Indonesia steers towards fixed motorbike ride-hailing rates

Grab Go-Jek
A GrabBike motorcycle driver, left, and a Go-Jek motorcycle driver wait for orders in Jakarta, Indonesia, on Sunday, Aug. 13, 2017. Photographer: Dimas Ardian/Bloomberg

Indonesia on Monday announced a much-anticipated regulation for app-based motorcycle taxis, which includes setting a fixed price range for ride-hailing companies.

In a policy that may hurt the bike-hailing space currently dominated by Grab and GOJEK, the Ministry of Transportation said it has set three different fixed price ranges based on zonal categories.

Zone I covers the island of Sumatera, Bali and Java (Greater Jakarta not included) and has a set price range of Rp 1,850-2,300 per km, while Zone II covers Greater Jakarta (Rp 2,000-2,500 per km). Islands farthest from the capital like Kalimantan and Sulawesi are included in Zone III where prices are fixed at Rp 2,100-2,600 per km.

The ministry also set a flagfall rate, which for Zone II is set at Rp 8,000-10,000 for every 4 km. For the other two zones, it is Rp 7,000-10,000.

The regulation regarding prices of ride-hailing services comes following repeated protests staged by both Grab and GOJEK drivers demanding higher fares amid heated competition between the two companies which has seen both aggressively offering discounts.

The fixed pricing would make it difficult for the companies to continue their strategy of slashing their fares to acquire and maintain customers, while the set flagfall rate will force them to share more income with their drivers.

The ministry said that the decision on the fixed rate was made following discussions with relevant parties such as driver and consumer associations, the anti-monopoly watchdog, and also Grab and GOJEK representatives.

“To make sure that neither dies, (we listened to) what their expectation is with our regulation, we also listened to their aspirations,” Budi Setiyadi, director general of land transportation at the Ministry of Transportation, told local reporters.

The rule on pricing is part of a comprehensive new regulation on motorcycle taxis that includes provisions for customer safety, the partnership between drivers and their respective ride-hailing companies.

The regulation finally gives legal certainty to the services of ride-hailing startups GOJEK and Grab in the country, which was previously not officially recognized under the Indonesian law, as motorcycle taxis were not legally considered part of public transportation.

Among the safety guidelines stipulated in the regulation are requirements for drivers to have a valid driving license, wearing company uniform and abiding by traffic rules. The regulation also includes standard procedures for ride-hailing firms in hiring and suspending its driver-partners.

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