Economic Impact during Covid-19 Pandemic to Road Transportation Business

This Policy Brief recommends Covid-19 protocols implementation and incentives provision for road transport business consolidation.

Center for Policy and Public Management (CPPM) SBM ITB was invited by the Ministry of Energy and Mineral Resources (MEMR) to evaluate public transportation during the COVID-19 pandemic. Problems facing the road transportation business during the pandemic include several key issues, as follows:

1. Restrictions on road transportation capacity during the Covid-19 pandemic, which impacts the overall supply and demand of the business;

2. Changes in passenger behavior due to the Covid-19 pandemic, which impacts road transportation passenger volume;

3. Changes and adjustments related to road transportation business operational costs due to the Covid-19 pandemic;

4. Changes and adjustments related to the operation of the business organization, including human resources (HR) aspects, due to the Covid-19 pandemic; and

5. Changes and adjustments to ensure the road transportation business remains resilient due to the economic impact caused by the Covid-19 pandemic.

DOWNLOAD POLICY BRIEF

Through the Soft-Systems Methodology, we recommend:

Key Policies:

• Standardization of the implementation of Covid-19 protocols with technological support for road transportation (including bus stops and terminals) by the government to provide a sense of security for passengers.

• Law enforcement against illegal road transport to ensure fair business competition.

• Each operator has a standard operating procedure (SOP) for health protocols and handling of suspected Covid-19 cases in road transport, which must be disseminated to users and reported to relevant parties.

• Moratorium on road transport business licenses.

• Providing incentives for road transport business consolidation (cost structure efficiency and business model innovation as alternative sources of funding/new revenue).

Policies based on Priority of Funding Availability:

• Cost subsidies: (a) Health protocols that focus on easy-to-implement yet high-impact measures and align with the behavioral nudge principle (queuing systems, thermometers, blowers, hand sanitizers, disinfectants, rapid tests) and HR training costs on Covid-19 protocol standard operating procedures; (b) Licensing fees, SKRB (Standard Vehicle Registration Certificate), KIR (Vehicle Inspection Certificate), and other administrative costs.

• Motor vehicle tax relief, interest expense relief, and loan restructuring.

• Operator fare subsidies (as a public service obligation for urban transportation) and human resource costs (e.g., emergency funding support implemented at PT Transportasi Jakarta to pay the basic salaries of non-performing fleet personnel).

• Buy-the-Service schemes in major cities to ensure service quality while maintaining cash flow in the transportation industry (a successful example of BTS in DKI Jakarta, with regional-owned enterprises or public service agencies).