Indonesia sets minimum and maximum limit to fares for ride-hailing apps under new rules

A driver and passenger ride on a motorbike, part of the Go-Jek ride-hailing service.
A driver and passenger ride on a motorbike, part of the Go-Jek ride-hailing service. PHOTO: REUTERS

JAKARTA (THE JAKARTA POST/ ASIA NEWS NETWORK) - Indonesia's transportation ministry has set the minimum fare for ride-hailing apps at Rp 3,500 (36 Singapore cents) per kilometre, with a maximum rate of Rp 6,000 per km for the regions of Sumatra, Java and Bali, as part of new regulations aimed at levelling the playing field with regular taxi operators.

The new rules, which were issued in March and took effect on July 1, are expected to put a speed bump to the rapid expansion of online car-hailing businesses.

In addition to fares, the regulation includes a wide range of stipulations, such as fleet quota for each city and vehicle road worthiness tests for cars.

The tariff regulation was seen as a positive sign for conventional taxi operators, with shares in publicly listed PT Blue Bird rising by 3.9 per cent and PT Express Transindo Utama by 2.6 per cent on Monday (July 3).

"We apply the equality concept so that these two types of operators can exist side by side," Transportation Minister Budi Karya Sumadi said on Monday.

The regulation came after violent protests in Jakarta last year from conventional taxi drivers, who argued their income had dwindled due to the growth of online rivals.

Apart from ensuring the continuation of conventional taxi businesses, Budi assured that ride-hailing drivers would be able to earn a reasonable income with the new fare base.

"If the fare base is too low, the first to feel the impact will be the drivers, as they earn a percentage from the fares," he said.

The ministry has set the tariff range for online car-hailing services at Rp 3,500 (36 Singapore cents) to Rp 6,000 per kilometre in Java, Bali and Sumatra - similar to that of conventional taxi services. For Kalimantan, Sulawesi, Nusa Tenggara, Maluku and Papua, the range is Rp 3,700 to Rp 6,500.

Uber's cooperative partner Jasa Trans Usaha Bersama (JTUB) said its minimum tariff stood at Rp 2,000 per km, which increases by Rp 300 per minute.

Transportation Ministry director general for land transportation Pudji Hartanto Iskandar said that fares for ride-hailing services would increase, but with additional benefits, such as travel insurance from state insurance company PT Jasa Raharja.

"Passengers have expressed concern about what would happen to them in the case of an accident during the trip. Now, they are well covered," Pudji said, adding that the new rates offer "equality, safety, security and comfort."

The new tariff also covers the costs of phone credit, minimum wage and insurance for drivers, as well as insurance for their cars.

The ministry said it would not strictly enforce these rules for the next six months to provide ride-hailing services enough time to make the necessary adjustments. Those who fail to comply once the grace period is over, however, may face the termination of their app.

The new regulation also requires ride-hailing services to pay taxes and hand over the vehicle registration certificates of their partners to authorities when they expire. That comes on top of a requirement issued on June 1 for cars to display a set of information on their dashboards, including a fleet sticker and a vehicle road worthiness certificate.

The three major ride hailing apps - Grab, Uber and Go-Jek - previously rejected the tariff scheme, stating that it might severely affect passenger service. However, Grab and Uber have since teamed up with Express, and Go-Jek with Blue Bird.

Grab Indonesia's head of public affairs Tri Sukma Anreianno said the firm respected the decision and would adjust its fare gradually.

"We need time to adjust and implement (the fare) to ensure that our drivers can still make a good living under our platform," he said.

Meanwhile, JTUB secretary Musa Emyus said the burden of a fare increase may ultimately fall on the passengers.

"Because of the additional time-based fare, a passenger may have to pay double for a trip. Going to the airport from the city centre could cost Rp 200,000 from the current fare of Rp 100,000. This may force passengers to choose other transportation options," he said.