Category Archives: Transport and logistics

‘Macet’: How to solve traffic congestion?

One of the most frequently used terms by people living in Jakarta is “kena macet” meaning “(I) get stuck in a traffic jam”.

Jakarta is (unfortunately) notorious for its traffic congestion. Estimates in 2011 suggested that traffic jams cost the city US$ 3 billion each year. Solutions to these problems are obviously not straightforward. They involve complexities about the governance structure (whether the central government or regional government is responsible for this), infrastructure development, etc.

Syarifah Amaliah, Master of Applied Economics at the University of Adelaide shared her thoughts about congestion charges in developing countries that might applicable to Indonesia.

In developing countries, the congestion charges schemes are generally considered as a cost effective policy because the system charges on a per-pass basis and pricing structures are time- and congestion sensitive.

Based on the experience of developed countries, developing countries should consider emulating the congestion charges to solve traffic congestion.

Despite its high startup investment, congestion charges will be feasible when the cordon pricing was defined in the CBD area.

However, it is not recommended to implement the policy in the short run, particularly when mass public transport in the cities is still under provisioned.

Syarifah  Amaliah’s observations highlight that it is imperative for policy makers in developing countries to realise that congestion charges essentially stand as a part of a larger policy portfolios in traffic management.

The effectiveness of the congestion charges will be significantly interrelated in particular to public transport policy for achieving effective modal split changes and other complementary policies.

Other recommended complementary policy measures include providing safe motorized access, setting up the targeted discounts for low income groups and local residents, improvement in institutional capacity, and providing revenue recycling mechanism from the congestion charge to the Road Funds which is expected to generate more public acceptance for this policy.

 

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2013 Food Security Regional Dialogue-Medan: The Quiet Revolution in Staple Food Value Chains in Asia

Professor Tom Reardon of Michigan State University has lead research in the past 10 years on staple food value chains in China, Bangladesh, India, Indonesia, Philippines and Viet Nam where nearly 10,000 farmers and supply chain actors being surveyed. He gave a presentation over the Skype on Day 2 of the 2013 Food Security Regional Dialogue, Medan.

Modern supermarket in Medan, Indonesia

On eve of Green Revolution, there has been debate in these countries on development to choose the following. First is a large-farm development path where supporters saying large estate farms mean fast development. Moreover, there are no good technologies for small farm and small farms wont adapt new technologies.

The second is small farm development path where supporters saying Green Revolution provides technology that makes small farmers as or more productive than large estate farms.  Also, small farm path fits land scarce, labour abundant situation.

All six countries adopted small farm development path starting with the Green Revolution in the 1970s now have massive investments in rural infrastructure. But what progress have they made in small farm modernisation and in developing supply chains from small farms to domestic market (95 per cent of the food market in Asia), especially the rapidly growing cities (urban areas are 75 per cent of food market in Asia).

Tom’s project found some surprising findings. Small farms are rapidly becoming small businesses who sell 70-90 per cent of output such as rice farms in India, China, Vietnam and Bangladesh. They are very responsive to the improved contacts. There has also been rapid intensification of small farms where they shifted into high use of new varieties, purchased seed, fertiliser, pesticide and herbicide. Some examples include shrimp and mangoes in Indonesia where they use new commercial varieties and high use of inputs.

Tom’s project also observed rapid mechanisation of small farming. There was rapid shift to high use of farm machinery to free labour from grain farming to higher income activities (horticulture, rural non-farm jobs). Rapid diversification of small farms was also observed where small farms ‘climbed the value ladder’ shifting from rice/wheat into vegetables, fruits, fish, livestock, dairy,etc and providing them 4-8 times earnings; or shifting from low-quality to high-quality rice with 50-100 per cent higher returns as in Vietnam and China.

Tom’s project also reported ‘quiet revolution’ in food supply chains. It was mainly grassroot revolution by small/medium enterprises and driven by private sector (not government intervention).  There was rapid spread of ‘cold storages’ and  modernisation of wholesale markets and traders and rice mills. Spread of supermarkets in all six countries was also significant. This all supply chain development is important because it forms 50-70 per cent of food costs to consumers.

The role of the government has been extremely important. In all six countries except grain in Indonesia, government role in direct intervention is very small. There was minimal role in input supply and crop marketing. The role of government in enabling farmers and grass-roots private sector was very large. This includes agricultural research (eg seed varieties), investments in roads, ports, electricity grids, permitting cell phone expansion and promotion of information and extension.

*This summary was written by Risti Permani (University of Adelaide) and may be subject to her personal interpretation of the presentation.

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Filed under Agriculture, East Asia, Economic development, Economic Integration, Food and agriculture, Trade, Transport and logistics

Port of Jakarta Fresh Food Import Closure

Tanjung Priok Port

Being South East Asia’s biggest economy, Indonesia’s rising middle income populations are well-identified by exporters across the globe. The increased penetration of modern supermarkets, highly associated with the phenomenon, has contributed to increased inflows of fruits and vegetables imports to the economy. According to a 2007 World Bank study, the value of fresh fruits and vegetables (FFV) output doubled in Indonesia over 1994-2004, to become a 10 billion dollar industry, while imports of FFV nearly tripled over that  decade, but by today are still very minor, accounting for about 3 percent of FFV consumption in Indonesia (the same as the developing country average). The increasing trend, however, seems to already raise concerns leading the Indonesian government to issue a ban on Port of Jakarta (Tanjung Priok sea port) fresh food imports planned to be enforced in March 2012. The ban is applied to imports of “Fresh Food Originating from Plant”, “Fresh Fruits And/Or Fruity Vegetables” and “Fresh Layered Tuber Vegetables” that will be restricted to four entry points, which do not include the country’s major sea port in Jakarta.

Why does the government plan to implement such a ban and what would be the likely effects?

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Filed under Economic development, Economic Integration, Food and agriculture, Indonesia, Investment, Trade, Transport and logistics

More on Structural Reform

Kereta Rangkaian Listrik (KRL)

Professor Christopher Findlay, University of Adelaide

An article by  by Maria Monica Wihardja in the Jakarta Post(21/9/2011) adds another valuable contribution to the continuing discussion of the structural reform challenge of Indonesia.

Dr Wihardja mentions the APEC study which was also noted here in a recent post.  She mentions the size of the gains from structural reform.    This is an important point and the results of that analysis are interesting and worth exploring a bit further.
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Filed under Economic development, Economic Integration, Employment, Indonesia, Reform, Review of article, Services, Trade, Transport and logistics

Ten Messages about Structural Reform

Improvements in public transport systems and logistics in Indonesia are important to improve investment environment in the economy.

Professor Christopher Findlay, University of Adelaide

Maria Monica Wihardja writes on East Asian Forum on 23/9/11 (available here) about Indonesia’s challenges in implementing its commitments on structural reform.   She calls for a clear understanding of the priorities and argues that what matters is both bureaucratic and regulatory reform.

The design of a structural reform program was the topic of a research project for the Policy Support Unit (PSU) of APEC released earlier this year.  The full report is available here. Ten key lessons from past efforts and structural reforms are identified in the report: these are all relevant to Indonesia for the work on the reform agenda which Dr Wihardja calls for.   As she says, getting this agenda right is difficult and requires a lot of work.  But it is possible.  The 10 key lessons provide a significant amount of guidance.
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Filed under ASEAN, Economic development, Economic Integration, Indonesia, Investment, Reform, Review of article, Trade, Transport and logistics