultants reports prepared by AECOM Ltd. involving Robin Guess, Chris Burley, Lindsay Shepherd and others. Any errors of fact or interpretation are solely those of the author. William D. Paterson Jakarta, November 2012 IndII 2012 All original intellectual property contained within this document is the property of the Indonesia Infrastructure Initiative (IndII). It can be used freely without attribution by consultants and IndII partners in preparing IndII documents, reports designs and plans; it can also be used freely by other agencies or organisations, provided attribution is given. Every attempt has been made to ensure that referenced documents within this publication have been correctly attributed. However, IndII would value being advised of any corrections required, or advice concerning source documents and/ or updated data. Cover Photo: Expressway network gives high connectivity for freight and passengers. Jakarta Cikampek Toll Road, West Java. Photo by Timur Angin

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5 TABLE OF CONTENTS ACRONYMS... V EXECUTIVE SUMMARY... VII CHAPTER 1: NEED FOR A NEW APPROACH ON NATIONAL ROAD NETWORK DEVELOPMENT FACILITATING INCLUSIVE NATIONAL DEVELOPMENT BY IMPROVED CONNECTIVITY CURRENT GOVERNMENT INITIATIVES AND OPPORTUNITIES SHAPING THE NATIONAL ROAD NETWORK TO SUPPORT ECONOMIC GOALS AND GROWTH INDII STUDY ON ROAD NETWORK PLANNING Approach and Results THIS... 8 CHAPTER 2: CHALLENGE FOR NATIONAL CONNECTIVITY CONTEXT STRATEGIC CHALLENGES Poor Trans-Regional and Metropolitan Travel Connectivity Investment Planning and Programming Processes Can be Improved Narrow Financing Base Increasing Adverse Consequences of Road Use Organisational Capacity Improving Slowly CHAPTER 3: DEVELOPMENTAL NEEDS PLANNING FRAMEWORK FOR ROAD NETWORK DEVELOPMENT Improving Trans-Regional and Intra-island Connectivity Improving Metropolitan Urban Mobility Input to MTEF and RENSTRA IMPROVEMENTS TO PLANNING PROCESSES AND POLICIES ORGANISATIONAL CAPACITY NEEDS Strengthening DGH Planning Strengthening BPJT Feasibility and Delivery Functions Enhancing Supporting Policies and Mechanisms CHAPTER 4: PROPOSED DEVELOPMENT OF THE NATIONAL ROAD NETWORK CURRENT NATIONAL MASTER-PLAN FOR ROAD INFRASTRUCTURE DEVELOPMENT INDII CORRIDOR PLANNING APPROACH ROAD RENEWAL STRATEGY i

6 4.4 FORECASTING FUNDING REQUIREMENTS AND OUTCOMES Forecasting Forward Funding Requirements Forecasting Outcomes or Performance Indicators APPLYING THE PLANNING FRAMEWORK Steps in Applying the Planning Framework CHAPTER 5: BUILDING CAPACITY DGH-BIPRAN Establishing Strategic Priorities and Supporting Changes to Policy and Regulations Planning of Expressway Network and Road Corridors Coordination and Roles of DGH and BPJT BPJT CHAPTER 6: CONCLUSIONS AND RECOMMENDED ACTIONS ANNEXES ANNEXE 1: NATIONAL MASTER PLAN FOR ROAD INFRASTRUCTURE DEVELOPMENT 52 ANNEXE 2: ECONOMIC AND FINANCIAL DATA ON PLANNED EXPRESSWAY DEVELOPMENT IN SUMATERA EASTERN CORRIDOR AND JAVA NORTHERN CORRIDOR ANNEXE 3: GENERAL GUIDANCE ON PREPARATION OF A NATIONAL ROAD MASTER PLAN REFERENCES ii

7 LIST OF TABLES Table 1. Current Low Connectivity in Economic Corridors Table 2: DGH Road Widening Program and Forecast Table 3: Estimates of Forward Funding Requirements for from Planning Analysis Table 4. Current Development in National Arterial Road Corridors of National Masterplan Table 5. Economic and Financial data: Java North Corridor Expressway Table 6. Economic and Financial data: Sumatra East Corridor Expressways LIST OF BOXES Box 1. Current Road Classification Box 2: Summary of Steps for Preparing National Road Master Plan LIST OF FIGURES Figure 1: Expressway Development Implementation Plan Sumatera Eastern Road Corridor... xii Figure 2: Travel Time Outcome Forecasts from Corridor Plan Sumatera Eastern Road Corridor... xii Figure 3: Funding Requirement Forecasts from Corridor Plan - Sumatera Eastern Road Corridor... xiii Figure 4: Forecast of Average Annual Funding Requirements on National Roads xv Figure 5: Competitiveness in Infrastructure Regional Comparison... 1 Figure 6: Priority Economic Corridors Defined in MP3EI Connectivity Strategy... 3 Figure 7: Extension of Toll Road Network Historical, Current and Planned Implementation... 5 Figure 8: Normalised Trip Times Estimated for Six Economic Corridors, iii

8 Figure 9: DGH Arterial Road Widening Program Figure 10: Expressway Development Implementation Plan Sumatera Eastern Road Corridor Figure 11: Capacity Expansion Profile - Staged Development in Parallel Facilities over Long-term 20-year Period - Sumatera Eastern Corridor Figure 12: Travel Time Outcome Forecasts from Corridor Planning Approach Sumatera Eastern Road Corridor Figure 13: Funding Requirement Forecasts from Corridor Plan - Sumatera Easter Road Corridor Figure 14: A Road Renewal Strategy would Follow a Selected Long-term Alignment Option Figure 15: Forecast of Average Annual Funding Requirements on National Roads Figure 16: Example of Forecast Average Travel Time based on National Road Development Plan Figure 17. Expected Distribution of Width Standard on National Arterial Roads after DGH Road Development Program Figure 18. Flowchart for Developing a National Road Master Plan iv

9 ACRONYMS ADB AusAID BAPPENAS BLU BPJT DGH GoI IndII INPRES IRMS KEPPRES KKBP (CMEA) M&E MoF MoT MPW MSOE MTEF MP3EI PERPRES Asian Development Bank Australian Agency for International Development Badan Perencanaan dan Pembangunan Nasional (National Agency for Planning and Development) Badan Layanan Umum (General Service Agency) Badan Pengatur Jalan Tol (Toll Road Regulatory Agency) Directorate General of Highways Government of Indonesia Indonesia Infrastructure Initiative Presidential Instruction Indonesian Road Management System Presidential decree Kementerian Koordinator Bidang Perekonomian (Coordinating Ministry for Economic Affairs) Monitoring and Evaluation Ministry of Finance Ministry of Transportation Ministry of Public Works Ministry of State-Owned Enterprises Medium-Term Expenditure Framework (Kerangka Pengeluaran Jangka Menengah) Masterplan Percepatan dan Perluasan Pembangunan Ekonomi Indonesia (Master Plan for the Acceleration and Expansion of Indonesia s Economic Development) Presidential Regulation v

10 PBB PPP RENSTRA RPJM RPJP RPN VGF Performance-Based Budgeting (System) Public-Private Partnership Rencana Strategis (Strategic Plan) Rencana Pembangunan Jangka Menengah (Medium Term Development Plan) Rencana Pembangunan Jangka Panjang (Long Term Development Plan) Rencana Pembangunan Nasional (National Development Plan) Viability Gap Funding vi

11 EXECUTIVE SUMMARY Indonesia s trade competitiveness and future growth prospects depend on strong action to improve connectivity between economic centres. This report outlines a new framework for modernising the national road network to achieve this. It requires a strategic shift in funding priority from asset preservation to capacity investment to underpin the coming medium-term strategy (RENSTRA), a change in public and private funding modality, and greater accountability for performance against national targets for connectivity and mobility. The Challenges Indonesia ranks below the medians for ASEAN and developing Asia in terms of road infrastructure in the Global Competitiveness Indices. The slow development of expressways and the low capacity of the arterial network in response to rapidly rising traffic demand are the two main reasons why average trip times between major centres are nearly double those of key neighbouring countries: 2-4 hours/100 km compared to hrs/100 km in Malaysia, Thailand and China. The Master Plan for the Acceleration and Expansion of Indonesia s Economic Development (MP3EI 1 ), which focuses on six priority economic corridors 2, provides a framework for prioritising and coordinating multi-sectoral investments in inter-regional and local connectivity. For roads this implies high-capacity, high-speed inter-regional connections between main centres and good local connectivity with feeder markets and production centres. This framework covers two high-productivity corridors (Java and Sumatera), two rapid-growth corridors (Kalimantan and Sulawesi) and the two eastern island groups with sparse development and many marine or missing links (Bali- Nusa Tenggara and Papua-Maluku). Connectivity has not been a priority in recent network planning and current standards show a huge backlog of investment in national road capacity. Corridor travel times are more than a day (26 hours) on Java, more than two days on Sumatera, Sulawesi and Bali-Nusa Tenggara, and over three days on Kalimantan (Pontianak-Samarinda) and in Papua-Maluku. In the north Java and east Sumatera corridors, designated as trunk routes by the Directorate General of Highways (DGH), widening to four-lane highways has raised average travel speeds to 50 km/hr, but on most other arterial roads the average speeds are typically 40 km/hr or less. Where roads are widened, traffic flow is usually impeded by low geometric standards, dense roadside land-use and slowmoving heavy vehicles. 1 Masterplan Percepetan dan Perluasan Pembangunan Ekonomi Indonesia (MP3EI), Coordinating Ministry for Economic Affairs (CMEA) Sumatera (Aceh to Lampung plus three transverse connectors), Java (Serang-Jakarta-Surabaya and Semarang-Jogyakarta-Banyuwangi), Kalimantan (Pontianak-Banjarmasin-Samarinda), Sulawesi (Makassar-Mamuju-Kendari-Palu-Gorontalo-Manado), Bali-Nusa Tenggara, and Papua-Maluku-Merauke. vii

12 In the past two decades, road planning has followed a two-track approach. For the main national arterial and collector road network (38,000 km in total length) the investment priority of the past two strategic plans (RENSTRA , ) has been asset preservation and road condition targets (86 percent stable by 2009, 94 percent stable by 2014). Budget allocations for network development have been of secondary priority and have gone into four-laning on parts of selected trunk routes and minor widening or improvement to intermediate standards on other arterial routes, especially in the current period Even so, trip speeds and safety improvements have been marginal due to low geometric improvement and short-term focus of the planning process. The second track of road planning has relied on private sector finance to construct toll roads under private-sector concessions. Of the nearly 3,000 km of expressways needed, only 700 km are in operation and a further planned 946 km have been delayed by a combination of concession financing failures, land acquisition delays and a slowdown in private-sector interest. DGH has identified future expressways in several main corridors, but the process for determining their feasibility and the capacity of the Toll Road Regulatory Agency (BPJT) in preparing them for market have been hampered by their low financial viability, problems of land acquisition and an inappropriate risk allocation in the concessioning framework. Public spending on national roads could deliver better value for money. Road condition has been deteriorating rapidly and is the subject of public complaints and demands from DGH for increased funding for road preservation. The 2010 IndII study on medium-term expenditure planning, which included an evaluation of the performance of past and current programs, identified key areas where improvements were needed. It found that overall life-cycle costs of road and bridge assets were higher than technically necessary or economically optimal leading to an inefficient use of funds and strain on the road budget. The reasons included: In regard to program delivery: (i) short asset life arising from low design standards and premature deterioration, and issues in project preparation, vehicle overloading, construction industry incentives and project management; (ii) high project costs arising from inefficient procurement, including fragmentation of projects, weak market competition and corruption; and (iii) weak project management with greater priority given to budget execution than staff capability and performance. In regard to network development and capital investment: (i) short-term and costly capacity improvements including marginal widening of existing roads and not addressing longer-term functional requirements of alignment, right-of-way and safety; (ii) unresolved spatial planning and land issues, including land acquisition and access control; and (iii) lack of high-capacity connections between regions and growth centres and a conflict of investment priorities between expressways and other roads in primary corridors. viii

13 Current Opportunities Large increases in the national road budget over recent years have meant that substantial funding is now available for investment in road development. With a sixfold increase in the seven years since 2005 (the budget averages IDR 30 trillion/yr in the current RENSTRA) the funding needs for asset preservation are amply covered and substantial funding could become available for investment in network development. The preparation in 2013 of the RENSTRA provides an opportunity to shift the priority from preservation to network development. The modernisation of government systems, through medium-term expenditure planning, performance budgeting and administrative reform, allows more room for major multi-year programs and for tying spending performance to strategic targets such as connectivity that have impact on economic growth. Expressway development is starting to revive after a long hiatus, a new legislation resolving land acquisition delays has been passed and the framework for private sector investment and Public Private Partnerships (PPPs) is gradually improving. After a decade of renegotiation and restructuring, many stalled toll road projects are now under implementation and other planned projects are under preparation. This is bringing pressure on the capacity of BPJT, the Toll Road Regulatory Agency, to manage the delivery of an accelerated program and makes it timely to consider changes to its functional role. The Law no. 2/2012 on public land acquisition 3 and implementing regulations provides for land acquisition for national roads to be undertaken by the national government instead of local governments, reducing the risk on private investors and accelerating the processes of consultation and compensation. New attention to managing the risk profile in PPPs and to mechanisms such as Viability Gap Funding (VGF) to support projects that have low financial viability is intended to attract greater private sector investment. Identifying a Way Forward Following its 2010 study, IndII supported a study in 2011 on the planning framework and investments needed to modernise the national road network to achieve national connectivity goals. The challenges to improving road connectivity include: The demand for road transport is high and rising rapidly. Over 70 percent of freight and 82 percent of passenger travel are carried by road transport. The road transport fleet doubled from 41 to 80 million vehicles in the five years from 2004 to Within this, motorcycles increased fastest and accounted for 75 percent of all vehicles in With current motorisation still comparatively low (at 70 vehicles per thousand population excluding two-wheelers) and with rising income, the fleet is expected to continue growing at about 10 percent per year. 3 Law no. 2 of 2012 on Acquisition of Land for Development in the Public Interest and Presidential Regulation no. 71 of 2012 on the Implementation of Land Acquisition for Development in the Public Interest ix

14 Road density and capacity is low compared with neighbouring countries, and the expressway network density is considerably lower. The national road network, comprising about 8 percent of the total network length of 477,000 km, is being expanded by about 5 percent/year in road space (lane-km) and extended also by about 5 percent/year in length through the construction of strategic roads in remote areas and reclassification of other roads. The expressway network density is less than a tenth of that in Malaysia, China and Philippines. A third of all vehicle travel is carried by the national road network, but low geometric standards in hilly terrain and encroachment from roadside development cause travel speeds to average only km/hour on the main arterials. Road safety is poor with over 30,000 fatalities/year, twice that of neighbouring Malaysia. Trans-regional and metropolitan connectivity is poor and not monitored. Most vehicle travel is concentrated in urban areas where speeds are generally very low. On inter-urban national roads the average travel speed was about 40 km/hour in 2005, but might be closer to 50 km/hour where there has been widening to four lanes; elsewhere, conditions will have deteriorated. Together with the lack of distance reductions brought by new alignments, these low speeds result in connectivity performance of only percent of that of major neighbours. However these travel time data are not yet regularly surveyed, reported or used in planning targets. Inadequate capacity for heavy mixed traffic slows travel and raises safety risks. NR14 Semarang. Photo by Phillip Jordan The restriction of expressway development to toll roads financed only by the private sector, along with other factors, has limited the delivery of a high-capacity network. Expressway length has increased by less than 10 km/year over the past two decades compared with a need in excess of 100 km/year. The focus on the financing modality rather than functional standards has led to a large backlog in expressway capacity and to distorted and conflicting investments in key economic corridors. There is a need to introduce a formal functional classification for expressways, address a broader range of financing options that facilitate a higher share of public funding, and improve the planning and administration of a national expressway network. Road spending priorities need to be linked more directly with national development goals. The strategic targets of previous RENSTRAs have focused on asset condition but not network function and connectivity. Appropriate performance indicators need to be defined for connectivity and appropriate planning procedures developed to allow achievement of connectivity goals to be demonstrated. x

15 Proposed Framework for Planning Development of the National Road Network A new framework is proposed to produce and update DGH s national master plan for road infrastructure. The framework would provide an outcome-oriented, analytical basis to address the challenges identified for the primary network, feeding directly into the funding requirements for the medium- and long-term plans, and defining outcome targets for connectivity. There are two key elements in the proposed framework. A Long-term Road Corridor Plan is the key tool of the proposed planning framework. It would be used to optimise road infrastructure and investment in each of the main MP3EI economic corridors over a multi-year timeframe. The corridor plan for each corridor would provide: A strategy for developing the optimal road infrastructure arterial road and expressway standards and phasing - needed over a 50-year horizon. This will prioritise investment in both the existing arterial network and the emerging expressway network over the coming 20-year period. A pipeline of investment projects for successive five-year periods, staged to optimise functional benefits and spread funding requirements, and identifying bankable projects for PPP delivery. Evaluation of the infrastructure standards and the connectivity delivered in terms of measurable journey times, which will allow performance targets to be linked to the capital investment plan. A focus on the location and staging of the expressway network that would form the backbone of trans-regional connectivity, with staged implementation. An optimised approach to raising the arterial roads in the corridor to modern highway standards, including realignment and renewal of the road structure, reduced annual costs, reduced social and environmental impacts and greater benefits than the present incremental approach. A Road Renewal Strategy would supplement the Corridor Plans. It would provide criteria for upgrading the arterial and primary collector roads in the national road network to modern geometric and structural standards able to support smooth safe travel and freight with low maintenance. This strategy would improve local connectivity, extend road life, and make more effective use of funds over the long term than the current incremental approach to betterment and widening. With staging by successive five-year periods over 20 years, it would support the preparation of RENSTRA plans and funding estimates. Together the medium-term Corridor Plans and Road Renewal Strategy would complement the asset preservation programs but would take precedence on individual links in order to ensure that funds for asset preservation were not wasted in conflict with scheduled development investments. xi

16 Travel time from Lampung, hours Illustration of Road Corridor Plans Examples of the corridor planning approach were prepared for the Sumatera eastern road corridor and the north Java corridor, using existing study data. The corridor plan generates four types of output: 1. A road development implementation plan showing the long-term schedule over about 25 years and the timing for each road segment of project preparation, land acquisition and construction activities. In the example illustrated in Figure 1, the activities for developing seven expressway segments in the eastern corridor and lateral corridors are shown over five successive 5-year plans from 2012 to A parallel long-term schedule would show the development of the arterial roads in the corridor. Figure 1: Expressway Development Implementation Plan Sumatera Eastern Road Corridor North-South segments Bakauheni-Palembang Pekanbaru-Medan Palembang-Pekanbaru Medan-Aceh East-West connectors Pekanbaru-Padang Palembang-Bengkulu Tebing Tinggi-Sibolga 2. A strip-map of road asset standards in the corridor, depicting the width and length of each section of the road assets (arterial and expressway), colour-coded for the 5-year period in which it would be opened. An example is shown in the main report in Figure 6. In this case, the plan shows the arterial road being improved to a minimum 7 m width standard over the full length of 2,536 km by 2027, with segments near Pekanbaru and Medan widened to four-lanes. The parallel expressway with a four-lane dual carriageway standard would be opened in stages between 2020 and 2030, with a total length of 2,014 km a distance reduction of 20.6 percent Legend Project preparation Land acquisition Construction B Aceh 3. A travel time chart showing the Medan 20 6 estimated travel times between 20 Pekanbaru key nodes along the corridor at 14 Palembang Lampung 11 9 the end of each 5-year period. In the above example, the RENSTRA End-year reduction in travel times varies by segment and period and results in a reduction in travel time from Palembang to Medan from 37 hours to 15 >2029 Figure 2: Travel Time Outcome Forecasts from Corridor Plan Sumatera Eastern Road Corridor Total travel time Lampung to B Aceh, hr xii

17 Funding Sources, IDR trillion Funding requirement, IDR trillion hours by 2024, and for the overall trip from Bandar Lampung to Bandar Aceh from 66 hours to 25 hours by 2030, as shown in Figure Multi-year funding requirements, showing the funding requirements by annual or 5-year periods, disaggregated by budget line. For the above example, the funding required for expressway development, arterial road development, and arterial road preservation is shown in Figure 3(a) and the funding source (public and private based on financial viability) in Figure 3(b) indicating total requirements of IDR 12.5, 61.0, 66.6 and 78.2 trillion in the periods from 2012 to It is notable that, in this example, the financially viable private sector investment amounts to only IDR 8.5 trillion or 4 percent of the IDR 218 trillion required over the 17 year period. Thus the PPP schemes would need to be designed to facilitate substantial portions of public funding through either VGF or a life-cycle/annuity mechanism. Figure 3: Funding Requirement Forecasts from Corridor Plan - Sumatera Eastern Road Corridor Expressway development, E Arterial road development, E Arterial road preservation, E Public sector Private sector Applying the Road Renewal Strategy Even when present plans for expressway development are complete, reaching about 4,000 km by 2029, the expressway network would make up only about ten percent of the national road network and then mainly in the most heavily trafficked corridors in the west. The road renewal strategy would provide the long-term planning framework for progressively upgrading the arterial road network to modern standards and lowering annual costs. Arterial roads would be upgraded to modern standards, section by section, at an appropriate time according to the priorities within the network and region. The existing road would be replaced by new construction or reconstruction, with modern alignment and cross-section. The renewed road would have a long expected life of 20 years or more, lower preservation costs, better safety, and a strong foundation to support future strengthening for growth in traffic loads. This would result in lower overall annualised costs, despite a higher initial cost. xiii

18 Road renewal would provide the opportunity for adopting the appropriate road alignment for the long-term. The alignment would be designed for a year period, including provision for appropriate right-of-way. The appropriate alignment may be in the existing location but in some cases may smooth the curvature to improve flow and safety, or be relocated to take account of spatial plans, geotechnical or environmental risks, or to reduce trip distance. While land acquisition requirements may be substantial, a one-off upfront action may be a suitable trade-off that can avoid the need for future repeated social disruption and higher costs. In budgetary and financial terms, road renewal may cost more than the current incremental widening strategy in terms of initial cost, but would be less than the current spending when annualised over 5-20 years. The current costs of widening and road renewal (to full 7 m width on 12 m foundation) are IDR 2-3 billion/km and IDR 5 billion/km respectively. With future preservation needs reducing to IDR million/km/year, the simple annualised costs including initial development and subsequent preservation amount to IDR million/km/year over 20 years. This is about half the current spending of IDR 700 million/km/year (after excluding nonpavement expenditures). Annual spending of IDR 5-10 trillion/year would fund renewal of 1,000-2,000 km of national road each year and would modernise the arterial road network of 30,000 km in years. Forecasting Funding Requirements and Outcomes The power of the proposed planning framework becomes still more evident through the long-term forecasting of forward funding requirements and outcomes for all national roads. Combining the outputs of the corridor plans and the road renewal plans, the framework is able to generate forecasts of funding requirements for the entire national road network, linked to spending timeframe and to performance in terms of travel time and accessibility. Using the IndII study example for demonstration purposes, and applying the renewal strategy over the 15-year period , the following scenario resulted: (i) expressway construction of 3,700 km (including north Java, east Sumatera and laterals, and 300 km in other corridors); (ii) road renewal applied to 30,300 km of arterial roads beginning with trunk road corridors of 8,700 km; and (iii) reducing the cost of road preservation from IDR 300 million/km/year to IDR 150 million/km/year after road renewal. The forecast national road funding requirements for this scenario are shown in Figure 4 (see also Table 3 in the report): annual public funding requirements would need to rise by 64 percent overall (from the present IDR 32 trillion/year to about IDR 48 trillion/year in the next RENSTRA and to about IDR 56 trillion/year in ) before falling again after These illustrative results probably represent an upper limit and of course could be spread to provide more uniform levels of funding. xiv

19 Annual Funding Requirement, IDR trillion (2011 prices) Figure 4: Forecast of Average Annual Funding Requirements on National Roads Expressway - private funding Expressway - public funding Arterial road development Road preservation Road management Three observations stand out: Most of the increased funding would be needed for expressway development, requiring IDR 360 trillion of funding over 15 years over the period However only a sixth (IDR 60 trillion) of this is likely to attract private sector investment due to the low or marginal financial viability of many packages outside the north Java corridor. Thus it will be imperative to find PPP mechanisms which facilitate substantial public funding contributions in the order of IDR 300 trillion. VGF mechanisms which involve upfront transfers could result in demands for public funding of up to IDR 27 trillion/year in as seen in the figure above. Others, such as annuity or lifecycle mechanisms, which spread the public payments over a long period such as 30 years, would reduce the demand for public funding to about IDR 10 trillion per year as well as producing more reliable outcomes. Development to modernise the arterial road network would require about IDR 19 trillion/year to be completed within the 15 year period, with two-thirds spent on road renewal and one third on bridges and other needs. The funding requirement for asset preservation begins at the existing level but would decline as the arterial road network becomes modernised with more durable performance and lower preservation costs. Lastly, forecast average travel times in the main corridors (hr/100 km) over the 15-year period could be generated and presented either as a national average or disaggregated by region or corridor (e.g., see figure 11 in the main report). Applying the Framework and Building Planning Capacity In this report, guidance is provided on the following nine steps involved in preparing a national road master plan using the framework: identifying the priority economic corridors; defining the road corridors and their priorities; specifying the levels of service; adopting appropriate design standards; defining the national expressway and highway network and supporting access roads; identifying connections between economic corridors; preparing the corridor development plans; developing a 20-year budget and financing plan for each road corridor; and preparing the initial priority projects for implementation. xv

20 Findings and Recommendations In adopting the proposed framework, DGH would have a rigorous basis for evaluating alternative spending strategies and development targets, serving as a basis for preparing medium- and long-term expenditure strategies for national roads. The two elements of the framework individual long-term corridor plans and a road renewal strategy would provide the basis for evaluating the physical outputs, funding requirements and performance outcomes of various scenarios. A preliminary demonstration of the framework has quantified the large backlog in capacity development of the national road network. Public spending on national roads would need to rise by 66 percent from the present IDR 30 trillion/year to an average of IDR 49 trillion/year over the 15-year period remaining in the current long-term plan (RPJN). All the increase would need to be allocated to road development, raising its allocation to about 80 percent of the total. An investment of IDR 638 trillion (in 2011 prices) in road development would be needed to improve connectivity by over 40 percent in terms of average travel times, especially in the priority economic corridors, over the fifteen year period A little over half of this, IDR 360 trillion, would be required to build 3,700 km of expressway connecting the country s main economic corridors, of which about one sixth is likely to attract private sector investment and about IDR 300 trillion is to be provided through public funding mechanisms. The remaining IDR 278 trillion would be invested in the renewal of 25,000 km of arterial roads and improvements to bridges and other national roads. The following actions are recommended for implementing the proposed planning framework: Road network development needs to become the strategic priority for DGH, requiring a proactive and long-term approach, with road preservation taking a secondary role. Revisions will need to be made to some policies, regulations and laws to reflect and support the shift in strategic priority and the modernisation of the national road network. A formal plan for road corridors, incorporating trunk routes and arterial routes, should be defined in relation to the national spatial plan. An expressway network should be defined as an identifiable network within national roads, separate from arterial roads. An initial long-term master plan for national road infrastructure should be prepared to serve as the basis for preparation of the RENSTRA. The preparation of road corridor plans for prioritised corridors should be developed as a DGH procedure, based on the example provided in this report and supporting documents. xvi

21 Outcome indicators - such as road transport demand, travel times and distances for the corridor need formal definition and inclusion in the strategic targets of spending plans. A multi-year schedule (of years) of unconstrained funding requirements should be prepared for each corridor, as well as a multi-year financing plan. A long-term development and expenditure plan for the national road network, together with forecasts of key outcome indicators, should be prepared for a range of funding scenarios. PPP mechanisms which facilitate substantial public funding contributions distributed over extended periods such as annuity or lifecycle delivery mechanisms need to be defined and authorised among the options for delivering VGF and reducing risk (this would be attractive for investors and lead to more reliable outcomes). Managerial and technical capacity in the Planning and Programming Division (Bipran), DGH should be enhanced for national road development planning using this framework. BPJT s managerial and technical capacity should be strengthened to expedite delivery of a high-capacity expressway network. The issues raised by this report are far-reaching and have significant implications for the setting of spending strategies and performance targets for development and expansion of the national road network in the future. Road renewal gives improved travel speed and safety and extended asset life. Coastal Road, Aceh; Photo by Timur Angin xvii

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23 CHAPTER 1: NEED FOR A NEW APPROACH ON NATIONAL ROAD NETWORK DEVELOPMENT CHAPTER 1: NEED FOR A NEW APPROACH ON NATIONAL ROAD NETWORK DEVELOPMENT 1.1 FACILITATING INCLUSIVE NATIONAL DEVELOPMENT BY IMPROVED CONNECTIVITY Indonesia s economic competitiveness depends to a significant degree on adequate infrastructure supporting its connectivity internally between economic centres and externally to its markets. Growing signs that a lag in the provision of infrastructure is impinging on economic growth and competitiveness therefore are a cause for concern. Thus the new national plan for expansion of key economic corridors (MP3EI) and a call for a dramatic shift in the way that development of the national road network is planned and managed are important matters for those responsible for funding and delivering national road infrastructure. Indonesia s connectivity and logistics performance is deteriorating. Indonesia s trade depends not only on efficient linkages between sea ports and airports and its international markets but also on good land-side connectivity to its agricultural regions, resource base and manufacturing centres. The land-side connectivity between port and hinterland in East Asia accounts for over half of the logistics cost for goods bound for international markets, according to ADB et al. (2005). The situation appears to be more critical in Indonesia. The nation s logistic performance deteriorated during the period 2007 to 2011 from an overall rating of 3.01 out of 5 falling to 2.76, according to the World Bank s Logistics Performance Index (World Bank 2010), with poor infrastructure a key reason for the Figure 5: Competitiveness in Infrastructure Regional Comparison (a) Road Infrastructure indicator (GCI 2011) GCI - Road Infrastructure Indicator (b) Access to Expressway Network INDONESIA Developing Asia ASEAN Indonesia China Thailand Malaysia Expressway Density (km/1000 pop.) Singapore (c) Estimated trip times in main corridors Trip time (hr/100 km) Malaysia China Philippines Thailand Indonesia Vietnam Vietnam Indonesia China Thailand Malaysia Sources: (a) Global Competitiveness Indices (2011); (b) DGH data and World Development Indicators 2008 analysed by Shimizu, JICA (2009); (c) IndII study estimates based on sample bus schedule and road corridor data,

24 decline. Indonesia is also falling behind comparable countries in the region such as Malaysia, Thailand, Philippines and Vietnam that have either maintained or improved their performance. Indonesia s competitiveness is also being impacted by the availability and quality of its infrastructure. In ratings of global competitiveness, Indonesia s ratings continue to reflect a lack in the availability and quality of infrastructure, despite recent improvements due to non-infrastructure factors 4, refer to Figure 5. In the region, the nation, with a score of 3.5 out of 10, ranks below the median of 4.3 for ASEAN countries and considerably lower than neighbours such as Thailand and Malaysia, as seen in Figure 5(a). Rapid growth in demand, the low penetration of expressways (10-40 percent of the levels in the region (refer to Figure 5(b)), and rising congestion on the nation s highways contribute to poor logistics performance. Indonesia also has to deal with the additional burden of significant urban congestion, not only in the Jakarta conurbation but also in the other six metropolitan centres, such as Surabaya and Medan, where the key airports, seaports and industrial areas are located. As a result, average travel times in the main corridors, a key factor in transport costs and logistical competitiveness, appear to be significantly longer than in neighbouring countries, as seen in Figure 5(c). In this context, the national master plan for development in key economic corridors is a crucially important initiative. The MP3EI 5, issued by the Coordinating Ministry for Economic Affairs (CMEA) in May 2011, focuses on strengthening connectivity to integrate the growth centres and ports in the nation s key economic corridors, as shown in Figure 6. Improved connectivity is fundamental to catalysing development and to integrate the more remote regions outside Java and Sumatera into the national economy. The six identified economic corridors 6 are: Sumatera Banda Aceh to Bandar Lampung with transverse connections to key centres and to Java Java Serang linking to Jakarta and Surabaya, and Semarang connecting to Jogyakarta and Banyuwangi Kalimantan Pontianak linking to Palangkaraya, Banjarmasin, and Samarinda Sulawesi Makassar linking to Mamuju, Kendari, Palu, Gorontalo, and Manado 4 In 2010 Indonesia was ranked at 44th position (out of 133 countries) by the Global Competitiveness Index (GCI). This was an improvement from 54th position in But in terms of infrastructure performance Indonesia was ranked at 82nd position. The index comprises 12 pillars of which infrastructure is only one. 5 Masterplan Percepatan dan Perluasan Pembangunan Ekonomi Indonesia (MP3EI). 6 Each economic corridor includes smaller sub-corridors where investment in the supporting roads should also be identified and prioritised. In this report the sub-corridors are considered to be part of the road corridor. 2

25 CHAPTER 1: NEED FOR A NEW APPROACH ON NATIONAL ROAD NETWORK DEVELOPMENT Bali linking to Nusa Tenggara Papua Malaku - Merauke linking to Jayapura, Manokwari, Sorong, Sofiti and Ambon Figure 6: Priority Economic Corridors Defined in MP3EI Connectivity Strategy Source: MP3EI, Coordinating Ministry for Economic Affairs (2011) Public expenditure in the road sector could have stronger linkage to national economic development goals, and trans-regional connectivity should become a strategic priority for the DGH. A recent review and study supporting the implementation of a Medium- Term Expenditure Framework (MTEF) and Performance-Based Budgeting (PBB) in the road sector was undertaken in collaboration between DGH and IndII 7. Among a broader set of recommendations, the review found that the existing approach to planning and implementing capacity expansion on the national road network was not delivering a modern high performance network that could meet current and future needs because it lacked a focus on connectivity and logistical performance. It also found that funding allocated to road development could be used more efficiently and effectively with more attention to long-run life-cycle costing. Given the substantial increase in Government funding, which has increased six-fold in the current RENSTRA compared with , higher priority should be given to the development of modern safe highways in the main economic corridors and to support for a trans-regional network of expressways (tolled or untolled) to provide high speed and safe travel with limited access. 7 Expenditure Planning and Performance-based Budgeting in the Directorate-General of Highways. Indonesia Infrastructure Initiative (IndII), March From IDR 5.3 trillion in 2005 to an average of IDR 29.6 trillion in the RENSTRA for DGH. 3

26 1.2 CURRENT GOVERNMENT INITIATIVES AND OPPORTUNITIES Focusing on a new framework for network planning is timely especially in the context of a number of important parallel initiatives, including: Modernisation of the bureaucracy through new organisational structures, performance measurement, accountability and remuneration in a governmentwide program (reformasi birokrasi). New approach to government budgeting through the implementation of the MTEF in MPW, involving rolling three-year expenditure programs, and PBB, which links accountability for achieving performance targets to the relevant agencies and work units 9. Progress in accelerating expressway development. After several years of renegotiation and restructuring, 24 toll road construction projects that have been stalled for about ten years are now proceeding. As a result, about 946 km are under implementation and due to open for operation between 2013 and 2017, according to present plans. Other new toll road projects are also under preparation, so the pace of implementation is set to accelerate, as shown in Figure 7. This implies considerable pressure on capacity to manage the delivery process, to minimise delays and provide adequate financing. Thus it is timely also to consider the functional role of BPJT and the appropriate administration of the expressways, in addition to their financing modality. Land acquisition problems are being overcome. A revolving fund in place since 2007 and the new Law no. 2/ on the acquisition of land in the public interest are addressing the prevailing issues. The law provides for land acquisition for national roads to be the responsibility of the national rather than local government, for disclosure and consultation to be completed within 90 days and for the full process of consultations, business and legal procedures to be completed within a total of 436 days at the latest. While this will pose challenges, it is moving in the right direction. Past PPP projects have experienced major difficulties where the private party was given responsibility for land acquisition but not control of the process, which resulted in implementation delays or stoppages. Guidelines on new models for facilitating private sector participation in toll roads, including PPPs and the provision of public financing, are available but urgently need to be expanded and demonstrated. The new guidelines recognise the importance of the risk profile and financial viability of the facility, and provide a framework for public financial support of those projects which are not viable for private financing alone. However, suitable mechanisms for the provision of the 9 IndII support to DGH has assisted the application of MTEF-PBB in the road sector, giving rise to this and related studies on improving the performance of public expenditures in the road sector. 10 Law no. 2 of 2012 on Acquisition of Land for Development in the Public Interest and Presidential Regulation no. 71 of 2012 on the Implementation of Land Acquisition for Development in the Public Interest 4

27 Total length, km CHAPTER 1: NEED FOR A NEW APPROACH ON NATIONAL ROAD NETWORK DEVELOPMENT public funding contribution need to be established and utilised because timely execution of the planned expressway program will depend on it. Public funding models which place the risk for factors that the private developer cannot control (such as land, resettlement and revenue) on the government, and which provide for regular payments (e.g. quarterly) by the government to the developer based on various criteria, are likely to provide the most stable basis for financing the large program. As this report will show, successful execution of the planned expressway program shown in Figure 7 will require government funding of more than 80 percent of the total cost in order to gain strong private sector participation. Figure 7: Extension of Toll Road Network Historical, Current and Planned Implementation Operational Implementing Planned Source: Data from BPJT as of October 2011, chart by IndII assuming km/year delivery of Planned program. The national road budget has risen steeply, nearly six-fold in the past six years, leading to an expanded program. The spending rose from IDR 5.3 trillion in 2005 to IDR 29.8 trillion (AUD 3.2 billion) in 2011, and the economy is growing. Public funding for development is thus no longer the constraint it used to be, and provided there is strategic direction to the allocation for investment in network development, the connectivity goals can be achievable. However, in allocating almost twice the budget from IDR 16 trillion/year in 2009 to the average of IDR 30 trillion/year for the period , DGH lacked a long-term plan with connectivity targets and a pipeline of development projects. The allocation of the majority of the budget (i.e., 63 percent or IDR 19 trillion/year) to road development was instead based on policies that had only limited strategic focus and were largely short-term in their impact. The strategic elements included, for example, the widening of existing roads in trunk road corridors, and improving strategic roads (non-national roads being reclassified) in remote and underdeveloped areas. However much of the funding was widely dispersed for minor and incremental widening of other national roads to normative width standards without optimising long-term requirements. The policies delivered short-term and marginal improvements rather than long-term substantial improvements to capacity and connectivity. Preparation of the next RENSTRA during provides the opportunity for adjusting the strategic focus of spending on national roads and its linkage to 5

28 connectivity. Preparation of the RENSTRA by DGH begins in January The RENSTRA establishes the medium-term strategic priorities for the sector and the allocation of funding across the five-year period. This is the third period of four within the long-term period and is crucial for converging on the longterm goals for connectivity and capacity development of the road network. 1.3 SHAPING THE NATIONAL ROAD NETWORK TO SUPPORT ECONOMIC GOALS AND GROWTH What type and shape of the national road network is required to support economic goals and growth? A backbone network of modern highways is considered essential to facilitate reliable, safe and fast regional connectivity. This backbone network would comprise limited access expressways where traffic demand is high, and safe high-speed highways in other trunk road corridors where expressways will become justified only in the longer term. To make logistics costs competitive, the network would need to provide safe reliable journey times in the order of hours/100 km (equivalent to average speeds over 60 km/hour up to 100 km/hour), compared with the current levels of hours/100 km. Moreover, the backbone network needs to be supported by a well structured network of arterial and collector roads with modern road standards that support efficient distribution of traffic and that connect the expressway network to manufacturing centres and local markets and land use activities. The spatial aspect of major economic infrastructure is a crucial element of planning that requires a long-term horizon. The location of infrastructure assets such as highways and expressways is essentially permanent and the structures themselves have a long economic life of 25 to 50 years, with appropriate asset management. This spatial element has a significant influence on the environmental and social impacts of physical infrastructure, as well as on the development of economic activity and land use. Thus a long-range vision of 50 years or more is appropriate when planning the layout of the network and the corridor space that is, if the support to spatial development is Ambarawa bypass avoids conflict with urban settlements. Courtesy of DGH. to be constructive and if the disruption to land-use activities is to be minimised. Any decisions on medium-term expenditures (e.g., five years) therefore need to be optimised and prioritised firmly in the context of long-term plans extending over at least 25 years and within a vision that extends to 50 years and beyond. This implies 6

29 CHAPTER 1: NEED FOR A NEW APPROACH ON NATIONAL ROAD NETWORK DEVELOPMENT significant changes to the present approach to the planning of national road development. 1.4 INDII STUDY ON ROAD NETWORK PLANNING Following the review of expenditure budgeting and performance for national roads in DGH (IndII 2010), which highlighted this connectivity and planning issue, IndII supported a more detailed study in to identify practical steps for improving the planning of road network development. The study is documented in a series of reports (IndII 2011). The key objective of the study was to demonstrate how national connectivity and mobility goals, supporting national economic imperatives and improved regional accessibility, could be incorporated in the long-term and medium-term planning processes of DGH Approach and Results The study has approached the development of the national road network in Indonesia from the viewpoints of first, an efficient and effective use of public funds, and second, of defining the connectivity objectives by measurable outcomes - such as travel times and other indicators - that can be used to monitor the achievement of development goals and the effectiveness of public expenditure. The approach in the study was generally analytical and used the findings of previous studies and the considerable knowledge and expertise of Government officers and local and international consultants. The intention was to provide and demonstrate a basis for upgrading the DGH procedures for the strategic planning of capital investment and the preparation of long-term and medium-term expenditure programs that have a clear and measurable linkage to national economic development goals and targets for development of the national road network. The result of the study has been the preparation of a long-term strategic framework to guide the development of national expressways and highways for the next 20 years, set in the context of a 50 year vision 11. The strategic framework would be implemented via practical mechanisms including: 11 In practical terms, this horizon needs to be adjusted to conform to the Government s present long-term plan (RPJP) which is a 20-year plan running from 2005 to 2024, and the subsequent long-term period

30 Comprehensive plans on a corridor basis in order to develop a pipeline of projects to guide long term forecasts of investment needs. Multi-year expenditure planning based on the forecasts of investment needs. Targeted support on road network development to DGH and Badan Pengatur Jalan Tol (BPJT, the Toll Road Regulatory Agency) to plan and implement this framework for expressways and arterial roads, and resulting in improved planning and programming in the short term. Development of an Action Plan of key initiatives to be implemented in the next five years with indicative directions beyond that (up to 10 years). 1.5 THIS This report looks first in more detail at the challenges facing improvements to national connectivity and at the issues relating to improving the planning of road development, including the funding, programming and design of road network capacity improvements. The report then presents (in Chapter 4:) the proposed new framework for planning the development of the national arterial road network, including the expressway network, to meet the connectivity goals and forecast economic growth in traffic demand. This leads into a proposed program of support for DGH and BPJT to build capacity for meeting this accelerated demand for network development. In particular, it includes the basis for preparing a long-term financing strategy to support the rapid development of the network, drawing on both expanded public funds and private sector investment. It demonstrates the forecasting of funding requirements, including private sector resources, and how these link to the outcomes and performance expected for the network. 8

31 CHAPTER 2: CHALLENGE FOR NATIONAL CONNECTIVITY CHAPTER 2: CHALLENGE FOR NATIONAL CONNECTIVITY 2.1 CONTEXT At present road transport dominates Indonesia s land transport modes by carrying over 70 percent of freight tonne-km and 82 percent of passenger-km (World Bank 2011). The remaining passenger and freight task is accounted for by air services, interisland shipping and inland waterway transport and rail. Air travel has a significant role for enabling essential access to remote parts of the country. Water transport for interisland freight and passenger movement is critical for national integration. Each of the major islands has at least one significant port. Inland waterways are limited to certain areas of Eastern Sumatera and Kalimantan (World Bank 2011). Four unconnected railway networks totalling 5,040 km of mainly single track (1,067 mm gauge) in Java and Sumatera primarily transport bulk commodities and longdistance passenger traffic. The Java rail network of 3,070 km contributes about 75 percent of the Indonesian Railways revenues, with passenger transport accounting for 83 percent of the total (World Bank 2011). Rail s potential is constrained by inadequate infrastructure and limited markets in which it is competitive. Dedicated rail will be needed for key resource developments but would be developed as dictated by commercial considerations. While rail is likely to be operating below its potential, efficient roads and road transport services will be critical to improving national connectivity. Demand for road transport is high and is likely to continue to rise rapidly. The demand for road transport is rising rapidly, with the vehicle fleet doubling from 41 to 81 million vehicles during the five year period 2004 to Within this there has been sharp growth in motorcycle usage, with the motorcycle fleet growing by 130 percent during 2004 to 2009 to reach 60 million which is more than twice the growth rate (56 percent) and three times the volume (21 million) of the balance of the motor vehicle fleet (IndII, 2010). With current motorisation still low at only 70 vehicles 12 per 1,000 persons, and an average per capita income of around USD 2,700, growth in the vehicle fleet and road travel can be expected to continue at a pace in the vicinity of 10 percent per year (IndII, 2010). The total length of the Indonesian road system was 372,000 kilometres in 2009 and consisted of: 35,000 km of national roads; 688 km of toll roads; 49,000 km of provincial roads; 264,000 km of district roads; and 23,000 km of urban roads (IndII, 2010). Box 1: Current Road Classification defines the current road classification. Through the public expenditure program , the capacity of the national road network is being expanded by about 4,000 lane-km/year from a level of 85,000 lane-km at the end of 2009, equivalent to an average of nearly 5 percent/year. Moreover, the national road vehicles per capita if two wheelers are included. 9

32 network is being extended at a rate of about 1,600 km/year, through the addition of strategic roads and reclassification of sub-national roads. Travel on the national road network has been constrained by terrain and land use. About one third of total road vehicle travel is made on the national road network, which DGH estimates to be growing by about 6 percent per year with a 2010 level of about 80 billion vehicles-km per year. Road travel speeds however remain slow due to generally low-speed road geometry standards that are characteristic of the generally hilly terrain, and to generally high levels of side friction arising from extensive ribbon development and weak controls on land use (IndII, 2010). Road surface standards are fairly high on national arterial roads, with 90 percent paved and about 86 percent reported to be in good or fair condition. However the rate of deterioration is high, especially in the heavily trafficked corridors. Box 1. Current Road Classification Article 7 of Law no. 38/2004 defines three basic road categories: (i) public roads; (ii) special roads (individual/private/dedicated roads); and (iii) toll roads. Public roads are divided into Primary and Secondary roads. Primary roads are further classified by function into: arterials and collectors (with sub-categories K1, K2, K3 which are primarily administrative), and primary local (District roads). Secondary roads are local and neighbourhood roads in urban areas. Primary roads are defined as linking big cities, medium cities and towns. A primary arterial road connects PKNs (National Activity Centre) to each other, connects between PKN and PKW (Regional Activity Centres), and links to airports and Airport Distribution Centres. The primary collector road network (K1), also part of the national road network, connects PKW and PKL (Local Activity Centres). The arterial and collector (K1) roads are the responsibilities of national government agencies. The K2 and K3 classified roads are generally the responsibility of provincial governments, except when they are identified in the national strategic plan (5 year RENSTRA) as strategic roads in which case they are eligible for national government funding. Thus some K2 and K3 classified roads might be the responsibility of both the national and provincial governments. Some provinces have defined some K2 and K3 collectors as strategic roads, even though the roads are not included in the RENSTRA, and by ministerial decree those receive national funding only after national needs have been fully met. Source: IndII (2011), Deliverable 2: Current State of Network Planning. Road safety risks are high, especially for motorcycles. Along with increasing motorisation, Indonesia is experiencing a serious road safety problem with over 30,000 fatalities occurring annually, and an estimated level of injury above 1,000,000 annually (Eric Howard and Associates, 2008) 13. Fatality rates per 10,000 vehicles in 2004 were eight times higher in Indonesia than in Australia, and more than twice the level in Malaysia, an ASEAN good practice road safety neighbour. A high percent of the fatalities involve motorcycles, followed by pedestrians. Continued sharp growth in 13 Updated by official statistics and analysis of Indonesian National Police Traffic Corps crash data, which show 31,234 fatalities in

33 CHAPTER 2: CHALLENGE FOR NATIONAL CONNECTIVITY motorcycle ownership rates is likely to increase fatality and injury rates further (Eric Howard and Associates, 2008). Access to roads and transport services in remote areas warrants investment on social grounds. It is estimated that 17 million people living in remote communities remain without direct access to the road network or all-weather roads (World Bank 2011). Currently, over 40 percent of the nation s population lives outside of Java and steady investment to improve inter-island shipping services and sea ports, air services and airports, and the road systems in remote regions is needed. Lower traffic demand in remote areas and outer islands will require investments to be made more on social than economic grounds. 2.2 STRATEGIC CHALLENGES Several key strategic challenges have been identified based on the analysis of IndII (2010) and IndII (2011). These are discussed below Poor Trans-Regional and Metropolitan Travel Connectivity The nation s economy is being constrained by the inadequate quality and reliability of land transport infrastructure and services. Most long distance travel is performed on national roads that are barely able to cope with the current traffic levels. Inter-regional travel times are generally slow, and due to congestion, journey times often vary significantly. Current vehicular travel is concentrated in the six metropolitan cities and smaller regional cities. These cities are growing at population rates of two to three percent per annum and vehicle registration rates of over six percent per annum. With a backlog of road and public transport infrastructure and services, urban development is sprawling, reducing city productivity and spilling over to neighbouring sub-regions. Traffic use is concentrated on national roads due to the absence of supporting local road hierarchies and this in turn gives rise to excessive congestion on the highways in the vicinity of towns and cities. Travel speeds on national arterial roads are slow, both across regions and within cities. In 2005 the average travel speed on the national arterial road network was estimated to be about 40 km/hour 14. The average travel speed on urban arterial roads was significantly lower at about 30 km/hour in metropolitan cities and 35 km/hour in other cities. In Jakarta in recent years the average peak hour travel speed on its arterial road network was estimated to be around 23 km/hour (IndII, 2011) but can be substantially lower in some segments. 14 DGH estimates have generally been based on theoretical calculations. 11

34 Surging economic activity and mixed traffic are straining infrastructure capacity and have adverse impacts in urban areas. NH14 Semarang. Photos by Phillip Jordan Current estimates of connectivity in the main economic corridors indicate trip times ranging from 2.5 to 3.2 hours/100 km for road travel and rising to 5.0 hours/100 km or more in corridors involving nautical links in the eastern regions, as shown in Figure 8. These can be compared with the service levels of a modern highway network in the order of 1 to 1.5 hours/100 km for road travel. Field data on actual travel times are not readily available. In the absence of standardised travel time surveys, this evidence on corridor performance has been developed from bus travel data and other estimates of end-to-end travel times in the nation s economic corridors, as Figure 8: Normalised Trip Times Estimated for Six Economic Corridors, 2012 Trans-Sumatra Trans-Java Kalimantan Sulawesi Bali-NTT Papua-Maluku Trip time hr/100 km* Road Trip Time Nautical Add-on Target service levels 1-2 hr/100 km Source: Study estimates based on Table 1 data and point-point corridor distances. shown in Table 1. Where appropriate, the corridor trip data incorporates travel on existing expressway segments. The data show that in the primary trunk road corridors where there has been substantial widening, such as north Java and east Sumatera, average travel speeds of up to 50 km/hour are being achieved. In other arterial road corridors, the average travel speeds are in the order of 40 km/hour. Elsewhere where recent field data are not available, an average travel speed of 40 km/hour has been assumed Systematic travel surveys are planned in 2013 to determine actual trip times in the economic corridors and to establish a baseline for planning and monitoring in the future. 12

35 CHAPTER 2: CHALLENGE FOR NATIONAL CONNECTIVITY Table 1. Current Low Connectivity in Economic Corridors Corridor Key Centres Economic Activities Corridor Road Travel Times and Distances Sumatera Bandah Aceh, Medan, Pekanbaru, Jambi, Palembang, Tanjungpinang and others Palm Oil, Rubber, Coal, Shipping, Steel Banda Aceh-Medan- Pekanbaru-Jambi-Palembang- Bandar Lampung 54 hour (2,741 km) Java Jakarta, Bandung, Semarang, Yogyakarta, Surabaya Food and Beverage, Textiles, Transportation Equipment, Shipping, ICT Merak-Jakarta-Cirebon- Semarang-Surabaya- Ketapang 26 hour (1,341 km) Kalimantan Pontianak, Palangkaraya, Banjarmasin, Samarinda Oil and Gas, Coal, Pam Oil, Steel, Bauxite, Timber Pontianak-Palangkaraya- Banjarmasin-Samarinda 83 hour (3,316 km) Sulawesi Makassar, Kendari, Mamuju, Palu, Gorontalo, Manado Agriculture, Minerals, Oil and Gas, Fishing Makassar-Palu-Gorontalo- Manado 51 hour (2,028 km) Bali Nusa Tenggara Denpasar, Lombok, Kupang, Mataram Tourism, Fishing, Animal Husbandry Bali-Lombok-Sumbawa- Flores-Timor 44 hour (1,744 km) (road portion only) Papua - Kepulauan Maluku Sofifi, Ambon, Sorong, Manokwari, Timika, Jayapura, Merauke Agriculture, Minerals, Oil and Gas, Fishing Sorong-Manokwari 15 hour (607 km); Manokwari- Jayapura-Merauke not connected; Sofifi-Ambon- Sorong ferry travel. Sources: Coordinating Ministry for Economic Affairs (2011) for left hand three columns. Corridor road distances from DGH Travel times for Java north and Sumatera east corridors are derived from daily bus services and equate to about 50 km/hour average speed, other corridor times are estimated based on 40 km/hour average speed; ferry travel between islands is excluded (IndII October 2011). This means that end-to-end travel times by road in most corridors are around two to three days whereas in comparable nations in South East Asia, such as Thailand and Malaysia where average highway speeds are around 80 to 90 km/hour, key corridors can be traversed by car in less than one day. In eastern Indonesia, as this concept is developed further, corridor travel times will need to include ferry travel between islands (i.e., based on a nautical highway corridor), and in Papua some economic centres are not yet connected by national road. The expressway function is defined by a toll roads classification and not focused on the economics and functions of connectivity and the efficient movement of goods and people. Although expressways, with limited access and high capacity, were identified 13

36 as a critical requirement to improve connectivity by IndII (2010), they are not defined as a separate road category under Article 7 of Law no. 38/2004 or even as a class of Public Road. Instead the road law defines toll roads as one of the three categories of road based on their revenue-raising character. Toll roads have the same functional characteristics as expressways and are classified as national roads; however the focus of their definition and control is on the revenue aspect: they are generally privately financed, and their administration falls under a separate agency, BPJT. This distinction has proved to be an impediment to the formulation of coherent planning and management of a high-standard, limited access expressway network that could serve as the backbone of regional connectivity. While it is likely that most of an expressway network would be tolled, the value of a functional classification is paramount for spatial and transport planning, and is essential for identifying the substantial differences in performance and impact on connectivity that result from various functional standards. The financing arrangements should be handled separately and should not dictate the functional classification. This focus on the toll road modality has also led to a fragmented development of the expressway function in the network, which has been based on the financial viability of individual segments for private sector financing. While a long-range toll road plan existed for the key corridors of Java and Sumatera, implementation difficulties relating to land acquisition, risk allocation and the viability of concessionaires resulted in major delays over the past decade which are only now being overcome. These delays created congested conditions on critical segments of the national network and led to alternative interventions by DGH to widen existing arterial roads on their existing alignment in the trunk road corridors. These incremental improvements were implemented with high costs of land acquisition and construction, but relatively low returns in the benefits of road capacity and improved travel speeds, for example at the margin from 40 to only 50 km/hour instead of much higher average travel speeds. In conclusion, there has been an inadequate focus in the recent road development programs on inter-regional connectivity, on the urgent need for the creation of a backbone network of expressways, and on the need for improving both traffic capacity and travel times on the arterial road corridors Investment Planning and Programming Processes Can be Improved IndII (2010) found that the existing planning process for road network development had considerable room for improvement in its effectiveness and efficiency. The linkages between national long-term planning goals such as connectivity and sectorlevel budget priorities for road development were not very evident and lacked relevant measures of performance and accountability. Current processes that shape the expenditure programs lack long-term effectiveness in addressing traffic demand and tend to be normative and to result in inefficient use of funds. Moreover, translating these programs into projects has been affected by constraints on technical standards, budgeting and implementation capacity. 14

37 CHAPTER 2: CHALLENGE FOR NATIONAL CONNECTIVITY The linkages between Long-term Development Goals and Expenditure Planning have not been fully effective, lacking a focus on connectivity and the functional performance of the road network. Although the long-term plans (RPJP) and spatial plans have identified key centres of economic growth over the past decade or more, these do not appear to have been translated into specific road development and capital investment plans in the medium-term plans (RENSTRA) or the annual expenditure plans. Although some planning of arterial road development was made in DGH, the studies tended to be fragmented and did not result in the publication of comprehensive plans for the development of links in the ASEAN highway network or for a national expressway network. As a result, the development of both these key drivers of connectivity has suffered from a lack of priority and visibility in recent five year plans. For example, the five year RENSTRA plans have not cited performance objectives in terms of improved connectivity and travel times for the ASEAN highway corridors, or indeed for other trunk road corridors. The existing incremental and normative approach to planning capacity expansion does not fully address long-term traffic demand and functional performance, and leads to an inefficient use of capital investment funds. The current paradigm supports incremental widening (usually in narrow strips less than 0.6 m wide on each side) where roads are of substandard width or congested. However, with weak strength and without effective means for improving alignment or of limiting access, the benefits are rapidly overtaken by attracted roadside activity, growth in traffic and surface damage. Furthermore, the cost of incremental widening is high. At IDR 2 to 3 billion (AUD 250,000 to AUD 350,000) per kilometre, the cost is only 30 percent less than the cost of full reconstruction which confers substantially higher benefits of longer life and lower annualised costs. The development focus in the past and current DGH RENSTRAs has been on this incremental approach - improving roads to defined width standards (road width and number of lanes), based on administrative classification and corridor status. However, by aiming for broad coverage within a short period, the funds have been widely dispersed and used inefficiently, delivering a marginal improvement that requires repeated investment within a short timeframe. A long-term approach - which is more effective in terms of development and connectivity and more efficient in terms of use of investment funds would take account of the long-term traffic demand, the speed required for connectivity and the safety environment, and also a wider range of options including improvement of the road alignment, sight lines and shoulders - as part of a comprehensive design to improve capacity and safety. The expanding availability of public funding provides an opportunity for improving connectivity and modernising the national road network, provided that capital investment is given high priority in medium-term expenditure plans and that planning processes are improved. When the budget envelope was tripled from the previous RENSTRA to the current one, the investment in road development received a smaller increase in allocation than the spending on road preservation. Lacking a strategy of investing in road renewal which would reduce annualised expenditure on road preservation at the same time as increasing travel benefits the additional 15

38 funding was instead allocated to higher (and inefficient) spending on maintenance and rehabilitation with only marginal benefits in vehicle travel costs. The strategic planning processes in DGH now need to be modified to improve the prioritisation of investments between road development and road preservation. The current planning tool, the Indonesian Road Management System (IRMS) for example, needs upgrading in data and capability for assessing the benefits of improvements to the network and traffic flow and of extended asset life. Multi-year budgeting under MTEF gives the opportunity of supporting a substantial investment program of progressive upgrading and renewal of the road system. However this needs to be integrated with related savings in road preservation so as to produce a funding strategy which is optimal in the long-term instead of short-term. Such challenges call for a change in the way of doing business in the planning of road development and prioritisation of road expenditures. A strategic framework would provide a long-term focus for investment in road infrastructure and balance the demands of economic and social development with the constraints of land use and social impacts. The planning process would generate design standards that are longer lasting and achieve lower annualised investment costs in the long-term, requiring better data and better analytical tools. These would enable a stronger and more transparent linkage between strategic development goals, expenditure plans and outcomes and thereby would gain stronger political and community support Narrow Financing Base The fiscal capacity of government for funding public infrastructure in general is limited. For the period, Bappenas estimates that the budget needs for infrastructure development are about IDR 1,786 trillion (of which about IDR 339 trillion is for roads), compared with a fiscal capacity of central Government estimated to be around IDR 1,010* trillion. If the infrastructure needs are to be met, the gap of IDR 419* trillion would need to be funded from other sources. Better mobilising of private sector finance, which has been slower than expected over the past ten years, is being addressed through new forms of PPP which better address the allocation of risk and the implementation delays. But it also comes at a higher cost to the consumer. Broadening and deepening of available domestic revenue sources should also be considered. Annuity or life-cycle models which channel public funding to public-private projects spread the supply of funding, ease the raising of private sector investment, reduce the risks and thus the costs, and ultimately will greatly accelerate delivery of the program. Reduction of the large fuel subsidy, which in 2011 accounted for nearly 20 percent of government expenditure, continues to be a highly progressive and desirable option but needs careful handling of the significant social and political implications. 16

39 CHAPTER 2: CHALLENGE FOR NATIONAL CONNECTIVITY Increasing Adverse Consequences of Road Use Inadequate regulation and enforcement of freight vehicle traffic, and inadequate safety control of the road environment, are compounding the adverse impacts of traffic growth. While the shipment of goods by road has proved to be more efficient for producers than alternative modes such as rail or coastal shipping, the high growth in heavy truck movement has been accompanied by excessive overloading, high safety risks and excessive emissions which are imposing higher costs on the road owner as well as higher external costs on society. Inadequate regulation of heavy vehicle Over-sized loads and weak shoulders shorten asset life and pose safety hazards. Jambi bypass. Photo by Phillip Jordan dimensions, such as length and axle configuration, and weak enforcement of load limits are resulting in an extremely high incidence of truck overloading which reaches about 100 percent in the Java northern corridor and 40 percent in Sumatera of all heavy vehicles. This accelerates the deterioration of the road condition, incurs high demand for road rehabilitation and leads to an inefficiently high annualised expenditure requirement to maintain the road in serviceable condition (IndII 2010). The external social costs are also substantial. The truck fleet is aged and a high emitter of the fine particulates and noxious gases which are harmful to human health. Moreover, overloaded and old or modified vehicles tend to be under-powered for their task which increases the risk of breakdowns and causes speed fluctuations that both increase the risk of accidents. Significant traffic conflicts occur in the vicinity of towns and villages where national roads are often used for pedestrian movement and local traffic, as well as long-distance traffic. Inadequate planning control over strip development and roadside activities, and inadequate separation of local and through traffic, create an unsafe and congested road environment which increases both traffic delays and safety risks. Renewal needs to reduce hazards and manage roadside activities, West Corridor, Sulawesi. Courtesy of DGH 17

40 2.2.5 Organisational Capacity Improving Slowly Within the Ministry of Public Works, the planning of all national highways including expressways, arterials and collectors is the responsibility of DGH, while the delivery and oversight of toll roads is the responsibility of BPJT. Since an internal reorganisation of DGH in early 2011, the planning of expressways has moved from its previous home under urban road development to Bipran, where it is now part of the division responsible for planning national highways and road programs. However the capacity for high-level network planning is low, both within DGH and the local private sector, especially in capability for conducting network analysis and comprehensive financial analysis for examining options for expressway development. Thus there is a need for substantial strengthening in the quality of long-term network planning for expressways and arterial highways. There is also need for a substantial upgrade of the primary national road database and planning tool - the Indonesian Road Management System (IRMS) which still lacks the geometric and image data needed for a proper analysis of the range of improvements to curvature, sight distance and alignment 16 that must be considered for long-term investments in road capacity. Field measurements of trip time are also missing, so the reporting of connectivity-related performance indicators is not possible or reliable. BPJT also has low staffing levels, especially with the technical qualifications needed for preparing and evaluating packages with significant financial engineering aspects. More qualified staff members are needed for the larger task 17 that is emerging and secondments have been made over the past two years to assist with the acceleration in the release of expressway packages for execution. Land acquisition is a key constraint to expressway development in particular and to geometric improvements on national roads as well. While the new Law no. 2/2012 and Perpres 71/2012 regulations bring crucial improvements, the administration and execution of land acquisition remains a complex and demanding task. The capacity of the BPJT unit which has Badan Layanan Umum or General Service Agency (BLU) status and the capacity of DGH to handle a greatly increased workload with greater efficiency urgently need improvement. One possibility that has been mooted is for a single unit, such as the BLU unit in BPJT, to be expanded to handle all land acquisition. While the overall capacity of DGH and BPJT is improving gradually, the institutions need more strategic focus and a more substantial gearing up of resources to be able to handle the huge task ahead. Significant improvements are needed in the organisation and capability of the planning units, as well as upgrading of staff qualifications and planning tools. 16 Full geometric and roadway imaging data, as well as basic road condition and traffic data, were included in IRMS from about 2001 when automated road surveys were conducted under a country-wide contract intended to be updated at 5-yearly intervals. However, these data were not transferred when the location referencing system was changed in For example, to support progress with implementation of the stalled toll road concessions. 18

41 CHAPTER 3: DEVELOPMENTAL NEEDS CHAPTER 3: DEVELOPMENTAL NEEDS The developmental needs to address these strategic challenges for planning road network development fall into three areas: A planning framework for determining the substantial improvements and investments in national road infrastructure needed over a medium to long-term period to support economic growth and social development in line with national development goals. The planning policies and processes needed to support production of the national road network development plan. The organisational capacity to undertake the improved planning processes and produce the plans. These developmental needs are explained in more detail below. 3.1 PLANNING FRAMEWORK FOR ROAD NETWORK DEVELOPMENT Improving Trans-Regional and Intra-island Connectivity Improving connectivity to support the economic and social development goals and to meet the projected rising inter-urban demand will require a high-capacity transregional road network of expressways the backbone network referred to in section 1.3 as well as improvements to the supporting arterial and collector road network. Planning this major network development and investment program requires a framework which will guide decisions on the infrastructure and the capital expenditure needed to achieve the desired connectivity and to set appropriate targets in the national development plans. The framework would need to define the hierarchical road functions for the very long term (for example 50 years) to provide certainty to planners, investors and the community. The framework should also define key principles, policies, standards and methodologies that can be applied nation-wide. Through a focus on function the appropriate standard of road development for each region in each economic corridor would match the local needs and growth path and would align with regional development policy. The planning framework will need to address the following issues raised by the strategic challenges: In building a backbone network how should investment in new expressways be planned in relation to improvement of the arterial road network, especially in the trunk road and key economic corridors? The plan should optimise the road 19

42 capacity required, while avoiding duplication of investment or conflict of function. The location, footprint and linkages of the expressways and arterial roads will impact accessibility, land use and development cost. The plan should optimise the use of investment capital, delivering the connectivity outcome with the least cost to the road user and taxpayer. A substantial network of limited access expressways will be needed to achieve a high standard of connectivity in high traffic corridors. Whether this network is contiguous node to node or intermittent, there is a need to have expressway defined in the Road Law as a class of public primary road alongside arterial and collector, based on functional standard. This change will shift the focus to the functional performance required of the facility instead of a focus on the private sector involvement and financing. How should a long timeframe of up to 50 years, appropriate for providing major road infrastructure, be incorporated into the planning process? Given the complex and uncertain factors involved in long-term forecasting, the framework needs to address the implications for designating and reserving land in future corridors, public consultation, and linkage to economic development plans. How can the framework be used to establish the linkage between economic development goals, connectivity targets and the investment plan? If the national development goals are used to drive the program by setting targets for achieving connectivity and a continuous network, this will have a significant effect on the economic and financial feasibility of projects and the demand for investment capital. The planning framework should help identify the segments of the network and the amount of investment that is viable and attractive for the private sector, within the overall resource envelopes associated with different development options and for a range of public-private financing models. In less developed areas, the framework should guide the strategic decision on when development in a road corridor should improve on an existing alignment or when it is appropriate to supplement or replace that with the development of a facility in a new location and alignment that is optimal for the long-term. Where traffic demand is relatively low the development of arterial roads to modern highway standards is likely to satisfy demand and connectivity for at least the medium-term. In some cases, a staging strategy that locates the modern highway on a separate alignment designated for a future expressway in a long-term plan may be appropriate. Policy guidance is also needed on several additional related issues. For example, should land be acquired for the ultimate cross section? Should all expressways be tolled? New and appropriate technical standards may be needed - such as design axle loading - if heavy truck overloading is expected to be a continuing problem. Since official policy is for the provision of a non-tolled alternative to toll roads, standards may also include guidance on what constitutes an acceptable free alternative route by taking into account the local land use arrangement, travel patterns and travel times. 20

43 CHAPTER 3: DEVELOPMENTAL NEEDS The framework should also address the next level of road (for example collector whether national or local) feeding the backbone network, where their performance (or shortcomings) would have an impact on the efficient performance of either the backbone (trunk or expressway) network or the arterial network. Alignments should be selected to minimise social and environmental impacts in the long term: (a) Nagreg, West Java; (b) Western Corridor, Sulawesi. Courtesy of DGH Improving Metropolitan Urban Mobility There is a strong demand for high mobility in metropolitan areas to accommodate both significant urban freight and passenger commuter travel. While transport planning priorities in urban areas include the development of rapid transit networks and public transport services to provide an alternative to car travel, the demand for urban expressways to provide road connectivity within the city and to the external backbone network is still high and an indispensable and essential complement to other transport solutions. Thus the planning of urban road and expressway infrastructure needs to be part of an integrated and comprehensive plan for metropolitan transport, development and land use. Moreover, urban area road networks need their own hierarchical system to ensure that they support urban traffic movements without undue dependence or impact on the national arterial road function. 21

44 3.1.3 Input to MTEF and RENSTRA For budget planning, the framework should help to identify a pipeline of specific projects for the rolling three to five year medium-term program that will support the annual budget and program preparation, and be tied to key outcome performance targets such as total vehicle travel or trip times. The framework should also help to identify the forward capacity needs in road corridors and forward investment needs in five, 10 and 20 year periods. These longer term forecasts would form the basis for preparation of the five year RENSTRA plans with a demonstrated linkage to connectivity and other performance targets. Divided carriageway improves traffic flow and safety but reaches capacity limits. Pantura, Central Java. Photo by Phillip Jordan. 3.2 IMPROVEMENTS TO PLANNING PROCESSES AND POLICIES In order to support the planning framework, the current planning policy and processes would need to be strengthened to handle the following: Definition of connectivity indicators, measurement and reporting of trip time. Data on road geometry, traffic, side-friction and accidents, as well as analytical models, to support estimation of trip times and evaluation of capacity improvements. Network analysis to evaluate diversion of traffic. Methodology for making long-term demand forecasts and analysis of options, taking account of economic and social development factors and plans. Capability of generating budget forecasts from pipeline data. Model for estimating private sector financing and VGF options for potential project packages. A policy on full renewal and modernisation of existing national roads to modern standards of cross-section, alignment and strength, including provision for constraining expenditures on the road prior to renewal. 22

45 CHAPTER 3: DEVELOPMENTAL NEEDS 3.3 ORGANISATIONAL CAPACITY NEEDS Strengthening DGH Planning The increased focus on inter-urban and urban expressway networks, arterial network planning and forward investment programming will place additional demands on DGH, and Bipran in particular. With the appropriate outsourcing of specialist services, Bipran will need capacity for handling corridor analysis and long-term demand forecasting, evaluating a range of investment and capacity improvement options, evaluating alternative financing modalities, undertaking pre-feasibility studies and preparing medium- and long-term pipelines of development projects. Bipran would also lead the definition of the expressway classification and identification of the expressway network, to be based on functional needs and not on financing Strengthening BPJT Feasibility and Delivery Functions Additional capacity is needed to help BPJT provide timely processing of the current large pipeline of new toll road projects and to oversee their implementation. The financing modality of projects should be evaluated and determined by BPJT during the business case stage of project preparation in order to improve project bankability and the success rate of going to the market for investors. The need for BPJT to focus on expressway development would require a change in scope of BPJT s responsibilities to deal with an expressway network rather than just toll roads, even though in practice the business would comprise primarily tolled facilities Enhancing Supporting Policies and Mechanisms Careful thought, analysis and consultation will be needed to develop appropriate policies and mechanisms to complement the new approach to planning of the national arterial network set out in this report. These policies and mechanisms could cover the following: Mobilisation of private sector finance Methods for building private sector confidence in current toll road plans are needed. New methods of concessioning need to be considered, including those which allow long-term periodic funding to bridge the viability gap. For example, models such as an availability-based or performance-based payment structure and annuity or lifecycle type, which allow periodic payments by the government to the concessionaire would be appropriate in situations where toll revenues are insufficient to ensure a project s financial viability or where tolls may be omitted. Land acquisition Even though the improved legal provisions on land acquisition are now in effect, the new provisions alone may not solve all problems concerning land acquisition. Even if acquiring the land in advance for a future ultimate roadway is permitted, use of the land in the interim could create difficulties in the 23

46 future. Leasing the land for temporary use may not be the solution if, through long term use, the residents acquire a legal or perceived right for continued occupation: physical barriers to prevent access may need to be maintained and trespass prohibited. Further, adequate and continuous disclosure to the public would always be needed to ensure local communities were well aware that the land in question is designated for future road development. More stringent right-of-way management This is needed to separate existing settlements from the roadway with a safety zone and to direct induced development to appropriately serviced areas. Increasing requirements for sound management of environmental and social safeguards These are needed where road improvement requires widening, realignment or relocation. Mechanisms to incentivise cities and regencies These are needed to plan hierarchical urban area networks as a whole and to complement national road networks. Improved management of overloading, hazardous loads, and over-sized vehicles This is necessary to avoid adverse environmental impact and undue road damage. Similarly, the safety and emissions performance of new and in-use vehicles will require closer scrutiny. Road design standards for capacity, access and safety would require review and upgrading. Greater attention to traffic management along highways and in urban areas This is necessary for efficient use of road capacity and for road safety in the face of rapidly increasing traffic. 24

47 CHAPTER 4: PROPOSED FRAMEWORK FOR PLANNING DEVELOPMENT OF THE NATIONAL ROAD NETWORK CHAPTER 4: PROPOSED ROAD NETWORK The IndII study developed a planning framework which would support the substantial improvement in connectivity across the nation that is needed for achieving the national development goals. This planning framework would be used for producing and updating the current National Master Plan for Road Infrastructure of DGH. The framework would provide an outcome-oriented, analytical basis for enabling the Master Plan to address the strategic challenges and the developmental needs identified for the primary road network. It would feed directly into the planning of fund allocation in the medium- and long-term plans and link to outcome targets of improved connectivity. A Long-term Road Corridor Plan is the key tool of the proposed planning framework. It would be used to optimise the road infrastructure and investment requirements in each of the main trunk road and economic corridors, such as those identified in the MP3EI, over a multi-year timeframe. The Corridor Plans would provide: A strategy for identifying the optimal road infrastructure needed to sustain development in a long-term 50-year horizon, which will guide investment in both the existing arterial road network and the emerging expressway network over the coming 20-year period. A pipeline of investment projects for successive five-year periods, staged to optimise functional benefits and spread funding requirements, and identifying bankable projects for private sector investment and PPP. Evaluation of the infrastructure standards and the connectivity delivered in terms of measurable journey times, which will allow performance targets to be established linked to the capital investment plan. Focus on the location and staging of an identified expressway network which would form the backbone of trans-regional connectivity, with staged implementation. An optimised approach to improvement of arterial roads in the corridor to modern highway standards, including realignment and renewal of the road structure, reduced annual costs, reduction in social and environmental impacts and greater benefits than the present incremental approach. A Road Renewal Strategy would supplement the Corridor Plans by providing planning criteria for capital improvements to modernise the roadway and road structure of all other arterial and collector roads in the national road network. This strategy would improve local connectivity among and within growth poles, extend road life, and make more effective use of funds over the long-term than the current incremental approach 25

48 to road betterment and widening. With staging by successive five-year periods over the 20-year long-term, it would support the preparation of RENSTRA plans and estimates of the capital funds required for national road development. 4.1 CURRENT NATIONAL MASTER-PLAN FOR ROAD INFRASTRUCTURE DEVELOPMENT The current DGH National Master Plan for , prepared in 2009 and updated to 2011, includes support for the MP3EI connectivity agenda and the six economic corridors identified by MP3EI. By its nature, the road development plan contributes to intra-island connectivity, termed local connectivity which includes connections among growth poles and within growth poles. For the NTT-Maluku-Papua region, the inter-island or marine highway connections will be an important element of connectivity-based development plans. Figure 9: DGH Arterial Road Widening Program Road Length, km - 2,000 4,000 6,000 8,000 10,000 Sumatra Java Kalimantan Sulawesi Bali-NTT Maluku-Papua 3,690 1,430 2,780 3,160 1,122 1,905 Total Length Improved length Source: Author, based on data from Table 2. The DGH plan identifies 24 arterial road corridors across six regions comprising about 30,400 km, or 80 percent, of the 38,000 km national road network, as shown in Annex A 18. The plan for the current RENSTRA includes 14,100 km of road widening, which constitutes 46 percent of the arterial road corridor length over the current fiveyear period, as shown in Figure 9 and Table 2. The plan is based on the target of 18 Recent plans in include connector corridors and other arterials, with a total length approaching 50,000 km. 26

49 CHAPTER 4: PROPOSED FRAMEWORK FOR PLANNING DEVELOPMENT OF THE NATIONAL ROAD NETWORK widening all narrow sections of road until the full length of each corridor meets the designated minimum road width of 4.5, 6.0 or 7.0 m by 2014 (see Annex A, Table 4). This represents a huge program of incremental widening, with treatments costing an average IDR 1.65 billion/km across most of the country (the exception being Java which has an average cost of IDR 10.7 billion/km owing to a large investment in four-lane divided roadways) (see Table 2). Table 2: DGH Road Widening Program and Forecast Region Arterial Road length km Widened length km Widened Length Arterial (in percent) Average Treatment Cost 2011 Road Development Spending (IDR billion) IDR b/km Sumatra , Java , Kalimantan , Sulawesi , Bali-NTT , Maluku-Papua , Total , Total ex-java , Source: Original data from Tentang Rencana Umum Jaringan Jalan Nasional, 567/KPTS/M/2010, updated by Bipran in Presentation and derived data in columns 4 and 5 are by the author. While this plan delivers marginal improvements to traffic flow and connectivity on the arterial road network over a wide area, it does not necessarily deliver the best benefits of shortened and improved alignment or renewal of the road structure 19, and it is not able to quantify the improvements to travel times. Moreover, the treatment cost is more than a third of the cost of road renewal, or full reconstruction, and is likely to need repeating within five to 10 years, which raises the question of the comparative economic returns between this incremental policy and a modernisation policy. Finally, 19 In practice some of the funds in this program are used for localised modernisation with minor realignments and reconstruction, however the planning for this is not a systematic policy. 27

50 the forward estimates for the following 10 years ( ) amounting to only IDR 7.4 trillion/year, appear to be insufficient for making the substantial improvement to connectivity implied by the MP3EI development plan. This presentation of the road infrastructure development plan also does not include development of the expressway network, which is handled separately because the expressway development is financed primarily through private investment. Integrating the development plans for both the arterial road network and the expressway network is needed in order to demonstrate the outcome of the development plans in terms of improved connectivity. It is also needed for demonstrating the tradeoffs between alternative investments in incremental widening, full road improvement and renewal, and expressways. The new framework proposed for planning the development of the national road network addresses these issues: first through application of a corridor planning approach, and second through developing a strategy on road asset renewal. 4.2 INDII CORRIDOR PLANNING APPROACH Examples of the corridor planning approach were developed for the Sumatera eastern road corridor 20 and the North Java corridor during IndII Phase I to demonstrate the concept of Road Corridor Development Plans. The Sumatera eastern corridor example was derived with data from the 2010 MARS study 21 which recommended the construction of the full length of tolled expressways (2018 km Bakauheni to Banda Aceh, plus 717 km of east-west connector routes) on policy grounds. That study concluded that the development of a tolled expressway was the most efficient option to enable effective connectivity and facilitate economic growth in Sumatera. The proposed expressway and connecting routes would: Link the eight state capitals. Link major sea and air ports with a high speed road link. Significantly reduce long-distance travel times for both passenger and freight movements. The IndII corridor plan analysed options for capacity expansion of the existing national arterial road from Lampung to Banda Aceh designated by DGH as a trunk route (lintas utama), and the expressways in the corridor, based on the DGH program and MARS data for the period This is smaller than the Sumatera economic corridor which includes more east-west connector road corridors. 21 The Establishment of a Master Plan for the Arterial Road Network in Sumatra Island (MARS), Korea International Cooperation Agency,

51 CHAPTER 4: PROPOSED FRAMEWORK FOR PLANNING DEVELOPMENT OF THE NATIONAL ROAD NETWORK The corridor analysis generated the capacity expansion implementation plan 22 shown in Figure 10, showing the project preparation, land acquisition and construction periods proposed for each expressway segment over the period , based on the economic and financial prioritisation (see Annex B for details). A similar implementation plan was prepared for expansion of the arterial roads in the corridor occurring in parallel to construction of the expressway. These implementation plans and the capacity provided in the two parallel facilities were optimised to provide the best improvement to capacity and connectivity during the 18-year period. Figure 10: Expressway Development Implementation Plan Sumatera Eastern Road Corridor North-South segments Bakauheni-Palembang Pekanbaru-Medan Palembang-Pekanbaru Medan-Aceh East-West connectors Pekanbaru-Padang Palembang-Bengkulu Tebing Tinggi-Sibolga Legend Project preparation Land acquisition Construction Source: NRMP Final Report, Activity 206(a) Technical Assistance to DGH, IndII (June 2011) >2029 Figure 11: Capacity Expansion Profile - Staged Development in Parallel Facilities over Long-term 20-year Period - Sumatera Eastern Corridor DEVELOPMENT OF ROAD CAPACITY IN EASTERN SUMATRA CORRIDOR TO 2029 ARTERIAL NATIONAL ROAD WIDTH Width m B Aceh Medan Pekanbaru Palembang Lampung Length km Total distance EXPRESSWAY Dual C'way B Aceh Medan Pekanbaru Palembang Lampung Renstra period code Baseline Length km Distance km Source: IndII Presentation based on data from NRMP Final Report, IndII June The IndII study referred to this as a capacity expansion profile but the term capacity expansion implementation plan is preferred. 29

52 Travel time from Lampung, hours The planned capacity standards can be seen in a strip map format in Figure 11, where the width of the strip relates to the road width and the colour coding depicts the five year RENSTRA period in which the capacity expansion is completed. The plan shows that the arterial road will be widened to a minimum of seven m width from Lampung to Medan by 2014, and that 944 km of the expressway should be completed first in the Lampung-Palembang and Pekanbaru-Medan segments by By 2029, the completed expressway would reduce the travel distance from Lampung-Banda Aceh by 20 percent from 2,530 km to 2,018 km. The arterial road would be at seven m width standard for the entire length, with four-lane divided links being introduced around the heavily trafficked cities of Medan and Pekanbaru by 2019 before the expressway is completed. Expected travel time reduction. To illustrate the benefits of the road corridor development plan, Figure 12 shows how travel times from Lampung to Banda Aceh will be reduced from the current 66 hours to 52 hours by 2019, 36 hours by 2024 and 25 hours by This means that, on completion of the expressway linking Medan to Lampung planned by 2024, all areas in that part of the corridor would be accessible by road within 24 hours (allowing for rest periods). Through 2019, most of the improvements come from improvements to the national arterial road. Figure 12: Travel Time Outcome Forecasts from Corridor Planning Approach Sumatera Eastern Road Corridor Total travel time Lampung to B Aceh, hr RENSTRA End-year B Aceh Medan Pekanbaru Palembang Lampung Source: Data from NRMP Final Report, IndII (2011) with updated travel time estimates, IndII (2012) Medium-term forecast of expenditure requirements. The financial analysis estimated the forecast expenditures in terms of DGH budget categories and year. The results, seen in Figure, forecast DGH spending requirements on the arterial roads to total IDR 16 trillion over the eight year period , comprising IDR 11 trillion on road 30

53 Funding Sources, IDR trillion Funding requirement, IDR trillion CHAPTER 4: PROPOSED FRAMEWORK FOR PLANNING DEVELOPMENT OF THE NATIONAL ROAD NETWORK development and IDR 8 trillion on preservation, reducing to just under half that or IDR 0.9 trillion/year from 2020 onwards. For the expressways, the MARS and IndII analyses show that only 4.4 percent, or IDR 8.5 trillion, of the IDR 193 trillion total cost for development of the 2,735 km of expressways is financially attractive for private sector investment even though the majority Figure 13: Funding Requirement Forecasts from Corridor Plan - Sumatera Easter Road Corridor Expressway development, E Arterial road development, E Arterial road preservation, E Public sector Private sector Source: Data from NRMP Final Report, IndII (2011) of it is economically feasible and thus a sound development priority. Therefore in this case, for the Sumatera eastern corridor and connectors, the government would need to provide the remaining IDR 184 trillion in some form of VGF over the period from 2015 to 2029 in order to implement the expressway scheme through PPP concessions. Defining appropriate mechanisms for VGF, such as annuitytype schemes, is thus an urgent necessity. The north Java corridor analysis was largely confined to using the available data on 11 expressway segments from Cikampek to Surabaya, with a total length of 657 km that are currently being concessioned. The data (see Annex B) showed that all sections were strongly economically viable, with benefit-cost ratio averaging 6.3 and ranging from 3.4 to 10. The estimated financial internal rate of return was generally moderate, ranging from 14 to 28 percent with two sections exceeding the 22 percent threshold for attracting private sector investment (Cikampek-Paliminan and Batang- Semarang). The analysis showed that VGF of IDR 11.9 trillion would be needed, amounting to 33 percent of the total construction cost of IDR 36.3 trillion. The road corridor development plan approach thus enables a robust expenditure plan to be prepared which incorporates an optimised tradeoff between investments in the arterial trunk road and a parallel expressway, scheduling that takes account of the lead time needed for project preparation and land acquisition, and a linkage of connectivity outcomes to funding requirements and sources. 31

54 4.3 ROAD RENEWAL STRATEGY Modernisation of the arterial road network to improve the capacity and safety is crucial to achieving better connectivity and accessibility in the majority of the country. Even when present plans for expressway development are complete, reaching about 4,000 km by 2029, expressways will still comprise only about 10 percent of the national road network and then only in the most heavily trafficked corridors in the west. Thus improving the connectivity in the majority of the national road network, comprising 24 corridors of arterial roads with 30,000 km in length across all regions, will also need to be a strong strategic priority for DGH in the next three RENSTRA periods. The existing incremental improvement strategy has been effective only in the medium-term for addressing the inherited constraints of narrow right-of-way, high curvature and weak road structures. Surface strengthening and incremental widening without improved foundations have left many roads vulnerable to rapid deterioration under heavy vehicles and overloading. Widening has often had negative impacts on settlements, especially where strip development has evolved, and has reduced curvature and improved speeds only marginally. As a result, spending on betterment and land acquisition has had to be repeated within eight to 10 years instead of 20 years or more, and speeds are still low. A Road Renewal Strategy would provide the long-term planning framework for progressively upgrading arterial roads to modern standards and lowering annual costs. A road renewal strategy applied to arterial roads would upgrade a road section to modern standards at an appropriate time according to the priorities within the network and region, and work progressively along each corridor. The existing road would be replaced by a new road, built with modern alignment and cross-section, and full reconstruction from the foundation up, resulting in an expected life of 20 years or more. The new road would have better safety and reduced preservation needs in the future, and a strong foundation to support growth in traffic and loading and future strengthening, leading to lower annualised costs even though the initial cost is higher. Road renewal would provide the opportunity to adopt the appropriate alignment for the long-term. The alignment and location of the road would be designed for the longterm of years, including appropriate provision for the full right-of-way. In many instances the road would be realigned in the same location with improvements to the curvature and cross-section. However in some sections, taking account of land-use and spatial development plans, as well as geotechnical risks such as flooding, subsidence and landslides, the location of the road may be moved to bypass a sensitive area or to shorten the route length (see Figure 14). The location decision would be subjected to feasibility study and may be incorporated in the corridor plan when the feasibility has been established. One-off land acquisition, producing a long-term appropriate solution for local circumstances, will avoid the need for further incremental acquisitions at a later stage with the higher prices and social difficulties that entails. 32

55 CHAPTER 4: PROPOSED FRAMEWORK FOR PLANNING DEVELOPMENT OF THE NATIONAL ROAD NETWORK From a strategic planning perspective, road renewal would be implemented at sublink level within a corridor and, being a long-term development investment, would affect the prioritisation of preservation on the sub-link in the years prior to implementation. As alignment and location need to be determined with longitudinal continuity along a corridor, road renewal should be planned for a full sub-link and will usually be implemented over a continuous multi-year period. This will also be appropriate for community consultations, spatial development plans, environmental conservation and land acquisition requirements. The prioritisation of a sub-link for renewal will need to be made on both a national and regional basis, considering budgetary allocation and regional economic priorities. Once prioritised for renewal, preservation spending on the sub-link will need to be moderated to minimise treatments and expenditures prior to the major investment in reconstruction. Figure 14: A Road Renewal Strategy would Follow a Selected Long-term Alignment Option Source: Base map from DGH National Road Master Plan (2010), modified by author. Note that the alignment options are shown only for illustrative purposes and are not from the Master Plan. From a technical perspective, road renewal would utilise the DGH road capacity manual and the new DGH pavement design code that produces structurally efficient long-life pavement designs with sound foundation and drainage design. Geometric design standards for the alignment and profile appropriate to the chosen speed environment and year capacity requirements would be based on the DGH road capacity manual, upgraded to improved safety standards. Foundation, drainage and pavement design would utilise the new pavement design code currently being deployed in DGH offices with IndII support. The design would have an expected life of 20 years or more before requiring major rehabilitation, reconstruction or improvement, thus reducing future preservation needs to routine and periodic maintenance alone. 33

56 In budgetary and financial terms, road renewal is expected to cost more than the current incremental policy in terms of initial cost but less than the current spending when annualised over five to 20 years. The current cost of road renewal with full road reconstruction is in the order of IDR 5 billion/km for a full standard road of 7 m width on 12 m formation. With future preservation costs, including routine and periodic maintenance, totalling about IDR million/km-year, the simple annualised costs including both initial development and future preservation are expected to be in the order of IDR million/km/year over 20 years. This is about half of the current spending level of about IDR 700 million/km-year (after separating bridge and other spending). An annual allocation in the range of IDR 5 to 10 trillion/year would support renewal of 1-2,000 km of road to full standard each year and thus could cover the entire arterial road corridor network of 30,000 km in years. Actual costs will depend on terrain, road standard and land acquisition in individual cases. A road renewal policy will be useful to underpin implementation of the renewal strategy. Given the significant implications - first, in the planning of road capacity and standards for long-term periods; second in making choices between local road improvements, new highway, and expressway options in relation to spatial development; and third in shaping the priorities for the five year RENSTRA plans and for multi-year programming and budgeting a road renewal strategy needs to be underpinned by a strong policy directive from DGH or the Minister on modernisation of the arterial road network. Introducing a road renewal strategy would need appropriate allocation of resources to road development in the RENSTRA, an appropriate planning framework (such as the corridor planning approach) to prioritise the road links and funding allocation, adequate consultation with affected stakeholders at the local and regional levels, and appropriate internal guidance in DGH to coordinate the programming and budgeting over the multi-year period required for project preparation, land acquisition, and implementation at the balai level. Renewal improves road curvature, sight distances and shoulders, and bridge standards (note safe shoulders and walkways), Aceh. Photos by Timur Angin. 34

57 CHAPTER 4: PROPOSED FRAMEWORK FOR PLANNING DEVELOPMENT OF THE NATIONAL ROAD NETWORK 4.4 FORECASTING FUNDING REQUIREMENTS AND OUTCOMES The strength of the road development planning framework becomes even more evident in the forecasting of forward funding requirements and outcomes. As the corridor plans generate funding requirements based on a specific capacity expansion and construction project pipeline, and the road renewal strategy enables direct estimates of funding requirements based on the length to be renewed, the framework is able to generate forecasts of funding requirements on the whole network that are linked directly to road improvements and thus to performance in terms of connectivity and accessibility Forecasting Forward Funding Requirements The forecast of funding requirements is illustrated using the IndII study example for the 15-year period, i.e. next three RENSTRAs, The following scenario based on the findings of the corridor analyses and the proposed road renewal strategy is adopted for this example: Expressway construction includes all of the north Java corridor (657 km) and all the Sumatera eastern corridor (Lampung to Banda Aceh, plus three east-west connectors Palembang-Bengkulu, Pekanbaru-Padang and Tebing Tinggii Sibolga) (2,734 km) (see Annex B), plus an unspecified 300 km in the outer years as a token part of a probable next phase of development. Road renewal is applied to all arterial roads, totalling 30,300 km (Annex A), beginning with trunk route corridors of 8,700 km. Road preservation reduces from IDR 300 million/km-year to IDR 150 million/kmyear after road renewal. The funding requirements forecast by the planning framework for this scenario are summarised in Table 3 and Figure 15 below. This shows that the annual funding requirements would need to rise - from the present IDR 32 trillion/year by 50 percent to about IDR 48 trillion/year in the next RENSTRA and to about IDR 56 trillion/year in , before falling again after in order to implement the priority works in the 15-year period. 35

58 Annual Funding Requirement, IDR trillion (2011 prices) Table 3: Estimates of Forward Funding Requirements for from Planning Analysis Expenditure Category year Funding Requirement, IDR trillion (2011 prices) 15-yr total Road development Expressway development Sumatra east corridor Sumatra east connectors North Java Other Arterial road development Arterial road renewal Other (bridge, strategic, etc.) Road preservation Road management Total national road network Source of Funds Public funds Private sector funds Cumulative length modernised, km Expressways Arterial roads Source: IndII analysis of data from IndII(2011), DGH and assumptions on road renewal strategy implementation. Figure 15: Forecast of Average Annual Funding Requirements on National Roads Expressway - private funding Expressway - public funding Arterial road development Road preservation Road management Source: Data in Table 3 from IndII analysis of DGH data and IndII(2011). Three main observations stand out with regard to the funding patterns: Most of the increased funding would be needed for expressway development, requiring IDR 360 trillion of funding over 15 years for the period However only a sixth (IDR 60 trillion) of this is likely to attract private sector investment due to the low or marginal financial viability of many packages outside the north Java 36

59 CHAPTER 4: PROPOSED FRAMEWORK FOR PLANNING DEVELOPMENT OF THE NATIONAL ROAD NETWORK corridor 23. Thus it will be imperative to find PPP mechanisms which facilitate substantial public funding contributions in the order of IDR 300 trillion. VGF mechanisms which involve upfront transfers could result in demands for public funding of up to IDR 27 trillion/year in as seen in the figure above. Others, such as annuity or lifecycle mechanisms, which spread the public payments over a long period such as 30 years, would reduce the demand for public funding to about IDR 10 trillion per year but over an extended period as well as producing more reliable outcomes. The funding requirement for arterial road development would be essentially similar to the current allocation, about IDR 19 trillion/year, but would be used in a different way. The main focus would be on road renewal essentially replacement of roads with modern road standards. The estimates are based on implementing about 2,000 km of road renewal per year (which allows all to be completed within 15 years), allowing for some land acquisition and some sections to be at rates higher than the norm of IDR 5 billion/km. A substantial amount is allowed as lump sum for other development projects such as bridges, strategic road development and improvement of accessibility standards in the eastern region. The funding requirement for road preservation begins at the existing level but declines as the arterial road network is renewed with roads of more durable performance and lower maintenance needs. The distribution of funding requirements over the 15-year period could be flattened either by deferring projects from the middle period ( ) to the last period ( ) or by adopting PPP lifecycle payment mechanisms. Funding requirements in the outer years, especially from 2030 onwards, are likely to stabilise but would be subject to later analysis on a rolling basis that would reflect the development goals and needs in the future. The example here is based on a preliminary analysis for illustrative purposes and several important caveats should be noted. Funding is shown in constant 2011 prices, so does not reflect inflation. The distribution of funding requirements over time is based simply on the pipelines generated by the analysis, and have not at this point been moderated to take account of fiscal, administrative, spatial or industry capacity constraints. Private sector investment levels are derived from the corridor studies and the primary sources used in them. Apart from the road-specific data from the two demonstration corridor studies, other data has been treated on an aggregate basis with allowance for regional differences. With these caveats, the example is considered to be broadly indicative of the strategic choices facing MPW and DGH at present. 23 This is an upside estimate assuming that the segments in the outer years become more financially attractive by the time of concessioning. Forty percent of the investment potential is associated with the north Java segments, which have financial rates of return of percent and can expect 57 percent of the IDR 42 trillion funding requirements to come from the private sector. About fifteen percent relates to the Sumatera expressways, and the balance relates to the assumption for unspecified future projects in the outer years. 37

60 Average Travel Time, hr/100 km Forecasting Outcomes or Performance Indicators The linkage of funding flow to project delivery times makes it feasible to estimate outcomes that result from the investment in road network development. The measure of corridor travel times, which is seen as an indicator for connectivity, will reflect the improved traffic capacity and the reduction of speed constraints, as well as the shortening of corridor length. While specific corridor examples can be generated, as shown in Figure 11 on page 36, it is also possible to generate more inclusive indicators that are representative of the network. The estimates of the normalised travel times for trunk road corridors (which include use of an expressway where available or alternatively the arterial road) and other arterial roads, as shown in Figure 16, link to the flow of funding and the timing of project implementation shown in the tables and figures above. Thus, any changes to the funding allocation or timing would be reflected in the impact on expected travel times, and thus on connectivity. Figure 16: Example of Forecast Average Travel Time based on National Road Development Plan End of RENSTRA Period Trunk routes Other arterial roads Source: Author, analysis of program scenario in Table 3 using corridor plan methodology 4.5 APPLYING THE PLANNING FRAMEWORK The national planning framework requires DGH/MPW to produce an overall concept plan and 25-year long-term plan (RPJPN) that is consistent with the Bappenas longterm concept plan (RPJPN-Bappenas) and the national spatial plan (RTRWN), under regulation PP no. 26/2008 and law UU no. 26/2007. Currently DGH has been preparing five year medium-term plans, such as the current RENSTRA for which is based on the DGH five year National Master Plan for Road Infrastructure (Tentang Rencana Umum Jaringan Jalan Nasional), issued by MPW under 567/KPTS/M/2010 (see also Annex A). However, DGH has not yet produced a long-term plan for national road infrastructure a point noted during the audit conducted by the corruption eradication commission (KPK) in The planning framework demonstrated in the previous sections provides a basis that could be used by DGH to prepare a long-term plan. This would relate to development goals identified in the Bappenas Plan and National Spatial Plan, generate forecasts of 38

61 CHAPTER 4: PROPOSED FRAMEWORK FOR PLANNING DEVELOPMENT OF THE NATIONAL ROAD NETWORK forward funding requirements, and link the planned road infrastructure development to development outcome indicators such as connectivity. Such a long-term plan would provide the foundation and framework for preparation of the five year medium-term plans (RPJM) and enable them to be consistent with the national guidelines on MTEF and PBB. The results of the example reinforce the message that DGH and MPW face a particularly strong strategic challenge in expanding the capacity of national road infrastructure to meet the connectivity goals and growing demand Steps in Applying the Planning Framework The following are some key steps involved in developing a long-term plan and addressing the challenge of expanding the capacity of national road infrastructure to meet the connectivity goals and growing demand. 1. The planning of road infrastructure capacity needs to become a strategic priority of DGH and requires a proactive approach. The scale of investment required for increasing the capacity of the national road network to meet connectivity and safety goals in the balance of the present 25-year long-term plan to 2029 is huge. The funding requirements for national road development alone average IDR 43 trillion per year for the next 15 years, or over 80 percent of total national road expenditure needs. With only IDR 4 trillion/year attractive for private sector investment, the total public spending on national roads needs to increase to an average of IDR 49 trillion/year. This is about 0.6 percent of GDP and 50 percent up on current levels, but is potentially affordable if the correct policies are in place to ensure effective outcomes. While the past focus on road preservation has been important, the baseline funding that is adequate for full provision of road preservation as well as road management overheads amounts to IDR 10 trillion/year, which would constitute only 20 percent of the DGH expenditure program. In addition to the fiscal priority, the delivery of the major infrastructure requires a long lead time and long-term planning. It needs to coordinate with and be responsive to the national spatial development plan and economic plans, especially in terms of demand forecasting. As the physical location of major infrastructure is intrinsically permanent, a socially inclusive approach is needed towards determining land requirements for realigning old roads or building new roads especially as historically land acquisition has proven to be a significant cause of delay to infrastructure delivery. Thus the incremental approach and the essentially annual cycle of minimal project preparation associated with the previous policy is not feasible for this large capacity development program. Instead, capacity expansion and road development projects need to be planned five to 10 years in advance for budgeting, and project preparation and land acquisition must be scheduled for one to three years in advance of project implementation or five years in advance if private sector financing is to be involved. Thus advance 39

62 planning, and a proactive approach that sets up consultations and preparations well in advance of the project are crucial to meeting the planned implementation schedule. An opportunity for this shift of DGH s strategic priority from preservation to development arises with the preparation of the next RENSTRA for which is due to begin in January When the funding resources were doubled late in the process of preparing the current RENSTRA in 2009, DGH did not have a road development policy or a pipeline of projects in place which could have guided the spending to more effective investment in modern standard highways. Consequently, the existing policy of incremental widening was applied widely to nearly one half of the arterial road network. The need for this shift in strategic priority of DGH to road development to happen very soon is thus critical. 2. Revisions will be needed to some policies, regulations and laws to reflect and support the shift in strategic priority and the modernisation of the national road network. The foregoing analysis makes it clear that an expressway network will be the backbone of trans-regional road travel and local connectivity going into the future, with single carriageway modern highways in areas of low traffic demand but important accessibility needs. However, important revisions are needed to support the shift in strategic priority, for example: a. Expressways (jalan bebas hambatan) need to be defined as a class of public road and national road with limited access and not defined solely as toll roads with toll revenue capability. b. Design standards for operating conditions, cross-section and curvature (including controls on access and land use) need to be established for expressways and for highways (sometimes termed high-grade highways ). c. Regulations need to be expanded to provide for a broader range of VGF mechanisms than the single one currently available, for instance to include regular payments to the concessionaire in annuity-type mechanisms. d. Provisions to facilitate and expedite land acquisition need to build on the latest law and the revolving fund, to authorise a unit such as the BLU in BPJT to act as the purchaser, and to address ways of reserving rights to land years in advance of requiring it for road development. e. The policy relating to availability of a free road parallel to a tolled facility should be reviewed to ensure that capacity expansion of public roads by DGH does not unfairly undermine the economic or financial viability of an expressway in the same corridor, but that the facilities are optimised with a view to delivering the appropriate overall level of service and connectivity in a corridor. 3. A formal plan for road corridors, incorporating trunk routes and arterial routes, should be defined in relation to the national spatial plan and form the basis of national road network planning. Using the preliminary outline of arterial road 40

63 CHAPTER 4: PROPOSED FRAMEWORK FOR PLANNING DEVELOPMENT OF THE NATIONAL ROAD NETWORK corridors compiled by DGH (see Annex A) as a starting point, the corridors should be given a hierarchy that reflects the function they serve in the network and the level of demand. The economic or social priority assigned to each route (for example by the national spatial plan or an economic development plan) may be reflected either in the hierarchy or preferably separately in an alternate designation. Each corridor should have defined nodes which will serve as the reference points for determining travel times and distances. A definition of nautical roadway or highway, or similar, should be established to address interisland connections, including a protocol for representing travel times and distances on the nautical segments either separate from or incorporated with travel in adjoining land sections. 4. An expressway network should be defined as an identifiable network within national roads and separate from arterial roads. The network would include all expressway segments built or planned in the foreseeable long-term, forming a contiguous interconnected network that would serve as the backbone of transregional and peri-urban road travel. Consideration may be given to including interurban highways in sparsely developed areas in the network where they are planned and located as a first stage of a potential expressway far in the future beyond the long-term plan. Otherwise, another term, such as highway or highgrade highway may be used to designate such roads separately from the expressway network. The expressway network would be defined in relation to the national spatial plan, and would include the segments already identified in an annex of the national road regulations, PP no. 26/ An initial long-term master plan for national road infrastructure should be prepared to serve as the basis for preparation of the RENSTRA. As the time for preparation is short and the timeframe remaining within the current longterm plan is 15 years not 25 years, this initial plan would utilise existing data to the extent possible and would limit any detailed analysis to the high priority corridors. Methods for handling cases with different levels of data availability have been outlined in the IndII study (2011). There are three scenarios - (i) where full feasibility study data is available for the network in the corridor; (ii) where partial feasibility study data is available; and (iii) where little or no formal data is available. Using the corridor analysis approach, a capacity expansion profile would be developed for each priority corridor. Forecasts of funding requirements and travel time outcomes should be made, following the methodology outlined in this report and by IndII(2011), to cover the national road network. The process is summarised in Box 2 and in more detail in Annex C. 41

64 Box 2: Summary of Steps for Preparing the National Road Master Plan 1. Confirm priority economic corridors The priority of economic corridors for road infrastructure development is not merely a technical task. It involves consideration of spatial, economic and social factors that will be influenced by national development policy and planning. Priorities both within the six economic corridors identified in the MP3EI and beyond them can be accommodated in the planning process if they are identified early on. 2. Define road corridors and their priority Within the priority economic corridors the individual priority road corridors, and their relative priority, can be defined based on technical criteria such as traffic volume/capacity ratio and on equity considerations. 3. Specify key measures of Levels of Service This includes desired travel times and Level of Service between key nodes on an end to end basis in each road corridor with the aim to provide full connectivity to the desired standard. 4. Adopt appropriate design standards This includes appropriate design speed, curvature, gradient, road cross-section, and access controls, etc. defined with a long-term view, appropriate for at least 20 years without major reconstruction or improvement. 5. Define the nation-wide expressway and highway network and supporting road access in each road corridor, the desirable functional structure of the expressway network, the arterial road network and the hierarchical structure of the supporting road network. 6. Identify connections between economic corridors including the capacity and design standards of connections between economic corridors. 7. Prepare Road Corridor Development Plans Within priority road corridors, the indicative priority needs to be determined for implementation of sections within the expressway or highgrade highway, their desired initial and long-term cross sections based on available information (e.g. traffic volumes, traffic composition, traffic growth rates and capacity), and the related land acquisition needs. 8. Develop a 20 year likely financing budget for each road corridor a capacity expansion profile and a pipeline of sub-projects, with supporting actions and associated budget needs. 9. Prepare important projects for early implementation. 6. The preparation of road corridor plans for prioritised corridors should be developed as a DGH procedure based on the example provided in this report and supporting documents. The steps include: a. Identify the preferred or optimal network, location, alignment and standard of major roads in the corridor including the proposed alignment for any new expressway or road; realignments of sections of existing road taking account of the spatial plan, available detailed development plans and other information; and of desired improvements in travel speed, safety and access. b. Review available studies or prepare feasibility analysis of capacity improvement options for segments in the corridor, especially alternatives between new expressway or highway development and improvement of the existing arterial road, evaluate environmental and social impact constraints and mitigation, develop scenarios of preferred options and data on segment length, traffic split, land and construction costs, economic return and benefit-cost ratio. 42

65 CHAPTER 4: PROPOSED FRAMEWORK FOR PLANNING DEVELOPMENT OF THE NATIONAL ROAD NETWORK c. Prepare a multi-year capacity expansion activity profile for each arterial road facility in the corridor (such as expressway and arterial roads), including project preparation, land acquisition and construction activities, covering a year period with sequencing based on the economic priority of the works. d. Prepare land acquisition plans and schedules based on the road plan and capacity expansion activity profile for the selected scenarios, including cost estimates and consultation process. e. Evaluate improvement options for the supporting arterial and collector road network in view of accessibility needs and targets and in relation to the spatial development plan and regional development factors. 7. Calculate estimates and trends of outcome indicators such as road transport demand, travel times and distances for the corridor, as a function of the capacity expansion activity profile over time. Allowance for impedance to traffic flow arising over time from traffic congestion or uncontrolled roadside activities should be included where appropriate. 8. Prepare the multi-year schedule of unconstrained funding requirements for each corridor, and develop a broad multi-year financing plan, including breakdown showing public funding by category and potential for private sector investment. The funding requirements and schedule should be based on the capacity expansion activity profile and cost estimates for the preferred options, expressed in constant current prices on a yearly or five yearly basis. The funding requirements should include a breakdown into potential funding sources, including public funding categories (expressway development, arterial road development, other road development, road preservation and road management) and potential for private sector investment based on an estimated financial internal rate of return 24. It is useful to identify the land acquisition element of development expenditures. 9. Prepare the long-term development and expenditure plan for the national road network, together with forecasts of key outcome indicators, for a range of funding scenarios. By compiling forecasts from corridor plans and other national road needs, successive medium-term development plans and funding requirements will be developed for the entire national road network. This will include plans for other parts of the network such as urban roads, strategic roads and collector roads. Scenarios covering high, medium and low funding resource envelopes would be developed, taking account of fiscal constraints from the Ministry of Finance (MoF), regional and spatial development policy from Bappenas, and other relevant planning policy guidance. This process would also take into account risk assessments on the availability of private sector investment, the implementation capacity and capability of the construction sector, the land acquisition process, and the performance of DGH and BPJT in program delivery. 24 Recent expressway studies for MPW, as well as the IndII (2011) study, have used 22 percent FIRR as a threshold for attracting private sector investment. 43

66 CHAPTER 5: BUILDING CAPACITY Increased capacity, and changes in policy in some aspects, will be needed to enable Bipran in DGH and BPJT to implement the new planning framework and to respond to this significant shift in strategic priority. In the near term changes in process will be required that are likely to warrant targeted technical support. In the medium-term there may also need to be changes in mandate, responsibility, image and organisational structure. 5.1 DGH-BIPRAN DGH, and Bipran in particular, would be responsible for adapting the DGH road development policy to the new paradigm and for implementing the new planning framework set out in Section Establishing Strategic Priorities and Supporting Changes to Policy and Regulations For the shift in strategic priority and supporting changes to policy and regulations, outlined in steps 1 and 2 of section 4.5, high-level consultation and socialisation of the issues involved will need to be undertaken within MPW and the senior management of DGH. These are the levels responsible for determining the strategy for the sector and the strategic priorities of sector expenditure. It is vital that the urgency and the magnitude of the challenge of road network development be fully explored and understood within MPW and DGH, as well as the feasibility and practicality of undertaking such a significant shift in strategic priority successfully. Key aspects are also of highly relevant interest to other ministries and agencies, especially Bappenas, MoF, CMEA and the Ministry of Transportation. The implications for the establishment of outcome targets (such as connectivity), the linkage with spatial development plans, and the prioritisation of regions and corridors are of particular relevance to Bappenas. The forecasts of a steep increase in funding requirements and how they should be allocated, the limited potential for private sector investment, and the urgent need to extend the modalities available for VGF are critical issues to be addressed in consultation with MoF and CMEA. To support these discussions, Bipran and DGH will need to develop the justification for the strategic shift with a more detailed evaluation of the technical and procedural implications of the proposed road development policy and strategy. Examples include: The introduction of connectivity as a strategic target and its definition. The use of realignment versus widening and its land implications. 44

67 CHAPTER 5: BUILDING CAPACITY The coordination of road renewal with road reconstruction in the programming process. The process of consultation at local and regional levels needed for acceptance of the long-term plan and road alignment strategy. The most important aim in the planning process will be to ensure that the right roads are being built in support of the nation s long-term social and economic development Planning of Expressway Network and Road Corridors Bipran will need to have a more explicit and a larger role in planning the spatial layout of the network, the identification and layout of the expressway and highway network, and the planning of realignment and road renewal in road corridors, than it does at present. As the corridors and connectivity issues generally cross balai boundaries, and as the planning and analytical work involves specialist methods and inputs, it appears appropriate that Bipran is probably best placed to be responsible for the coordination of network development planning, and specifically for preparation of the corridor plans and forecasts of forward funding requirements for road development. However, detailed surveys and consultations will need to be conducted by and in cooperation with the relevant balai and local agencies, especially in relation to identifying and defining alignment options and assessing the implications for land acquisition and spatial development. To fulfill this larger role, Bipran will need to rebuild and extend its capability for network planning and analysis, expressway planning, economic appraisal and financial analysis. Currently, staffing skills and capability are skewed towards monitoring, evaluation and reporting so some adjustment towards planning and appraisal capability is required, as well as making efficient use of external consultant support Coordination and Roles of DGH and BPJT Road corridor-specific proposals to build lengths of expressway will be passed to BPJT while other road construction, rehabilitation and preservation will be the responsibility of DGH. Specific functions such as land acquisition, which under the recent law may now be purchased directly, may be consolidated under a BLU within BPJT. The maintenance of the framework including updating of the Preliminary National Road Master Plan and preparation of Road Corridor Development Plans, and the development of the DGH rolling program and RENSTRA, for the multiple five-year periods making up the long-term planning horizon, will be the responsibility of the DGH. DGH, and Bipran in particular, will need to demonstrate its ability, in-house or through consultants, to manage the whole process and conduct the necessary technical 45

68 analyses to ensure that all schemes going into the project pipeline are rigorously assessed and based upon sound strategic criteria. This requires a more comprehensive approach than currently used. A planning team could be established and properly resourced to undertake this role. 5.2 BPJT BPJT at present is responsible for the procurement and delivery of toll roads and for the concessioning of toll roads built with government funds. Since, at the present time, all expressway development is planned as toll roads, BPJT is in effect a de facto expressway authority. However, in order to shift the focus to an identifiable expressway network and to allow for the possibility of non-tolled expressways in the future, the remit of BPJT, in whatever its final form, would need to be broadened to cover all expressways. The formal conversion of BPJT to an Indonesian Expressway Development Authority may be appropriate in the medium term. BPJT would be responsible for the delivery of the priority expressways identified by DGH. BPJT will package the roads into projects, undertake the financial evaluation of each project, determine the most appropriate concession type and develop and negotiate the concession. BPJT will be required to manage its own budget from which it will need to cover land acquisition well in advance of project commencement, any VGF that might be required at concession negotiation, and the direct construction costs of projects that are to proceed without private sector funds. The evaluation and project management responsibilities would require access (either in-house or via consultants) to high calibre planning, technical, financial and management expertise. The concession negotiation process will require effective preparation and negotiation to ensure that society s interests are safeguarded. This will require a substantial enhancement of BPJT resources and capabilities and would require BPJT to be supplemented significantly by specialist outside expertise. The preliminary findings of the IndII (2011) study on BPJT needs included: A substantial increase in staffing and their capacity to support project preparation and business case development work. Currently there are practical constraints to finding and retaining staff with the appropriate background and experience for the present level of remuneration in BPJT. Higher remuneration is an initial requirement. Enhanced access to specialist expertise such as legal advisors, demand forecasting experts, economists, and commercial/financial experts. It is neither realistic nor necessary to expect BPJT to perform every one of the many specialised tasks for the toll road projects on its books that are potentially valued at up to several hundreds of million dollars. BPJT instead needs to become an informed purchaser and effective manager of the expert professional services that it requires like similar agencies in the UK, Australia and other countries in the region. BPJT does need improved capacity and enhanced knowledge of certain topics such as how 46

69 CHAPTER 5: BUILDING CAPACITY the private sector perceives risk and the principles of risk allocation. BPJT would therefore manage all key tasks undertaken by its specialist consultants. Considerable annual budgets would be needed to retain and therefore access the needed specialists speedily. Its own land acquisition unit and specialists capable of processing a large volume of transactions and satisfying government and donor requirements on environment and social safeguards. The private sector will not be attracted to invest in projects where there are risks they cannot manage such as the timely delivery of land and the necessary environmental and social safeguards clearances. 47

70 CHAPTER 6: CONCLUSIONS AND RECOMMENDED ACTIONS The government faces an urgent and strategic turning point in its provision and development of road infrastructure. Despite strong growth in the economy, the landbased local connectivity between main economic centres remains low and significantly lower than regional neighbours, thus reducing trade competitiveness and impeding the spread of economic activity to regional centres. After more than a decade of making road preservation the strategic priority for road infrastructure, the road assets are in reasonable condition but the road standards and capacity of the network are inadequate for the growing economy. The impact of lagging investment in the development of modern highway infrastructure is becoming increasingly evident. The inhibiting factors have been identified as follows: Expressway development, essential to long-range high-volume road travel, has lagged demand through an over-reliance on private sector investment and an inadequate framework for public partnership and managing financial risks that is necessary for attracting the needed investment. The long-term impacts on connectivity arising from underinvestment in road development and from a short-term policy of incremental road width improvements over the past decade have not been reflected in the performance targets set for road infrastructure leaving the road infrastructure weakly positioned to support the country s expected surge in economic growth. Short-term policies and inefficiencies in road program delivery mechanisms have led to repetitive work and high annual costs for road preservation that have required a disproportionate share of the road budget and been only moderately effective. The Framework for Planning Development of the National Road Network described in this report shows how a long-term Master Plan could be prepared that is linked to national development goals such as connectivity, and guides the funding requirements and the physical road development program in successive five year medium-term plans. The Master Plan would comprehensively identify the future expressway, highway and arterial road network, together with the implementation steps, required resources, policies and standards. The Framework proposes a two-pronged approach to the planning of road network development: Long-term road corridor plans that would be used to identify the future expressway, highway and arterial road network in each national road corridor, for a year horizon. Each plan would optimise connectivity and road capacity to support the forecast transport demand and social and economic development for years in the context of the national spatial plan, and take into account longer-range options out to 50 years. 48

71 CHAPTER 6: CONCLUSIONS AND RECOMMENDED ACTIONS A road renewal strategy, implemented on national arterial roads, would be used to progressively upgrade all arterial roads to modern highway standards over the 15-year period. Using the guidance of the corridor plans, the roads may be realigned to improve traffic flow and safety and to eliminate or minimise future needs for land acquisition. Importantly, the road structure would be rebuilt to new long-life standards that would reduce future maintenance needs and overall lifecycle costs. A preliminary application of the planning framework has shown the large magnitude of the backlog in capacity development of the national road network. Public spending on national roads would need to rise by 66 percent from the present level of IDR 30 trillion/year to an average of IDR 49 trillion/year over the 15-year period remaining in the current long-term plan (RPJN). All the increase would need to be allocated to road development, raising its allocation to about 80 percent of the total. An investment of IDR 638 trillion (in 2011 prices) in road development would be needed to improve connectivity by over 40 percent in terms of travel times, especially in the priority economic corridors, over the 15 year period A little over half of this, IDR 360 trillion, would be required to build 3,700 km of expressway connecting the country s main economic corridors of north Java and east Sumatera, from Surabaya to Medan and links to neighbouring centres. Of this, about one sixth or IDR 60 trillion is likely to attract private sector investment, leaving about IDR 300 trillion to be provided in public funds through VGF or other mechanisms such as annuity and lifecycle funding models. The remaining IDR 278 trillion would be invested in the renewal of 25,000 km of arterial roads and in improvements to bridges, strategic roads and other national roads. The following are a number of actions which could be taken to implement the proposed planning framework, with the aim of stimulating the development of the national road network to achieve the goals of the long-term national development plan, RPJN 25 : Road network development needs to become the strategic priority for DGH, with road preservation taking a secondary role. The planning of road network development requires a proactive and long-term approach, planning the investment projects, road standards and funding five to 20 years in advance. Revisions will need to be made to some policies, regulations and laws to reflect and support the shift in strategic priority and the modernisation of the national road network. A formal plan for road corridors, incorporating trunk routes and arterial routes, should be defined in relation to the national spatial plan and form the basis of national road network planning. 25 More details are provided in section 4.5 and section 5 of the main text. 49

72 An expressway network should be defined as an identifiable network within national roads, separate from arterial roads. An initial long-term master plan for national road infrastructure should be prepared to serve as the basis for preparation of the RENSTRA. The preparation of road corridor plans for prioritised corridors should be developed as a DGH procedure, based on the example provided in this report and supporting documents. Outcome indicators - such as road transport demand, travel times and distances for the corridor and their forecast trends in each corridor, should be estimated as a function of the capacity expansion activity profile over time. A multi-year schedule (of years) of unconstrained funding requirements should be prepared for each corridor, as well as a multi-year financing plan identifying the source of funds, including a breakdown showing the public funding by category and the potential for private sector investment. A long-term development and expenditure plan for the national road network, together with forecasts of key outcome indicators, for a range of funding scenarios, should be prepared by compiling the forecasts from corridor plans and other national road needs across the national road network. PPP mechanisms, which facilitate substantial public funding contributions distributed over extended periods, such as annuity or lifecycle delivery mechanisms, need to be defined and authorised among the options for delivering VGF and reducing risk (this would be attractive for investors and lead to more reliable outcomes). Build managerial and technical capacity in DGH-Bipran for national road development planning: Support for internal dialogue on the proposed planning framework, the future program and funding implications, and the shift in strategic priority for DGH. Undertake initial study and surveys to define travel times and corridors. Prepare the Preliminary National Road Master Plan, with technical assistance as needed. Prepare formal Road Corridor Development Plans for priority economic corridors, with technical assistance as needed. Review and support the implementation of organisational and staffing improvements at DGH. Build BPJT s managerial and technical capacity to expedite delivery of a highcapacity expressway network: Build managerial and technical capacity in BPJT for project preparation and processing of transactions. 50

73 CHAPTER 6: CONCLUSIONS AND RECOMMENDED ACTIONS Identify specialist skills needed to enhance and expedite project transaction processing and facilitate adequate sourcing of the skills to support improved performance in transaction processing. Review and strengthen the role of the land acquisition BLU in line with the new law and pending regulations. Review and support the implementation of organisational and staffing improvements at BPJT. The issues raised by this report are far-reaching and have significant implications for the direction of policies and allocation of funding for development and expansion of the national road network. However as noted there is a critical window of opportunity during 2013 when the RENSTRA is being prepared, for the strategic issues in the report to be considered and addressed in the directions being set for future spending on the national road network. Modern roads bring smooth, safe travel and access to amenities and markets, Aceh. Photo by Timur Angin. 51

74 ANNEXES ANNEXE 1: NATIONAL MASTER PLAN FOR ROAD INFRASTRUCTURE DEVELOPMENT The DGH National Master Plan for Road Infrastructure Development (Tentang Rencana Umum Jaringan Jalan Nasional), issued by MPW under 567/KPTS/M/2010, includes the identification of the following 24 road corridors in the national road network. Table 4 below includes the data on corridor road length and the extent of road widening undertaken during the current RENSTRA under the expenditure category of road development. Table 4. Current Development in National Arterial Road Corridors of the National Master Plan Island Road Corridor Current Road Length Capacity Expansion Minimum Width Standard (km) (km) (m) Sumatera East ,0 Middle ,0 West ,5 Java Pantura north ,0 Middle Cross ,0 South Cross ,0 South Coast Cross ,5 Kalimantan South Cross ,0 Middle Cross ,5 North Cross ,5 Border Cross ,5 Sulawesi West Cross ,0 Middle Cross ,5 East Cross ,5 Bali-NTT Bali North-cross ,5 Bali South-cross ,0 52

75 ANNEXES Island Road Corridor Current Road Length Capacity Expansion Minimum Width Standard (km) (km) (m) Trans-Lombok ,0 Trans-Sumbawa ,5 Trans-Flores ,5 Trans-Timor ,5 Maluku - Papua Trans-Seram ,5 Trans-Buru ,5 Trans-Halmahera ,5 Papua Strategic Links ,5 Indonesia Total Distribution of road width standards 4.5 m width ,5 6 m width ,0 7 m width ,0 Source: Current national road master plan data from Bipran, DGH (2011) Figure shows that by close of the current program in 2014, only 14 percent of the network will have a width standard of 7 m, and 53 percent will still be at the very basic level of a 4.5 m width standard. Figure 17. Expected Distribution of Width Standard on National Arterial Roads after DGH Road Development Program 7 m width 14% 6 m width 33% 4.5 m width 53% Source: Data from Table 4 53

76 ANNEXE 2: ECONOMIC AND FINANCIAL DATA ON PLANNED EXPRESSWAY DEVELOPMENT IN SUMATERA EASTERN CORRIDOR AND JAVA NORTHERN CORRIDOR. No. Expressway segment Length km Table 5. Economic and Financial data: Java North Corridor Expressway Feasibil ity - IDR b Design - Land - IDR Construc IDR b b tion - IDR b Total - IDR b Construc tion unit cost - IDR b/km BCR NPV IDR b EIRR - % FIRR - % VGF - % VGF - IDR b 1 Cikampek-Palimanan , % 0% - 2 Kanci-Pejagan , % 45% Pejagan-Pemalang , % 53% Pemalang-Batang , % 41% Batang-Semarang , % 0% - 6 Semarang-Solo , % 52% Solo-Matingan , % 54% Mantingan-Ngawi , % 74% Ngawi-Kertosono , % 26% Kertosono-Mojokerto , % 53% Mojokerto-Surabaya , % 43% Total N Java Corridor ,45 862, , % Data source IndII (2011). Deliverable 7 National Road Master Plan Process (Final) - Table ibid. Section 8.2, p IndII (2011) Working Paper on Corridor Analysis. Package 2 Development of NRMP - Table 2.2 page ibid. Table 3.1 page ibid. Table 4.2 page Data not presented in ref. 3 - filled from basis used in ref. 1 Table 6. Economic and Financial data: Sumatera East Corridor Expressways No. Expressway segment Length km Feasibil Design - ity - IDR IDR b b Land - IDR b Construct ion - IDR b Total -IDR Construc b tion unit cost - IDR b/km BCR NPV IDR b EIRR - % FIRR - % VGF - % VGF - IDR b 1 Bakauheni-Palembang , ,1 11% 2 Palembang-Pekanbaru , ,2 3 Pekanbaru-Medan , ,3 4 Medan-B.Aceh , ,8 Subtotal South-North Palembang-Bengkulu , ,9 6 Pekanbaru-Padang , ,5 7 T.Tinggi-Sibolga , ,3 Subtotal Connectors Total - East Corridor Data source IndII (2011) Deliverable 7 - NRMP Process. - Table 7.4 page IndII (2011) Package 2 NRMP - Working Paper on Corridor Analysis - Table 2.3, page ibid. - Table D.1 54

77 ANNEXES ANNEXE 3: GENERAL GUIDANCE ON PREPARATION OF A NATIONAL ROAD MASTER PLAN 1. Preparation of the National Road Master Plan The purpose to be fulfilled by a National Road Master Plan is to: Define the overall 20 plus year framework that shows the structure of the desired expressway network and supporting arterial road network to be developed, and gives clear indications of how it will be realised, and, by so doing: Demonstrate how new national road development would make a substantial contribution to the success of the nation s economic corridors. Comprehensive study and thinking on how to provide appropriate connectivity between the key nodes (cities, ports, etc.) is critical to support the development of the economic corridors. Although the detailed development planning of the economic corridors is still ongoing, the principal expressway sections of the needed master plan can be identified with the option of adding other links, if needed, to serve newly identified nodes in the future. Detailed prioritisation of all links is not necessary at the outset because the volume of worthwhile and do-able sub-projects is likely to exceed the available budgets. The highest priority for the National Road Master Plan is to provide the expressway connections or high-grade highways between major economic centres and trading nodes such as cities, ports, rail terminals, airports and production areas. Subsequent master plans could address the regional and urban road needs. Importantly, land acquisition requirements for the ultimate cross section of proposed expressways and high-grade highways must be identified well in advance in order to allow the opportunity of reserving or purchasing land at appropriate costs. This also allows orderly adjustments to be made to spatial planning at a local level to coordinate the connectivity of infrastructure and to minimise any adverse impacts on residential or commercial ownership and activities. Because the performance of expressways may be affected by the performance of other arterial roads or collectors, the scope of a National Road Master Plan must consider the role of expressways and high-grade highways together with arterials and collectors. The National Road Master Plan would also identify the sequence of subsequent detailed Road Corridor Development Plans 26 whose outputs would progressively refine 26 Long-term network refinements and development plans for national expressway and supporting arterial and collector roads along key road corridors in the economic corridors is required. Further, the economic corridors need to be broken down into logical sub-corridors 55

78 the national expressway and supporting road network structure. Their outputs would also identify a series of phased sub-projects and supporting implementation actions in the following time periods: (i) One to three years for the Annual Work Plans and rolling programs; (ii) Four to 10 years 27 to indicate the road investments and actions needed for the medium term; and (iii) 10 to 20 years on an indicative basis. This framework is illustrated in Figure that indicates that it would be possible to complete a Preliminary National Road Master Plan within one year and progressively develop a more comprehensive Master Plan within five years if extensive resources are allocated to support the planning effort. Road Corridor Development Plans would be updated after five years depending on local circumstances to inform subsequent updating of the Master Plan. Similar planning and development of other provincial and urban road networks is required but this is a separate task not addressed in this report. 2. Preparation Steps This section provides more detail on the steps for preparation of the National Road Master Plan, set out in Box 2 on page 42, that are DGH-Bipran s responsibility. Step 1 Confirm Priority Economic Corridors The priority economic corridors would be expected to be identified by Bappenas since national, economic, and social development matters need to be considered. Step 2 Define Road Corridors and Their Priority DGH-Bipran and Bappenas would prioritise the road corridors (within economic corridors) based on technical criteria such as traffic volume/capacity ratio plus social accessibility needs. Prioritisation is essential as resources need to be focused on where the need and benefit to be achieved is high. Step 3 Specify Key Measures of Levels of Service Desired travel times and Levels of Service between key nodes on an end to end basis in each road corridor of the six priority economic corridors should be determined. However, given that the various geographic regions have different topography, development characteristics, and existing road infrastructure, the Levels of Service are likely to be differentiated by region. For example, in a mountainous region desired travel speeds may be lower than in a region with flat or rolling topography. to aid focusing of effort. The term road corridor is used in the conventional sense meaning that it could include possible alternative alignments or completely new parallel roads. 27 And hence the forward programs contained in the Five-year RENSTRAs. 56

79 Continued from above Continued below ANNEXES Figure 18. Flowchart for Developing a National Road Master Plan Node to node connectivity & supporting networks Standards, policies Concept Plans for Green Fields areas & land acquisition needs Indicative budgets IndII 1 Preliminary National Expressway Master Plan Updated National Expressway Master Plan I Informs: network structure, 1-3 year rolling program, 4 to 10 years, and 10 to 20 years indicative Concept Road Corridor Development Plan 1 East Sumatra Ground Truthing - Road Corridor Development Plan 2 Road Corridor Development Plan 3 Detailed network capacity expansion profiles Concept Plans for all roads Procurement readiness for first year sub-projects for East Sumatra & Road Corridor 2 Refined ToR for further Road Corridor Development Plans Budgets Road Corridor Development Plan 4 Jakarta Conurbation & other urban centre Road Network Plans 1 year 3 years Updated National Expressway Master Plan II Informs: network structure, 1-3 year rolling program, 4 to 10 years, and 10 to 20 years indicative Repeat/ update every 5 years Road Corridor Development Plan 5 Road Corridor Development Plan 6 Road Corridor Development Plans 5 years 57

80 Step 4 - Adopt Appropriate Design Standards Critical standards that should be considered are: Provision of free lanes adjacent to tolled lanes may be needed on some new expressway sections that are to be tolled and where no existing road can provide the function of a free alternative. Need for a full modern road standard for all road widening(that is 7 m or 14 m carriageway, 80 km/hour design speed and geometry, and year design life to ensure low maintenance needs). Axle loads for pavement design and bridge loading should be aligned with future ASEAN and other international standards, such as 11 tonnes or 13 tonnes maximum axle load. In low traffic regions guidelines would assist the design of roads appropriate to the generally low traffic volumes and their future function for instance adopt modern alignment for future economic growth, initial two lanes later with possible provision to expand to future expressway standard in the very long term. Step 5 Define the Expressway Network and Supporting Road Needs A primary road hierarchy would be defined in each road corridor. The long distance travel requirement would be catered for by the definition of the expressway network and its alignment. In most cases, new expressways on new alignments would need to be identified. Satellite imagery followed up by field work can be used to verify the likely feasibility of identified new expressway sections in an economical way. In this way, new investigations can supplement the tolled road network and the arterial roads identified in the National Spatial Plan. Local distribution roads also need to be addressed. The performance of existing arterials is likely to be important as the possible free alternative if a tolled expressway is to be developed, and for distribution of expressway traffic. It would be also necessary to identify which existing roads are actually performing the major arterial functions. In some cases, a provincial road may be performing a key arterial function and may require appropriate upgrading to best perform it and in the medium term may need to be re-classified as a national road. The indicative priority of identified expressway sections (i.e. sub-projects) and the desired initial and long term cross sections should be identified where possible based on available information on traffic volumes, composition and growth rates. Where there is sufficient information, these requirements should be translated into road corridor concept plans so that indicative land acquisition for the entire network at ultimate development can be identified and approximate budgets determined. Indicative land acquisition schedules would need to take into account availability of funding and the vulnerability of expressway sections to encroachment. In green field situations, land acquisition requirements should be able to be determined quite precisely through use of the concept plans. However in non-green field areas the 58

81 ANNEXES subsequent detailed Road Corridor Development Plans would need to identify the land acquisition needs indicatively and as reliably as possible subject to the outcome of consultations. The preferred road alignments should be determined on technical grounds in the first instance, on the availability of road rights of way in provinces and local government areas, and on consultation with provincial and local officials. A key policy issue is when and under what circumstances should an expressway be tolled. The National Road Master Plan does not have to determine what is tolled or untolled. This matter would be determined during the preparation of the subsequent Corridor Development Plans. The output of this step would be the Preliminary National Road Master Plan to be prepared by DGH-Bipran with technical support. Step 6 Identify Connections Between Economic Corridors All economic corridors would have to be linked appropriately. Such links should be included in Road Corridor Development Plans. Step 7 Prepare Road Corridor Development Plans The proposed Road Corridor Development Plans (for each key sub-corridor of the Economic Corridors) are fundamental for developing realistic rolling investment programs that fit within a strategic framework. They are the means by which the desired integrated network of expressways and supporting modern highways (i.e. the key supporting arterials and collectors) would be developed. The responsibility for the preparation of the Road Corridor Development Plans belongs to DGH-Bipran. Bipran would take the work to the pre-feasibility stage of project preparation. Under current institutional and legal arrangements, DGH-Bipran would determine the scope for private sector involvement in general terms. Where private sector involvement is considered desirable (or possible) the project would be transferred to BPJT for further project preparation and business case development including detailed determination of the mode of delivery (i.e. whether public or private) with the aim of taking the project to implementation. Process for Identification of Capacity Needs The approach developed makes full use of existing studies and available data. Where studies are recent and comprehensive (i.e. cover all classes of relevant road and have the correct geographical scope) then the process of identification of capacity needs and the associated activities and sub-projects would be straightforward. Where background studies are not up to date, and data are scarce, more field work, traffic count data and practical strategic planning would be required. Detailed traffic modelling would likely only be needed in the vicinity of the Jakarta conurbation and the other metropolitan centres where complex network effects are likely. 59

82 A capacity expansion profile would be developed for each major road corridor in each economic corridor and the road investment strategy whereby this is to be achieved, for example through expressway construction, development of new arterial roads, or widening of existing roads would be determined by using appropriate threshold traffic capacities relevant to each class of road for the desired level of service and traffic composition. The development strategy would at first be determined using current and forecast traffic volumes (based on assumed traffic growth rates) and comparing them to the chosen threshold capacities. In this way, the desired ultimate road cross section could be determined fairly well in most cases. Economic evaluation and consideration of non-economic factors would be used to confirm the most viable or socially desirable road projects and sequence of subprojects. Since the aim is end to end node to node connectivity, appropriate decisions on sub-project packaging would be required. The capacity expansion profile for each road corridor in each economic sub-corridor together with the results of analysis being undertaken on optimal investment strategies for road preservation (supported by IndII under a separate activity), will enable the Road Corridor Development Plans to give broad indications of: The shares of funds which should be allocated on economic grounds to the various types of road investment (for instance capacity toll road development and land acquisition needs; arterial road widening; preservation periodic maintenance, strengthening, reconstruction). The locations to which the DGH should be giving priority for investment in road capacity expansion. The timing of capacity expansion investments in particular to inform the three rolling programs. Step 8 Develop a 20 year Likely Financing Budget for Each Corridor From the capacity expansion profiles for each road corridor a pipeline of sub-projects and sub-project preparation steps would be identified. From these tasks not only can the three year rolling program for PBB (and RENSTRA) be developed but also a comprehensive view of financing needs including investment and recurrent financing (including viability support for toll roads) for informing future budget requests. A broad financial assessment of toll road development in the selected corridors will determine the possibility of involving private funding in expressway network development. The private funding of road projects must be recognised in preparing RENSTRA and rolling programs for example, in terms of the need for VGF or to provide connector roads to the new toll road. 60

83 ANNEXES Step 9 Prepare Important Sub-Projects for Early Implementation To ensure Road Corridor Development Plans lead to tangible improvements, it is considered quite important that preparation of some of the important but more straightforward sub-projects are carried out for early implementation. Preparing projects for private sector participation is complex and time consuming and requires considerable financial resources to complete a transaction via market sounding, commercial analysis, concession preparation, procurement, and negotiation. Furthermore, to achieve the appropriate allocation of risk requires national government via DGH or similar to arrange land acquisition and satisfy all environmental and social safeguard requirements, so that a successful private sector tenderer is able to commence implementation immediately. These tasks are the responsibility of BPJT and since the steps required would be time consuming it would not be possible to fully prepare a new toll road project (or sub-project) for implementation within the preparation period of a Road Corridor Development Plan. 3. Environmental and Social Aspects to be Addressed In the preparation of the Master Plan and the Road Corridor Development Plans, environmental and social considerations would need to be appropriately addressed Environment The consideration of environment aspects should be conducted in accordance with State Minister of Environment Regulation no. 11/2006. Specific guidelines for road project development include: General Guidelines for Environmental Management in Road Sector Guidelines for Environmental Management Plan in Road Sector: detailed mandatory environmental management in pre-construction, construction, and post construction (operation) stage Guidelines for Environmental Monitoring Plan in Road Sector: detailed mandatory environmental monitoring in planning stage, pre-construction, construction, and post construction (operation) stage including post project evaluation The above regulation and guidelines are applicable at the project (and sub-project) level. Although those regulatory frameworks have afforded some protection to the environment, it is inadequate for environmental consideration at the plans, strategies and policies level. Article 14 of Act no. 32 Year 2009 regarding Environmental Protection and Management suggested the national or local government to implement the Strategic Environmental Assessment (SEA) for each proposed project development at the plans, strategies and policies level. 61

84 National road investments should be planned in safe locations, taking account of mapped natural hazards such as earthquake, tsunami, floods and landslide risks. The present hazard maps by the Geology and Mitigation Department, Ministry of Energy and Mineral Resources will aid the assessment process but the maps need to be further developed, coordinated and consolidated to provide a complete picture Gender and Social Considerations Particularly in rural areas, good connectivity can provide accessibility to employment opportunities or business opportunities to people. For example, when home-work travel time is shortened parents can adjust working hours to suit, allowing the family income and standard of living to increase, as well as the productivity of the area. It can also allow mothers to participate in the workforce before their children become independent. These aspects should be considered in the economic or non-quantifieds analysis of a road project. On the other hand, adverse impacts from improving national roads connectivity can include the severance of communities, reduction of productive land and income. Where International Financial Institutions or bilateral donors are involved their environmental and social safeguards policies may also have to be satisfied. 62

85 ANNEXES REFERENCES Asian Development Bank, Japan Bank for International Cooperation & the World Bank (2005) Connecting East Asia: A New Framework for Infrastructure. Coordinating Ministry for Economic Affairs (2011), Masterplan Acceleration and Expansion of Indonesia Economic Development (Masterplan Percepatan dan Perluasan Pembangunan Ekonomi Indonesia MP3EI) Eric Howard & Associates (2008), Initial Investigation of a Possible AusAID Road Safety Project in Indonesia. Prepared for AusAid. July. IndII (2010), Application of Medium-Term Expenditure Framework and Performance Based Budgeting in Directorate General of Highways Indonesia., prepared for Indonesia Infrastructure Initiative (IndII) by Paterson, W. and Harahap, G., February. IndII (2011), DGH Road Development Program Package 2 Activity 206a Technical Assistance to DGH Various Reports., prepared for Indonesia Infrastructure Initiative by AECOM Ltd., June. IndII (2011a), Considerations for Future Support by IndII Phase 2 to the Road Sector in Indonesia, Working paper of Indonesia Infrastructure Initiative for AusAID, August. JARNS (2001). Java Arterial Road Network Study, Final Report, prepared for Ministry of Public Works, IBRD Loan 3913 IND, October. MARS (2010). The Establishment of a Master Plan for the Arterial Road Network in Sumatra Island, Final Report, prepared for Korea International Cooperation Agency and Ministry of Public Works, July. World Bank (2010), Logistics Performance Index Web Site. [ tentmdk: ~menupk: ~pagepk:210058~pipk:210062~thesitepk: ,00.html]. Accessed on 20 July. World Bank (2011), Transport in Indonesia. [ ONESIAINBAHASAEXTN/0,,contentMDK: ~isCURL:Y~pagePK: ~piPK: ~theSitePK:447244,00.html]. Accessed on 19 September. 63

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