Economist Questions Feasibility of PSO Subsidy for High-Speed Rail

Existing Transportation Alternatives Challenge Justification

The Indonesian government is exploring the possibility of providing a Public Service Obligation (PSO) subsidy to the Jakarta-Bandung high-speed rail project, also known as Whoosh. However, economist Nailul Huda, Director of Economics at the Center of Economic and Law Studies, has expressed concerns about the feasibility of this approach.

Nailul emphasized that PSO subsidies are typically reserved for public services that are widely used and require government intervention. He pointed out that multiple transportation options already exist between Jakarta and Bandung, making it challenging to justify the need for a PSO subsidy for a high-speed rail service that prioritizes speed.

Limited Necessity for Fast Travel Times

"Not everyone traveling between Jakarta and Bandung needs fast travel times," Nailul explained in an interview with Kontan.co.id. This observation raises questions about whether the high-speed rail service meets the criteria for a PSO subsidy, which is generally aimed at services that are essential for the broader population.

Implications for High-Speed Rail Project

The debate over the PSO subsidy comes as the high-speed rail project continues to develop. The government's consideration of a subsidy highlights the ongoing efforts to support the project's viability. However, the economic justification for such a subsidy remains a subject of discussion among experts.