Indonesia gears up electrification of public transport: forum addresses opportunities, challenges, and funding

Held in April 2024 in Jakarta, the workshop highlighted the need for a multi-stakeholder approach to accelerate the implementation of electric buses in Indonesia. Over 50 participants from 29 institutions attended, representing government institutions, development partners, private sectors, state-owned enterprises, and non-profit organizations.

This collective effort is driven by two key factors: the government's ambitious target of electrifying 100% of public transportation in Indonesia by 2030, and the pressing environmental need to reduce greenhouse gas emissions and air pollutants.

Progress, opportunities, and challenges in EV Adoption

Iman Sukandar, the Subdirector of Multimodal and Intermodal Transport at the Directorate of Road Transport of the Ministry of Transportation shared current policies and the progress of electrification of public transportation in Indonesia. 
 
Iman cited a few legislative developments that further the objective, such as Law No. 22 in 2019 on traffic and road transportation, Presidential Decree No. 79 in 2023 on the acceleration of the program for battery-EVs, and Presidential Instruction No. 7/2022 on the use of battery-EVs for government operations. Developments like these make transformative sustainable transport solutions even more possible as policies serve as legal backbones of such initiatives. 
 
Further, the Ministry is also developing a nationwide comprehensive roadmap together with the Institute for Transportation and Development Policy (ITDP)  . They also launched a stimulus program to encourage local governments to employ electric buses. This initiative first supported ten cities, with the intent to hand it over to regional authorities.

Aside from developments in government policies, notable progress was also seen in Transjakarta, the country’s largest bus system. At present, Transjakarta has 4,775 buses, 100 of which are low-entry bus EVs. They also have 20 operators which handle 244 routes all over the city. 
 
Daud Joseph, Transjakarta’s Director of Operational and Safety, (1) noted improved battery performance, (2) enhanced reliability and (3) cost-effectiveness as the bus system’s best practices within two years of the implementation of EV buses. 

Another notable progress was the result of a Klynveld Peat Marwick Goerdeler (KPMG) study  that Daud shared during the forum. It suggested a growing preference for public transportation in Indonesian society, which pushes the need to invest in the public transportation sector.

While these are great milestones to celebrate, challenges were also identified during the forum. According to Iman, the Ministry is working on achieving optimal cost-efficiency and overcoming technological issues as it implements its stimulus program. Transjakarta on the other hand, points out the need to revise current regulations on operations standards as it no longer accommodates electric buses and their specific requirements.

Financing and innovative business models

As financing EV development requires a structured approach, the forum emphasized the need for a supportive regulatory framework to facilitate financing mechanisms. 

A new business model was also explored in the forum. Shihab Azhar, Senior Operations Officer of International Finance Corporation, introduced the concept of “Asset Companies (AssetCo)”, a business model for fleet electrification. This is when different entities, including both the public and the private sector, collaborate to finance, own, and maintain EV fleets. 

As per Shihab, this approach has proven successful in countries such as Chile, Colombia, and India, and offers a potential solution for Indonesia’s EV sector.

The Road Ahead

The forum had a roundtable discussion which identified the need for collective effort and to establish a clear financial plan, with the help of the government, to improve efforts in sustainable mobility.  

"I am excited to see the same progress made in Jakarta in adopting electric public transportation into other cities, especially in Bogor", declared Ririn Kusuma, Indonesia Director of Clean Air Asia, as she concluded the event.   
 
The potential for follow-up discussions to explore policy and investment opportunities in greater detail were also discussed. Participants were also encouraged to collaborate in promoting the adoption of EVs in public transportation for a cleaner and more sustainable future for Indonesia.