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Analysis: Plans to regulate ride-hailing rates could threaten Grab and Go-Jek

11 January 2019 04:25 PM  Company: []
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JAKARTA - The Indonesian government’s plan to introduce regulations fixing the rates of ride-hailing services could potentially threaten Grab and Go-Jek’s expansion, Reuters wrote.

The regulations are expected to meet drivers demand for more oversight and higher rates, but concerns have been raised about rising costs that could hamper the development of Grab and Go-Jek as the two companies fight for domination in the Indonesian ride-hailing market.

Grab and Go-Jek have been engaged in price wars as part of their efforts to bring banking, e-commerce, ride-hailing, food delivery, and other services to every corner of Southeast Asia.

However, since 2018 Grab and Go-Jek motorcycle taxi drivers in Jakarta have regularly staged protests calling for higher fares and better working conditions.

The Ministry of Transport plans to implement minimum and maximum tariffs for car and motorbike ride-hailing that will be “higher than Go-Jek and Grab’s current rates” and limit promotional price cuts, said the ministry’s Director General of Land Transportation Budi Setyadi.

“Grab believes the government will develop the best regulatory framework and hopes that all stakeholders will be included in the process,” said Grab Indonesia’s Head of Public Affairs Tri Sukma Anreianno.

A Go-Jek spokesman added, “We support the government’s spirit to encourage our driver partners...and hope the regulation will have a positive impact on the sustainability of drivers’ income...and fair business competition.”

However, officials said both companies are concerned about the regulation since they have spent heavily on driver subsidies to cut customer rates and build businesses. (MS)