In­done­sia plans to reg­u­late ride-hail­ing rates

Viet Nam News - - ASIA BUSI­NESS -

JAKARTA — In­done­sia is pre­par­ing to launch reg­u­la­tions fix­ing the rates driv­ers and rid­ers for ride-hail­ing ser­vices such as Grab and Go- Jek re­ceive, two gov­ern­ment of­fi­cials said this week, cre­at­ing po­ten­tial ob­sta­cles for the com­pa­nies’ ex­pan­sion.

The reg­u­la­tions would meet driv­ers de­mands for more over­sight and higher rates but there are con­cerns that the ris­ing costs to the com­pa­nies could sti­fle their de­vel­op­ment as they bat­tle to dom­i­nate the ride­hail­ing mar­ket in South­east Asia’s big­gest econ­omy.

Sin­ga­pore- based Grab and home grown Go-Jek have been locked in price wars in In­done­sia, part of a wider fight to bring bank­ing, e- com­merce, ride­hail­ing, food- de­liv­ery and other ser­vices to every cor­ner of South­east Asia.

How­ever, since 2018, mo­tor­cy­cle taxi driv­ers work­ing for Grab and Go-Jek in Jakarta have held protest ral­lies call­ing for higher fares and bet­ter con­di­tions.

In­done­sia’s Min­istry of Trans­porta­tion plans to im­ple­ment min­i­mum and max­i­mum tar­iffs for car and mo­tor bike ride- hail­ing that will be “higher than Go-Jek and Grab’s cur­rent rates” and im­pose lim­its on pro­mo­tional price cuts, said Budi Setyadi, di­rec­tor gen­eral of land trans­porta­tion at the min­istry.

“This is for the safety and pro­tec­tion of driv­ers,” he said.

The min­istry’s Pub­lic Trans­porta­tion Di­rec­tor Ah­mad Yani said a de­pen­dency on in­cen­tive- driven pay­ments and low fixed rates per kilo­me­tre was a safety risk as it led to driv­ers over­work­ing.

Yani said Grab paid 1,200 ru­piah (US$0.085) per km (0.6 miles) with a fo­cus on bonuses, while Go-Jek’s rate was 1,400 ru­piah ($0.099) per km.

The of­fi­cials said fixed fare ranges for mo­tor bikes were still be­ing fi­nalised, but would be im­ple­mented from March.

Fixed rates for ride- hail­ing cars will start in June and be set at 3,500 to 6,000 ru­piah ($0.43) per km in the is­lands of Java, Su­ma­tra, and Bali.

The driv­ers were push­ing for in­creases to a stan­dard fare of 3,000 to 4,000 ru­piah per km.

New rules

The firms said they wel­comed the new rules, though they had not seen de­tails of the mo­tor bike reg­u­la­tions.

“Grab be­lieves the gov­ern­ment will de­velop the best reg­u­la­tory frame­work and hopes that all stake­hold­ers will be in­cluded in the process,” said the com­pany’s Head of Pub­lic Af­fairs Tri Sukma An­reianno.

A Go- Jek spokesman said: “We sup­port the gov­ern­ment’s spirit to en­cour­age our driver part­ners ... and hope the reg­u­la­tion will have a pos­i­tive im­pact on the sus­tain­abil­ity of driv­ers’ in­come ... and fair busi­ness com­pe­ti­tion.”

How­ever, both trans­port of­fi­cials said the com­pa­nies are wor­ried about the pend­ing reg­u­la­tion since they have spent heav­ily on driver sub­si­dies to slash their cus­tomer rates and build their busi­nesses.

“Grab and Go-Jek have told me they would pre­fer there was no reg­u­la­tion,” said Yani. “Due to the com­pe­ti­tion be­tween them ... they are scared what could hap­pen if they don’t keep up with each other.”

In­done­sia’s Supreme Court blocked a pre­vi­ous trans­port min­istry at­tempt to fix ride-hail­ing rates in 2017 af­ter driv­ers sued say­ing the rules fa­vored the taxi firms. Both min­istry of­fi­cials said the new reg­u­la­tions met anti-com­pe­ti­tion stan­dards and fol­lowed ex­ten­sive dis­cus­sions with driver syn­di­cates. — REUTERS

A Go-Jek ad­ver­tise­ment at a rail­way sta­tion in Jakarta. — Photo AFP

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