GOJEK faces the brunt of Indonesia’s new ride-hailing regulation

FILE PHOTO - A driver and passenger ride on a motorbike, part of the Go-Jek ride-hailing service, on a busy street in central Jakarta, Indonesia December 18, 2015. REUTERS/Darren Whiteside/File Photo

Ride-hailing firm GOJEK said on Monday that a tariff increase enforced by the Indonesian government for app-based motorcycle taxis has started to have an adverse impact on its passenger orders.

The Indonesian government enforced the regulation starting May 1, 2019, in five cities in Jakarta (Jabodetabek), Bandung (West Java), Yogyakarta, Surabaya (East Java) and Makassar (South Sulawesi).

The government’s new tariff is capped at Rp 2,000 (0.14 cents) per kilometre, an increase from the previous Grab and GOJEK tariff at Rp 1,600 (0.11 cents) – Rp 1,800 (0.13 cents) per kilometre.

The regulation factors in provisions such as standard minimum fare of motorcycle taxis and customer protection or safety and stipulates that the minimum tariff should take into account a motorcycle taxi’s operational cost.

Despite this, the new government’s set tariff is far from what is deemed as ideal, say experts. The motorcycle drivers have long been proposing the minimum standard tariff at Rp 3,000 (25 cents) per kilometre.

“After implementing the regulation for the past three days since May 1, we saw a significant drop in the passengers’ orders, impacting our driver partners’ income,” GOJEK chief of corporate affairs, Nila Marita, said in a statement.

During the implementation of the new tariff, GOJEK needs to keep offering the promotional and tariff discount to maintain its number of passenger orders. However, the company said such moves are only good in the short term, but they don’t address the issue over the long term.

Nila said excessive promotional discount gives the impression of lower tariff, but it is not sustainable and cannot be permanent. She said it will threaten the industry’s sustainability, while also creating a monopoly and would also reduce the quality of services within the industry itself.

“We expect to maintain the sustainability of this industry, so that our driver partners are able to have sustainable income, while consumers can continue to enjoy safe, comfortable and quality services,” Nila added.

Rival Grab said that it has always committed and supported the government’s regulation to ensure the safety and welfare of drivers and passengers.

“The new tariff should continue to be respected and implemented by all the ride-hailing firms operating in Indonesia,” said Grab Indonesia president Ridzki Kramadibrata.

Grab said it will continue to closely monitor the implication of the new tariffs to its passengers, as well as the partner drivers’ income.

Also Read:

Indonesia raises tariff rates for ride-hailing firms

Regulations may obstruct SE Asia’s ride-hailing firms’ way to success

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.

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.