Gov't Sets Tariff Ranges for Online Car-Hailing Services

Grab Indonesia has arrived in Jayapura, Papua, as part of the online ride-hailing service's expansion strategy to offer a safe, convenient and affordable transportation alternative in the archipelago. (Reuters Photo/Edgar Su)

By : Agustinus Beo Da Costa & Eveline Danubrata | on 9:37 PM July 02, 2017
Category : Business, Corporate News

Jakarta. Indonesia has set minimum and maximum tariffs for online car-hailing services, 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 US group Uber Technologies, Southeast Asia's Grab and Indonesia's Go-Jek have heavily subsidized 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 Rp 3,500 - Rp 6,000 ($0.26-$0.45) per kilometer for the islands of Java, Bali and Sumatra. For Kalimantan, Sulawesi, Nusa Tenggara, Maluku and Papua, the range is Rp 3,700 - Rp 6,500 per kilometer.

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 Blue Bird and Express Transindo Utama, 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.

Reuters

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