City-owned public transportation operator PT MRT Jakarta has recently announced a plan to go public in 2022 after predicting a profit between Rp 60 billion (US$ 4.26 million) and Rp 70 billion by the end of this year.

PT MRT Jakarta president director William Sabandar said the company planned an initial public offering (IPO) in the next two years to increase transparency and raise fresh funds from the public.

"We want to increase our corporate transparency, even though PT MRT has been quite transparent by displaying our financial statements on our official website," William said on Wednesday, as reported by Kompas.com.

William said he believed the company could be listed on the Indonesia Stock Exchange (IDX) within the next two years, citing its healthy financial performance.

"If we can keep our financial performance good for three years in a row, we can launch our IPO. We want good governance in our company, so we need control from the public. We have been publishing our financial reports on our website so we can get used to being accountable," William said.

He said the company’s financial performance would be even better in coming years as the length of the MRT tracks would be extended to 230 km by 2030.

The first phase of Indonesia’s first underground railway was launched in April and was welcomed by residents. The tracks spanned 15.7 kilometers, connecting Lebak Bulus in South Jakarta to Hotel Indonesia traffic circle in Central Jakarta.

The second phase of construction will start soon. The new line will go from HI traffic circle to Kota in West Jakarta. It will also continue to West Ancol in North Jakarta.

The project is expected to be finished by 2024, while another new line to connect Unjung Menteng in East Jakarta with Kembangan in West Jakarta will begin construction in 2022.

"We consulted several experts about our IPO plan. We found out that one of the requirements to launch an IPO is that we should be able to have raising profits for three consecutive years," William said.

He said the city-owned company had successfully made a profit during its first year of its operation, mainly from ticket sales, ticket subsidies and non-farebox business.

The revenue from non-farebox business included naming rights, partnerships with telecommunication companies and retailers. It exceeded the revenue from ticket sales.

“From the non-farebox, we estimate that we will close 2019 with Rp 225 billion of revenue. That is larger than our estimated earnings from ticket sales, about Rp 180 billion,” he explained.

However, William said most of the company income – 560 billion – still came from ticket subsidies from the Jakarta administration.

"From our estimated revenue of Rp 1 trillion this year, the company is expected to use about Rp 940 billon for operational costs, meaning we will have about Rp 60 billion of profits. The company is also expected to gain Rp 40 bllion from bank interest," he said.

To further expand its business venture, the company plans to sell more of its stations’ naming rights.

So far the company has sold the naming rights for five stations to private companies. Each sponsored station features the logo and promotional material of the company that owns the rights.

William said he was upbeat about the company’s performance. He thought its profit could double or triple in the following years if the number of daily passengers increased by 10,000 people per year and more deals were made with private companies.

“The company aims to get about Rp 200 billion to 250 billion in revenue in 2020 and Rp 300 billion to 350 billion in the following year. By 2022 we will get ready to go public,” he said. (nal)