SHOULD THE INDONESIAN PUBLIC TRANSPORT SYSTEM SHIFT TO PRIVATIZATION?

Abstract

This paper examines the debate surrounding the privatization of Indonesia’s state-owned enterprises (SOEs), focusing on the public transport sector as a critical case study. Using a mixed-method approach that combines desk research, financial analysis, and public perception surveys, the study identifies persistent inefficiencies rooted in political interference, soft budget constraints, and bureaucratic rigidity. Drawing upon ethical theory and political economy frameworks, the research argues that privatization is not merely an economic policy choice but a moral and political decision that reshapes the relationship between the state, market, and society. While privatization may enhance efficiency and fiscal discipline, it also risks undermining equity, accessibility, and public accountability if not supported by strong regulation. Survey findings indicate cautious public support for efficiency-oriented reforms, alongside deep concern for fairness and affordability. The paper concludes that Indonesia’s optimal path lies in a hybrid public–private partnership model that integrates market discipline with ethical governance to promote both economic efficiency and social justice.

Keywords: Privatization, Public Transport, State-Owned Enterprises, Governance, Indonesia