1. Strategy for
Public Transport Revitalization
The Reform of the Urban Bus Industry:
Industry Structure, Planning, Regulation and Institutions
Richard Meakin
Legal and Institutional Specialist

2. 2
Challenges
• Falling bus ridership, increasing car and m/cycle use
• Traffic congestion affecting buses – a vicious cycle
• Private vehicle restraint is not politically feasible until
public transport offers an acceptable level of service
• Must avoid escalating subsidy: buses must be:
– demand-responsive
– efficient
– value for money
• Consolidation of the bus industry is complex:
– many stakeholders
– well-entrenched
– low cost/low quality equilibrium

3. 3
Key Constraints on Bus Industry Reform
Current System Proposed System
Route permits & control card.
Perpetual, no service obligations
Limited-duration contracts with
performance standards
Fleet owned by individuals, organised
into cooperatives
No service obligations
Fleet owned by company
Setoran daily rental to drivers Drivers employed, paid a wage
Flat fares Graduated fares based on distance,
service quality

4. 4
Opportunities
• Jakarta (non-BRT) buses all recover operating costs from revenue.
Retain this key threshold.
• Commercial operation and cost recovery imperative will impose
financial discipline and market sensitivity on planners, operators,
regulators.
• BRT and MRT will adopt electronic ticketing
– enables flexible pricing, data collection, secure revenue, passenger
convenience.
Promote a common ticket.
• MRT ridership will depend on effective integration
• Tendered contracts promote competition and demand-responsive
• Operation by companies will:
– mobilize market incentives, management expertise, capital
– enable internal cross-subsidy
– enable performance standards
– consolidate bus industry into a manageable number of clients

5. 5
Requirements for Successful Management of
Urban Buses
1. A coherent and progressive policy with clear objectives
and time frame
2. A manageable industry structure
3. An appropriate regulatory framework (laws,
regulations, standards etc)
4. A capable institution for monitoring, planning and
regulation

6. 6
Keberhasilan Pengelolaan Bis
Empat Pilar Keberhasilan Pengelolaan Bis
6

7. 7
Pillar 1 - A Coherent Policy
Keberhasilan Pengelolaan Bis

8. 8
Why Draft a Policy Statement?
• Encourages a formal, rational and comprehensive approach
• Successive statements enable a progressive, long-term, approach
• Notifies stakeholders and community of government’s proposals
and provides a focus for consultation
• Difficult dilemmas require community consensus and support
• Guides day-by-day decision-making
• Discourages short-term, political expediency
• Government’s performance can be measured against its policy
• Promotes investors’ confidence
• Can develop common strategies for many cities - mutual learning
• Provides a basis for transport law

9. 9
The Mayor of London’s Transport
Policy 2009
Fast Forward
Copenhagen 2003
Draft for Consultation
Examples of Urban Transport Policy Papers

10. 10
Does Jakarta have a Transport Policy?
No specific policy paper
Policy can be inferred from a variety of sources:
Government publications:
• Pola Transportasi Makro (PTM) 2007 - a transport infrastructure plan
• Grand Design draft 2010 - management principles, (not published)
Consultants studies:
• JAPTraPIS* 2012 a transport masterplan, advocates bus industry consolidation
Laws and regulations:
• Law UU 22 of 2009 on Transport
• DKI Perda of 2013 on Transport
Ministers statements and actions
DKI Transport Policy is not coherent, progressive
Still scope for short-term, ad hoc, expedient measures
Laws tend to pre-empt policy, most transport operations now illegal
* Jabodetabek Public Transport Policy Implementation Strategy’ (Japtrapis)

11. 11
Keberhasilan Pengelolaan Bis
Pillar 2 – An Industry Structure Amenable to
Regulation, Responsive to Demand

12. 12
Current Industry is too Fragmented to
Regulate Effectively – Must Consolidate
14,000 angkots
2,200 medium bus
1,600 big bus
• Each vehicle licensed separately by Route Permit and
Control Card - no service obligations
• Each setoran vehicle is a separate business, must recover
costs each day
• Co-operatives act as intermediaries
• Illicit regulation fills the ‘regulatory vacuum’
• Setoran separates owners from drivers
• Nobody is accountable for service delivery

13. 13
Keberhasilan Pengelolaan Bis
Pillar 3 – A Regulatory Framework Appropriate to
Industry Composition and Policy Objectives

14. 14
Some Principles of Regulation
• Operators’ incentives should align with policy objectives,
eg to maximise ridership, respond to demand
• Competition is the most effective incentive
• Operators must be accountable for service delivery
• Some functions should be left to the operators: eg minor
changes to fares and routes
• Severing the link between revenue and cost (eg by pay-
by-km) requires complex management, financial
accountability, and incurs a high risk of escalating subsidy

15. 15
Conditions to Attract Private Investment
Contracts must attract commercial, corporate operators
with experience, qualified management and financial
resources
Government must minimize risks:
– Risk of ‘unfair’ competition (low cost, low quality, no
service obligations) from angkots, illegal modes,
and government buses
– Risk of fare constraints for socio-political reasons
despite rising costs
– Risk of congestion reducing bus productivity and
efficiency
– Risk of imposing unprofitable service obligations
– Risk of high front-end investment (eg depots)
Contract conditions must give a reasonable assurance of
cost-recovery over the life of the contract

16. 16
Best Practice in Commercial Contracts
• Minimum contract - one route. Can be area network
• Private companies with resources and management skills
• Operating under multi-year, fixed-term, contracts
• Service obligations with sanctions
• Competition for contracts
• Market incentives, some commercial freedom
• Cost recovery, no operating subsidy
• Fares to reflect market and costs

17. 17
The National Law Provides for Bus Reform
National Law UU22 on Transport:
• Encourages ‘healthy competition’ (198)
• Main routes must be served by big buses (158)
• Small buses may not operate parallel to big buses (158)
• Operating right may be a limited-duration contract, or an
area network (174)
• Contracts to be awarded by ‘selection or tender’ (174)
• No individual may operate a fixed-route transport service
(139)
• Fares for non-economy routes set by the operator (185)
• Non-economy services may not be subsidised (185)
• All public transport operators to comply with minimum
service standards, to be elaborated by regulation (198)
• No Ministers regulations yet made under UU22

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The DKI Perda of 2013 – A Missed Opportunity?
• Does not expand the reform provisions of UU22
• Many matters left to Governor’s regulation
• May subsidise passengers (conflicts with UU22)
• Route or area contracts awarded by ‘selection’ or tender,
but 5-year Route Permits and 1-year control cards
retained (97–106)
• Operators submit monthly performance reports (102)
• Maximum age of buses 7-10 years (Art 51). Euro 2 (54).
• Small buses to be replaced by large buses on expiry (52)
• DKI government to ‘monitor and evaluate’ each bus
route annually (112)
• Head of Dishub must evaluate the performance of the
transport system every year (205)

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Keberhasilan Pengelolaan Bis
Pillar 4 - A Capable Agency to Manage Reform
and to Plan, Monitor, Regulate

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Key Roles of the Agency
• Manage the reform process
• Plan
– Annual 5-year network, service and financial planning cycle
– Coordination with other government agencies (economic affairs,
land use, infrastructure, police etc)
– Draft transport policy and strategy
• Monitor
– Monitor the performance of the PT system and all operators vs
demand, affordability, policy objectives
– Introduce measures to address deficiencies in the annual plan
• Regulate
– Procure transport services under contracts
– Take measures to remedy deficiencies, improve performance
– Maintain balance of supply/demand, revenue/cost/affordability

21. 21
• Established and defined by a regulation
• Governed by an appointed board
• Clear objectives
• Accountable for performance
• Some autonomy, within legal limits:
- revenue and expenditure
- staffing and conditions
- operations
Features of a Transport Authority

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• To procure public transport services using formal and transparent
competitive procedures
•To coordinate and integrate several transport modes, eg to manage the
modal share between bus and rail
• To coordinate transport strategies and financial arrangements between
multiple local governments
• To provide political accountability for subsidies from public funds
•To concentrate limited resources – expertise and funds.
• To reduce opportunities for direct political interference in service
provision
• To focus policy attention and funding on urban transport
• To coordinate the programmes of different departments responsible for
different aspects of urban transport.
• Sometimes a condition of donor project funding to manage funds,
ensure supervision and accountability.
Functions of a Metropolitan Public
Transport Authority

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Steps in the Transition Towards a
Jabodetabek Transport Authority
Phase 1 - Strengthen Dishub’s capability:
– to plan, monitor, regulate
– to manage the consolidation and reform of the industry
Phase 2 – Create a DKI Public Transport Authority based
on the strengthened Dishub public transport division
Phase 3 – Extend the jurisdiction of the TA to Jabodetabek