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.