Indonesia issues official regulations for ride-sharing transportation

Uber. Photo: Reuters

Indonesian Transportation Ministry has officially issued regulation, which provides legal basis for the operations of application-based transportation in the country. The regulation will become effective from September 2016.

The new rules -Transportation Ministry No. 32 of 2016 – have been issued for the ride-sharing application based transportation operators, which are not covered by the existing transportation regulations – a lacuna which had led to widespread protests from conventional taxi operators.

Also Read: End of standoff? GrabCar, Uber register as legal cooperatives allowing them to operate in Indonesia

The new ruling covers all non-fixed route public transportation such as taxis, rentals, charter, special purposes and so on. The regulation basically allows mobile application based transportation on condition that they comply with certain requirements.

According to the new regulation, an app could be done by the transportation operator or in cooperation with an application provider, which has legal entity in Indonesia. Payment system can be done through application as long as it complies with the regulations with regard to electronic transactions.

If the public transportation company such as taxis, cooperate with application provider, the application provider may not act as transportation operator, therefore the application provider may not set the tariff, recruit drivers and determine the income of drivers.

As for application providers such as Uber and Grab – the regulation mandates them to provide access to the authorities (in order to monitor their service, data of companies that cooperate with the application provider, data on all vehicles and drivers that use its application and its own address).

In addition, the regulation requires the application provider to set up legal entity in Indonesia, either in the form of limited company or cooperatives.

The application provider is also required to obtain permit to conduct non-fixed route transportation business with requirements as follows: own at least five vehicles on behalf of the company and pass regular tests, owns car pool and workshop and its drivers must have drivers licenses.

In terms of tariff, the ministry has assured that Uber and GrabCar rates need not be government approved.

Director General of Land Transportation Iskandar Pudji Hartanto said, there are various conditions that must be fulfilled should include legal status, shall have a permit for the transport of not in the stretch, where irregularities have the vehicle or the pool, providing vehicle maintenance.

“Tariff is just about agreeing to a certain price between the company and car owners. The Traffic Law states that [taxis] must have a fare meter and other requirements. We want to achieve equality,” according to Hartanto.

Commenting on the new rule, Grab said, the company is aware that some parts of the new regulation might affect the business model of app-based transportation services in the fast-growing industry.

“We are aware that some parts of the new regulation have worried our driver partners,” Ridzki Kramadibrata, Grab Indonesia managing director, said in a statement.

Also Read: After massive protests, Jakarta allows Uber and Grab to operate, but with conditions 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.