Indonesia fixes tariff amount of online car hailing services to ensure even pricing

Indonesia set minimum and maximum tariffs in a bid to ensure comparable pricing with conventional transport providers and address complaints of undercutting, sending shares of the nation's top two taxi firms soaring. Ride-hailing services such as U.S. group Uber Technologies Inc, 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 in a statement on 2 July that it had set a tariff range for online car-hailing services of 3,500-6,000 rupiah per kilometer 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 kilometer. The regulation kicked in on 1 July and will be evaluated in the next six months, the ministry said.

"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. The news sent shares of Indonesia's two biggest taxi operators, PT Blue Bird Tbk and PT Express Transindo Utama Tbk, surging on 3 July.

By 0340 GMT , Blue Bird shares jumped as much as 10.7 percent, while Express gained as much as 4.3 percent. The broader Jakarta stock exchange was 0.7 percent higher. 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 said it is ready to cooperate with the transport ministry and to comply with regulations. "After receiving direction from the government, we will review the policy and make the necessary adjustments to ensure that our driver-partners will still earn the best incomes when using the Grab platform," it said in an email.

GO-JEK did not provide an immediate comment. Blue Bird and Express did not immediately respond to requests for comment.

Reuters


Published Date: Jul 03, 2017 02:47 pm | Updated Date: Jul 03, 2017 02:47 pm