In brief: Indonesia to regulate ride-hailing rates, limit promos

Indonesia is preparing to launch regulations fixing the rates drivers and riders for ride-hailing services such as Grab and Go-Jek receive, two government officials said this week, creating potential obstacles for the companies’ expansion.

The regulations would meet drivers demands for more oversight and higher rates but there are concerns that the rising costs to the companies could stifle their development as they battle to dominate the ride-hailing market in Southeast Asia’s biggest economy.

Source: Reuters

Budi Setyadi, director general of land transportation at the Indonesian government’s transportation ministry, said that the department is planning to introduce minimum and maximum ride-hailing prices “higher than Go-Jek and Grab’s current rates.”

The ministry will also impose limits on promotional price cuts “for the safety and protection of drivers,” said the ministry’s public transportation director Ahmad Yani, suggesting that subsidized rates and incentives cause drivers to overwork.

According to Yani, Go-Jek pays drivers 1,400 rupiah (US$0.10) per kilometer, while Grab pays 1,200 rupiah (US$0.09) per kilometer.

The ministry’s fixed fare range for private car-hailing is set to apply from June, and will be between 3,500 and 6,000 rupiah (US$0.25 to US$0.43) per kilometer on the major islands of Java, Sumatra, and Bali. The fixed ranges for motorbike-hailing will be introduced in March but are still being finalized, the officials said.

Currency converted from Indonesian rupiah. Rate: US$1 = IDR 14046.55