ABSTRACT:
THE DEVELOPMENT OF NATIONAL ROAD NETWORK UNDER BUDGET CONSTRAINT: A CASE OF INDONESIA
Authors :
Parikesit, D., Norojono, O., Abimanyu, A.
Keywords :
road network, development, budget allocation, economic growth, equilibrium model
In many developing countries, road network is very essential in promoting country’s economic development. Indonesia, at the beginning of 1993 has 65,350 km national and provincial roads and is expected to have an additional 10,000 km by the end of 1998. This figure has made the country’s growth in road length as the second fastest in the Asia and Pacific region with 7.25% during 1985-1994. However the country’s road density remains low (0.181 km/km² in 1995, ranked 14th among Asia-Pacific countries), showing the still increasing demand in the road supply. The need is also enlarged with the fact that there is a disparity of road quality between the Western part of Indonesia – which is relatively more prosperous, and the Eastern part.
Indonesia has long been using a computer software called IRMS (Integrated Road Management System), which is originally developed and used in western countries, for national and provincial road maintenance and rehabilitation program. The system basically uses traffic volume and existing road quality, represented by IRI value, to determine the treatment for a particular road segment or section. The maintenance and rehabilitation costs are then combined with the benefits accrued from Vehicle Operating Costs and other savings to obtain the economic feasibility of the investment.
The approach assumes that there is no budget constraint to implement fully the maintenance and rehabilitation program. The problem occurs since the country has a limited national budget to be allocated to all development sectors. There has been also no instrument to demonstrate the contribution of road sector investment to the national economic growth and thus makes it difficult to justify the investment needs. To overcome the above problem, a combination of a macro economic model and a micro model is required. The Computable General Equilibrium (CGE) is a macro economic model of supply and demand for all sectors. The study used INDORANI software to estimate the parameters used in the CGE model. The software is employed to model the impact of road sector investment under an unlimited as well as constrained national budget. The result is then iterated with the result of IRMS software to produce five years national and provincial road rehabilitation and maintenance program.
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Abstract submitted for The East Asia Society of Transportation Studies Conference Taiwan, 1999.
Dr. Danang Parikesit and Mr. Olly Norojono, M.Sc. are lecturers at the Faculty of Engineering, Gadjah Mada University, Dr. Anggito Abimanyu is a lecturer at Faculty of Economics, Gadjah Mada University, Yogyakarta, Indonesia.
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