By: Thomas Franky – Managing Director of Fortune PR
The Indonesian government pointed out that starting from April 2017 up to the next 3 months of grace period, both ride-hailing apps and conventional taxi companies must be ready to compete fairly. This decision is based on the revision of Transportation Ministerial Regulation No. 32/2016 on non-route public transportation (taxi). How far will this regulation change the game for online taxis in Indonesia?
According to Kompas, Transportation Minister Budi Karya Sumadi stated that this attempt was made to ease tension among drivers of both transportation modes, as clashes caused by jealousy were frequently occurring in few big cities in Indonesia. The government also highlighted the issue related to predatory tariff, as current practices of ride-hailing apps were not fair to conventional taxi companies where the operators could decide the fares. Ride-hailing apps were also criticized as they reduce the rates to attract passengers during the normal time, but then increased them during the peak hours. So far, the new regulation is only applied for taxis, not yet for online motorcycles rides.
This new transportation Ministerial Regulation does consist of a few major changes for online transportation. As published on The Jakarta Globe, the government now has the authority to set certain standards in terms of fares, fleet size, taxes, and salary rates for drivers. The most highlighted regulation is about the fares. The floor and ceiling prices will be determined by the governor of the province where the service is being rendered.
This new rule also regulates the vehicles as well as the drivers. Ride-hailing companies must now open pools for their cars or motorbikes to wait for passengers. Hanging out on street corners looking for passengers will no longer be allowed. Their vehicle must meet the minimum engine displacement requirement (1000 cc) and has been issued with a roadworthiness certificate and taxi sign stickers. The number of operating vehicles will also be limited to avoid oversupply, which can greatly reduce income for drivers.
As cited in The Jakarta Post, online transportation apps companies have rejected the new regulation, particularly regarding the fare and pricing system which brings disadvantages for them in the long run. Besides having the potential to lose their consumers, one of the opposing argument from ride-hailing app companies has concern over the fact that this rule would make it harder for Indonesians to access reliable transportation options and the flexible economic opportunities that ride-hailing offers.
Despite the changes that will occur, ride-hailing app companies can still use their special features as their strength and opportunity to compete in the future. First is their excellent use of technology. Through mobile applications, consumers can save more time when waiting for taxi. Safety is also the highlighted feature, since passengers can easily track the driver, location, and the fares.
According to The Economist, online taxi drivers are more technology savvy than conventional taxi drivers. They constantly used GPS to ease their passengers. Passengers can easily give anonymous customer feedbacks and complaints. Ride-hailing apps also provide a lot of promotions, opportunities for free rides, and more payment options for passengers to choose. Passengers can even split their bills if they are sharing a car with other passengers. By paying online using credit card, passengers do not have to worry about tipping.
But there are more implicit benefits that ride-hailing app companies can point out for their consumers. Using online taxi enables consumers to choose their preferred types of vehicles. Let say, if a passenger favor a fancy car or a bigger car for more than four people. Or if they want to ride a car as if it is their own, without all the taxi signs and bumper stickers. Ride-hailing app companies provide these features for them. In Indonesia, pride and prestige matter. This can be a selling point by online taxis to survive under the new regulation.
Looking ahead, although this regulation acts as a major disadvantage, ride-hailing apps can point out all their advantages to still play in the game. Looking at all those advantages, people who are already used to use online taxi will still favor it although the price increases. If ride-hailing app companies can maximize their advantages using the ride strategies, their future can still be bright.
On the contrary for online motorcycles, if this regulation applies for them too, this can be a major disadvantage. Different from taxis which don’t easily operate on all streets, we can find a lot of taxi bike or ‘ojek’ pool in almost every corner of the streets. So looking at the future ahead, the vehicle that will most likely be impacted will be ‘ojek’, rather than online taxis (car).
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