Riding the Rails to Prosperity

How a new railway line can transform a province

In the late 1970s, Deng Xiaoping, China’s paramount leader, embarked on a bold vision to modernise and develop the country.

One of his most notable achievements was expanding the railway system, which he saw as a crucial step in achieving this goal.

Under his leadership, China’s railway network grew rapidly, connecting major cities and remote regions and facilitating the movement of goods and people across the country.

This contributed to China’s unprecedented economic growth and social development.

Fast forward to today, a similar story is unfolding in Indonesia.

The railway line from Makassar to Parepare, which connects two port cities and three districts in South Sulawesi, stands to transform the province’s economy, people, and livelihoods.

However, experience shows that despite investment in transportation infrastructure, many local communities don’t necessarily benefit.

They tend to lack access to resources, skills, and opportunities needed for economic growth.

President Joko Widodo has been pushing for Indonesia to invest in infrastructure, particularly in regional areas, since he took office in 2014. 

The Makassar to Parepare railway line is a significant step towards achieving this goal, as it will improve transport connectivity and boost trade and commerce in Indonesia.

It will make it easier for farmers, miners, and exporters to access domestic and international markets, which will help to boost the economy in the region. 

It will also make it easier for people living in South Sulawesi to travel between cities and find jobs in other areas.

However, as with any large-scale development project, challenges still need to be addressed before the railway line can be fully operational. 

Researchers from the Partnership for Australia-Indonesia Research (PAIR) – led by the Australia-Indonesia Centre and supported by Australia’s Department of Foreign Affairs and Trade, Indonesia’s Ministry of Transportation and the South Sulawesi Government – have studied the railway line and identified several challenges and potential solutions. 

One of the main challenges facing the railway line is its potential to pass through hazardous areas with raised earthworks that could impede water flow during floods. 

Earthworks could lead to potential disasters if not appropriately addressed. 

More research is needed to identify hazards, find potential risks, and create effective risk management plans to mitigate these risks.

Another challenge is that while there is strong interest among potential passengers for the railway, less is shown among freight movers. 

Both markets are price-sensitive, so a pricing strategy is needed with possible subsidies combined with education campaigns to increase demand for both passenger and freight services by making the railway more affordable and accessible to the public.

Intermodal play a crucial role in determining the effectiveness of the railway as a freight corridor, so it is recommended to develop an intermodal freight transport plan to increase the viability of train logistics by providing efficient and cost-effective options for moving goods and materials. 

The existing single-track rail network is also insufficient for frequent, timely passenger and regular freight trains to run concurrently, so optimising the public transport network and rail schedules increases accessibility and functionality by providing more frequent and timely trains for both passengers and freight.

Additionally, to ensure the railway line’s success, the study recommended creating a Smart Transportation master plan for five regions. 

One solution is implementing a Land Value Capture (LVC) scheme along the South Sulawesi railway corridor. 

This scheme involves managing the land around the railway line in such a way that the value of the land increases due to the railway, which can be captured and used to fund the railway’s operations and infrastructure. 

LVC can make the railway more viable and sustainable by generating additional revenue for its operations and maintenance. 

The railway stations along the Makassar-Parepare line also offer opportunities for transit-oriented development (TOD) and cargo-oriented development (COD), which can provide significant business growth for local governments, train operators, and the public.

TOD is a development focused on creating buildings and spaces easily accessible to public transportation, like railway stations. 

This can include things like housing, shops, and offices. 

COD is a type of development that focuses on creating buildings and spaces easily accessible to cargo transportation, like railway stations. 

This can include things like warehouses and logistics centres. 

TOD and COD can provide significant business growth for local governments, train operators, and the public. 

By creating these types of developments around the railway stations, it can attract more people to use the railway, more businesses to set up around the railway stations and increase the property value around the railway stations, thus providing more revenue for local governments and train operators.

The expansion of railway systems has been a critical factor in modernising and developing countries like China, and the Makassar-Parepare railway line in Indonesia has the potential to do the same. 

It is important to address the challenges and potential solutions identified by researchers to ensure the railway line’s success and maximise its potential benefits for the people and economy of the region. 

With the right planning and implementation, this railway line can change the lives of the people and the region’s economy, just as it did in China.


Check out the policy brief that covers this topic:

Partnership for Australia-Indonesia Research (PAIR), 2022, Maximising the effectiveness of the South Sulawesi railway line, Policy Brief, Australia-Indonesia Centre, December

Link to the PAIR website

Link to PAIR’s policy briefs

Link to the Australia-Indonesia Centre

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