Chronology Of Formula E Jakarta With Problems Threatened To Loss Like Montreal

DKI Jakarta Governor Anies Baswedan when meeting with Formula E CEO Alejandro Agag in New York (Photo: Instagram @aniesbaswedan)

JAKARTA - The ambition of the DKI Jakarta Government to hold Formula E races takes a long round. Apart from being hampered by the COVID-19 pandemic, the issue of budget flushing which is considered to be a burden on the APBD is in the spotlight. Not to mention, if you look at past events, such as Formula E in Montreal, unfortunately it has not boosted the economy.

July 13, 2019, the Governor of DKI Jakarta, Anies Baswedan stated that Jakarta will host the prestigious Formula E 2020 car race. This was revealed by Anies after meeting with the International Automotive Federation (FIA) as the manager of Formula E in New York, United States (US).

The DKI Jakarta Provincial Government (Pemprov) stated that there are two routes around Monas which will be used as the 2020 Formula E racing track. Head of the DKI Jakarta Transportation Agency, Syafrin Liputo, said that the two routes had been approved by Formula E organizers.

Initially, on August 13, 2019, Anies claimed to need funds of 24.1 million or Rp. 343 billion to host the Formula E race. Not to forget that he also emphasized that it has great benefits for the economic side of Jakarta which has the potential to generate revenues of up to IDR 1.2 trillion.

Until September 20, 2019, Formula E, through its official website, confirmed that Jakarta will host the series on June 6, 2020. Apart from Jakarta, Seoul, South Korea and London, England is also included in the 2020 Formula E racing calendar.

Delayed by two years

During the second month of 2020, the issue of Formula E continued to roll. Initially, the problem arose regarding the selection of the circuit location.

The State Secretariat (Setneg) as the Commission for the Steering Committee of the Medan Merdeka Area did not give permission for the DKI Jakarta Provincial Government to hold an electronic car race in the Monas area by considering the region's cultural heritage status. However, in less than a week, Seteng changed his decision and gave permission to the DKI Jakarta Provincial Government to hold Formula E in the National Monument area.

The matter of place has been resolved, now a bigger problem has emerged: the COVID-19 pandemic. Chairman of the Indonesian Motorcycle Association (IMI) Sadikin Aksa said the International Automotive Federation (FIA) is monitoring the impact of the corona virus ahead of Formula E 2020 at Monas.

Until early March 2020, Anies then temporarily stopped all crowd permits in the capital for fear of the spread of the new corona virus. This decision automatically made Formula E on March 9, 2020 officially postponed. And the news of this delay is back, because the race is planned to be held only in 2022.

Budget issue

The problems don't stop there. Now, it is the turn of the budget issue to be highlighted. The amount of budget disbursed for this racing event is considered to be a burden on the regional budget.

In the results of the audit issued on June 19, 2020, the Financial Supervisory Agency (BPK) noted that the Governor of DKI Jakarta Anies Baswedan has paid a commitment fee and a Bank Guarantee of nearly IDR1 trillion. In detail, there is a commitment fee paid in 2019 worth IDR 360 billion. Then in 2020, the commitment fee paid is equivalent to IDR 200.3 billion. Then, the Bank Guarantee that is paid is worth IDR 423 billion.

The BPK has criticized the Formula E budget. The financial institution noted that all financing costs for the electric-powered car racing event are still borne by the DKI Regional Budget (APBD). In fact, Anies has issued Governor Regulation Number 83 of 2019. In it, Anies has assigned the BUMD PT Jakpro as the organizer to be able to find sponsors or cooperation from other parties.

Therefore, BPK urged DKI Dispora to encourage PT Jakpro to cooperate with other parties. In principle, it is in order to find other sources of funding apart from the APBD.

The DKI Provincial Government has been asked by a number of parties to withdraw the money disbursed so that it can be diverted for handling the pandemic. However, the BPK noted that the commitment fee could not be withdrawn.

Illustration (fiaformulae)

The BPK assesses that the DKI Jakarta Provincial Government has not conducted the negotiations optimally. Therefore, the BPK asked PT Jakpro as the organizer of Formula E and representatives of the DKI Provincial Government to renegotiate with the FEO related to affirmation and clarify the status of the sustainability of the cooperation and the status of the funds that have been deposited.

Deputy Governor of DKI Jakarta Ahmad Riza Patria responded to the results of the BPK audit regarding Formula E. According to Riza, the DKI Jakarta Provincial Government still wants to hold Formula E. The plan is that the international car racing will start to be held in 2022.

"Due to the COVID-19 pandemic period, in 2020 and 2021 it is not possible. We have decided together with related parties, we will carry out Formula E in 2022. Hopefully, in that year the atmosphere will be different from the pandemic. drastic, "replied Riza.

Test the economic impact

One of the problems that is of concern to many people is the matter of "redundant" public money being used. Especially in the midst of the COVID-19 pandemic, the budget to deal with the problem of spreading the disease is of course a priority. In addition, many people are skeptical about the reciprocity of the money that was disbursed to finance Formula E, which are also predicted not to be worth it.

We can actually take a lesson from the Formula E event in Montreal to see how the economic impact this race creates. But before reviewing this, we also need to see whether the Formula E title itself brings profit or loss.

As reported by Forbes, the Formula E electric-powered car racing event has actually spent more money than it has generated since its inception in 2014. Although at certain periods, this event has begun to appear to find a formula for profit.

When Formula E was launched in 2014, many observers believed the championship would stall in a matter of months. The new races are considered mere games and follow the title of the Formula Superleague, which connects the team with football, the Grand Prix Masters for former Formula One stars and the A1 Grand Prix where countries field their teams. And all those titles end in the pits, but Formula E is on track.

Unlike many ill-fated championships, Formula E is in line with the needs of automakers as it allows them to demonstrate their green energy image which is becoming increasingly important.

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A post shared by ABB Formula E (@fiaformulae)

According to a recent report by consulting firm McKinsey, electric vehicle sales increased 63 percent to more than two million units in 2018. And there is still room for growth as they represent only 2.2 percent of the overall light vehicle market.

Formula E not only shows off an electric vehicle or EV, but also simulates an electric vehicle on the same road that consumers use.

This race depicts the small noise and emission levels of the Formula E cars, so the race is possible in the city center and this has helped it become a favorite advertisement for the EV industry.

Bigger pegs than poles

Initially, the Formula E title was seen as a loss-making title because the cost of running it exceeded its income. Others say they don't have enough income to cover the costs and there is no doubt about that.

In 2018, for example, FEO - an institution that holds a Formula E license - made a net loss of US $ 28.4 million. This is because it spent 171.9 million US dollars for its implementation but only earned 143.5 million US dollars. And it's not the first time.

FEO's revenue has not covered its costs every year since Formula E was launched. While his income did grow three times from 2015 to 2018. However, that number was not enough to break even.

Meanwhile, from the perspective of the house where Formula E is held, there are actually a number of advantages to racing in the city center. Racing on city streets also keeps Formula E events right at the doorsteps of densely populated areas and this has attracted more manufacturers than those on the F1 event.

Audi, BMW, Jaguar and Nissan are all field Formula E teams this year joining Porsche and Mercedes to lead the standings following this weekend's season-opening in Saudi Arabia. However, Tesla, the world's most famous EV manufacturer, was absent despite favorable conditions.

Initially, this event did not charge the country that wanted to host it. However, after this title became known, he began to change his business model.

First look at the spectacular Montreal street circuit. Ride onboard with @RFrijns #MontrealePrix pic.twitter.com/MdhIUEzE6o

- ABB FIA Formula E World Championship (@FIAFormulaE) July 28, 2017

The fate of Montreal

Although it is considered to be promising a large turnover of money, Formula E titles in several regions have actually experienced obstacles. And one of them is in Montreal, Canada. There is a report that reveals that the 2017 races had a surprising impact on local businesses.

According to the survey institute Formule Citoyenne quoted by the Mulier Institute Utrecht (2020) instead of boosting the merchant economy, 70 percent of them said the opposite. The majority of business people are losing money. They surveyed 70 traders and as a result, 49 of them admitted to having experienced the negative effects of racing. Meanwhile, 28.6 percent said they did not make a profit and only 1.4 percent made a profit.

According to the agency, "despite the positive impact on some businesses, many traders are still angry with this sometimes costly experience." He added that the losses incurred from the race ranged from US $ 500 to US $ 18,000 per trader. One of the reasons is due to competition between racing facilities and local businesses.

"Formula E is a small, isolated and autonomous village, with its facilities and infrastructure. There is a kind of" autonomous area "which includes food trucks that do not originate in the area, to the detriment of nearby restaurants," the Formule Citoyenne statement read. The race then received a red light and was removed from the calendar the following season.

The FEO financial report even acknowledges that risks are evident in the changing array of cities. Organizing races on city streets carries its own challenges, but because city street racing is part of the DNA of the series and attracts a wide audience, the group continues to attract deals from the city or promoters.

* Read other information about Formula E or read other interesting writings from Ramdan Febrian.

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