PRECONDITION OF RAILWAY RESTRUCTURING IN DEVELOPING COUNTRIES: A CASE STUDY OF INDONESIA

The railway restructuring process in Indonesia was driven by coercive process with the involvement of World Bank through Railway Efficiency Project. The failure of REP was trying to be repaired with the establishment of Law No. 23/2007 on Railway. Elimination of monopolisation by incumbent operators and giving opportunity to the private sector and local government to join the railway sector are reform program set by the new law. Ironically, the new law is not completely implemented due to budget constraints and weak basis of restructuring. Since the restructuring process is still continuing, proper preconditions have to be created to ensure it�s success. The dissertation uses a literature review involving a material harmonisation study i.e. best method of railway restructuring and privatisation, an experience from Japanese railway restructuring, explanation of Law No. 23/2007 on railway. A review related to documents and academic articles was conducted to gather information regarding the process of railway restructuring in Indonesia. Legal framework amendment, assets re-evaluation, human resources assessment and obvious support from the government can be considered as the most essential preconditions. In order to ensure the success, those parameters have to be supported by the existence of good governance