Indonesia: Ride-hailing apps stand to lose pricing advantage as govt imposes new tariffs

Taxis are parked near the national monument as their drivers take part in a protest against what they say is unfair competition from ridesharing services in Jakarta, Indonesia March 14, 2016. REUTERS/Darren Whiteside/Files

By Agustinus Beo Da Costa, Eveline Danubrata

July 2, 2017

Indonesia has set minimum and maximum tariffs for online car-hailing services (ride-hailing apps) aiming to ensure comparable pricing with conventional transport providers whose drivers have complained about being undercut by their newer competitors.

Ride-hailing services such as U.S. group Uber Technologies Inc, Southeast Asia’s Grab and Indonesia’s GO-JEK have heavily subsidised their drivers in Indonesia in order to gain market share in the country of 250 million people, analysts say.

The transport ministry said it had set a tariff range for online car-hailing services of 3,500-6,000 rupiah ($0.26-$0.45) per kilometre for the islands of Java, Bali and Sumatra. For Kalimantan, Sulawesi, Nusa Tenggara, Maluku and Papua, the range is 3,700-6,500 rupiah per kilometre.

The regulation kicked in on July 1 and will be evaluated in the next six months, the ministry said in a statement.

“There has to be a balance between conventional and online transport, so that has to be regulated,” Pudji Hartanto Iskandar, director-general of land transport at the ministry, told Reuters by phone.

Indonesia’s two biggest established taxi operators are PT Blue Bird Tbk and PT Express Transindo Utama Tbk, whose shares have fallen on investor concerns about competition from the cheaper ride-hailing services.

Drivers of Blue Bird and Express have called for a ban on ride-hailing services, claiming they were subject to less stringent requirements than conventional taxis.

Uber said in an emailed statement it had yet to receive a copy of Indonesia’s regulations.

“However, we remain committed to working with the government to find a path forward that accommodates the interests of riders and driver partners and supports innovation, competition and customer choice,” Uber said.

Grab and GO-JEK did not immediately respond to requests for comment.

Also Read: Ride-hailing firms protest new rules in Indonesia even as Singapore allows taxis to introduce surge pricing

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Uber, Go-Jek competitor Grab says likely to raise funds in near future

Reuters

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