Toll Road in Indonesia: Private Goods or Public Goods

Cited from the abstract of my research dissertation: "Public Private Partnership Model: Study of the Implementation of Build Operate and Transfer (BOT) Contract in Toll Road Concession Agreement in Indonesia" (Postgraduate Program Faculty of Law University of Indonesia).

ABSTRACT:

This dissertation examines how the government of Indonesia implements the concept of build operate and transfer (BOT) contract model upon partnership between government and private sector or public private partnership (PPP), of which entered into the toll road concession agreement after the government promulgated Law No. 38 year 2004 concerning the Road (Law No. 38/ 2004) as new law which replaced the previous law. Data collected shows that total as built section roads refer to new law only 131,35 Km long compared with previous law which built as 610,62 Km long. Private sector was very small in participation as well with approximately 25% (twenty five percent) only from which the remain with approximately 75% (seventy five percent) operated by Jasa Marga as government enterprise. Notwithstanding that government had issued the regulations to support the development of infrastructure included toll roads, many obstacles could be seen such as: increasing of land price, land status which owned by government legally but of which financed by private investor, land acquisition, and there are many toll road sections are economic worthiness but not financial worthiness. However, the basic problem of which, the article 33 (2) of Indonesian Constitution (UUD 1945) stipulated that infrastructure as one of part of product (goods and services) that is very important for State and dominate the social lives are under authority of State. These could be showed from the pattern of investments where the land acquisition financed by private investor but then owned by the government legally. Theoretically, such patterns bring the toll road infrastructure as public goods whilst the concept of BOT contract model theoretically as private goods. This dissertation make an attempt to give a solution by making the legal structure where the toll road infrastructure contract model remain as private goods but do not release the status as public goods, of which by giving to private investor the right of land use (Hak Pakai) upon the management right of land (Hak Pengelolaan) authorized by Kementerian Pekerjaan Umum Republic of Indonesia, by giving such the right of land during the concession period to private investor,  then the toll road infrastructure status could be as private goods, of which could be transferred, rent or put as collateral in debt financing (Hak Tanggungan), but it keeps its public dimension, where the Government (State) still have the right of authority through Hak Pengelolaan.

(Dr. Iwan E. Joesoef, SH., Sp.N., M.Kn).