Rail liberalization for Indonesian railways: Learn from the experience of Germany and France

The European Union (EU) has long been regarded as a model for global rail liberalization. Rail reform experiences from EU members have been well documented in recent years to comply with new EU legislation requiring EU members to introduce competition for passenger rail services beginning in 2020. However, outside of Europe, the discussion of rail restructuring remains limited. This article examined rail reform in South East Asia, more specifically in Indonesia, by examining domestic policy, access charges, and pricing principles, as well as market growth. The purpose of this paper is to conduct a comparative analysis of two European Union members – Germany and France – to identify lessons learned. Several critical issues include the following: 1) the vertical integration model used in France and Germany can be adopted with some adjustments to accommodate the national context; 2) government support through the use of subsidies cannot be separated from public transportation such as railways, but the amount will most likely depend on the rail market, policy, and institutional landscape; and 3) an independent regulatory body should be established to open the rail market to competition and promote fair access and contracting.