1. Indonesia Railways in International Perspective HWTSK, Inc An Outsider’s Assessment

2. 1 Better Than We Expected Reports from many sources let us to believe: – The railway was in poor condition – Had poor discipline – Was unsafe We inspected the railway in a series of visits We benchmarked some Indonesian Railway measures. against similar railways The Indonesian Railway is much better than we expected. But there is room for improvement

3. 2 Limited Interaction with PTKA Until Recently In the following pages, we will look at some very general benchmarking data Then, we will correlate that data with our observations This correlation provides a preliminary assessment of the railway from an outsider’s perspective Caution is always in order when comparing railways: Our analysis does not compare PT KA to the very large railways with different track gages Our analysis’s purpose is simply to get a general idea of how PT KA compares to other, somewhat similar railways

4. 3 We selected similar railways for comparison. These railways are meter or Cape gauge (same as Indonesia) At nearly 4,700 kilometers long, PT KA is typical of the other meter gauge railways Size of Rail Network

5. 4 Employment PT KA employment levels are generally consistent with other railways of its size - productivity measures are more interesting.

6. 5 Work Performed: Narrow Gauge Some narrow gauge railways perform much more work (passenger kilometers + freight tonne-kilometers). PT KA is lightly used.

7. 6 Network Productivity Some narrow gauge networks are highly productive – EFVM because of iron-ore, Japan’s railways because of high density passenger services

8. 7 Employee Productivity Network density helps employee productivity measures – here EFVM and South Africa in freight transport, but Japan in passenger transport

9. 8 Employee Productivity PT KA relatively low network density reduces employee productivity as measured by network kilometers per employee

10. 9 Motive Power Productivity PT KA’s locomotive and power unit fleet is relatively productive Dense infrastructure (signals, Catenary) or high axle loads help EFVM and Japan achieve high motive power unit productivity

11. 10 Freight Wagon Fleet Productivity PT KA’s wagon fleet is moderately productive - limited by light axle loads. Railways with more productive freight wagon fleets have higher axle loadings.

12. 11 Passenger Vehicle Fleet Productivity PT KA’s passenger vehicle fleet is productive, even comparing it to Japan A high proportion of urban transport trips helps increase PT KA passenger vehicle fleet productivity

13. 12 Passenger Fares PT KA’s average passenger fares are low, even compared to China.

14. 13 Freight Charges PT KA’s average freight tariffs are relatively high

15. 14 PT KA has been focused on passenger transport Passenger services appear to be relatively productive but efforts to increase revenue density of trains (Rupiah/train path) should be considered Low axle loads and short train lengths are fine for passenger traffic but a hindrance to freight transport in its markets – Geography of Indonesia limits length-of-haul – Current limitations make freight less competitive – Freight and passenger markets in Java very competitive for road, air and sea transport, making it difficult to increase freight market share

16. 15 Investment should be focused on limitations While the infrastructure is in good condition, speeds can be increased – More precision in track maintenance equipment can improve line and surface – New signal systems can improve capacity and permit higher speeds – These investments can provide better financial returns than double tracking Low axle loads and short train lengths are OK for passenger traffic but a hinder freight transport in PT KA markets – Short potential haul lengths require high productivity from the railway – fast service or heavier loading, or both – Freight and passenger markets in Java very competitive for road, air and sea transport, making it difficult to increase freight market share A long term plan to increase axle loading capacity and reduce the tare weight of freight wagons can help make freight more competitive

17. 16 Some Preliminary Conclusions Scrap old rolling stock. other materials. and facilities that are uneconomic to operate – they clog the network, represent idle money, and send a poor message to employees and customers Invest in modern track maintenance machinery – not only for labor savings but also for increasing materials’ lives, and for improved commercial capabilities and line capacity the better track offers Invest for the long term, e.g. in higher axleloads Investigate international practices more fully – Given PTK’s axle load limits, low-tare high-capacity wagons are more commercially viable even if these wagons cost a premium price – Develop more detailed specifications for technology investments to ensure inter-operability and maintainability and to reduce spares requirements Simplify the organization structure to streamline decision making – too many parties involved in decisions, too many layers of HQ, regional, and local organizations Think “where you want to be”, not “where you are.”

18. 17 Thank you!