Indonesia’s Ministry of Transportation has banned ride-hailing services that operate online such as Uber, GoJek, GrabTaxi, stating that these companies do not meet the official definition of public transport.
While there is no clarity on the enforcement of this ban, international investors will see the move as yet another flip-flop from the President Joko “Jokowi” Widodo-led government, and it also comes at a time when Indonesia is going all-out to boost foreign direct investment.
Besides, the ban comes within days of ride-hailing services being granted permission to operate in Jakarta.
With the downturn in the commodities market hitting the country badly, leading to a sharp slowdown in economic growth, Indonesia is increasingly looking towards foreign investment to kick-start the economic cycle and also build much-needed infrastructure. Last month, Widodo had appointed 10 ministers and two ministerial-level officials, to travel around the world, and pitch to investors to come to Indonesia. The president’s move comes as Indonesia needs $384 billion over the next five years to build infrastructure across several sectors, including energy and transportation.
Director General of Land Transportation Ministry Djoko Sasono, said the ban was contained in the Notice letter No. UM.3012 /1/21/Phb/2015.
“This assertion has been made only because their operation of vehicles for public passenger transport is not in accordance with Law 22/2009 on Road Traffic and Transport and derivatives legislation is in violation of the law so that the operation is prohibited,” he said through a text message.
The notice letter was signed by the Minister of Transport Ignatius Jonan on Nov. 9, 2015. Djoko said that the letter was also addressed to the Police Traffic Corps as well as the police chief and governors throughout Indonesia.
According to him, the operations of Uber, Go-Jek, Go-Box, GoFood, GoMart, GrabTaxi, GrabBike, GrabCar, Blu Jek and LadyJek do not comply with the provisions of the law and Government Regulation No. 74 Year 2014 on road transportation.
“Whatever the name, type of operation, Go-Jek, Go-Box, GrabTaxi, GrabBike, GrabCar, BlueJek, Lady-Jek is forbidden,” he said.
But earlier this month, Indonesia had allowed Uber and Singapore-based GrabTaxi Holdings Pte. Ltd. to operate in the capital, and Jakarta’s transportation agency head Andri Yansyah had announced that Gov. Basuki Tjahaja Purnama had conveyed this message to all tech startups operating in this space. The decision to allow these companies to operate legally, came after the Indonesian Investment Coordinating Board had approved Uber’s proposal to set up a foreign investment company.
There has been a steep rise in the transportation services using Internet applications. These began in 2011 and are active in the places like Jakarta, Bandung, Yogyakarta, Surabaya, Bali and other major cities,
Total drivers for these services is estimated to have reached 20,000. The ride-hailing service not only provide transport services for people, but also package deliveries, and food orders.
The director general said, ease of booking and cheaper rates during the initial promotion – that are barely 35 per cent of the price charged by regular public transportation – could cause friction with other transportation modes.
DEALSTRETASIA had tried to reach out to Go-Jek and GrabTaxi to get their comments on the new regulation, but these compnies had not responded at the time of publishing this article