App-Based Transport Services Need More Than Updated Regulations: ITF

International Transport Forum economist Philipe Crist says application-based transportation services need special regulations that leave room for technological developments in the sector in order to provide a better customer experience without breaking the law.

By : Tabita Diela | on 7:05 PM May 20, 2016
Category : Business, Economy, Featured

Leipzig. Application-based transportation services need special regulations that leave room for technological developments in the sector in order to provide a better customer experience without breaking the law, an International Transport Forum economist said.

Indonesia, like many other countries, has seen the emergence of innovative app-based ridesharing services that challenge established rules because they are typically not part of existing regulatory structures. Several ridesharing applications such as Uber, Grab and Go-Jek, are currently available in major cities such as Jakarta, Bandung (West Java) and Denpasar (Bali).

"The government has to sit around the table and think what is the fair policy that we need to have," ITF economist Philipe Crist said on the sidelines of the International Transport Forum Summit 2016 in Leipzig, Germany, on Wednesday (18/05).

"Existing taxi regulation are probably not state of the art. We can do better for the whole sector. We should bring these rules together, except in very specific applications such as consumer interaction," Crist told reporters.

Crist referred to the findings of the ITF's corporate partnership board report called "App-Based Ride and Taxi Services: Principles for Regulation" that was published earlier on the same day.

The report gives several insights for governments into app-based transport services, including the importance of focusing policies on the needs of consumers and society as a whole; to keep the regulation simple but flexible enough to adapt to new technologies; to encourage more innovation in the sector; to embrace data-led regulations that will make it easier to regulate the sector.

"Automated collection of fare information for fiscal purposes, onboard monitoring of vehicle conditions and driver behavior and other possibilities allow the authorities to better monitor and deliver on public policy mandates," the report said.

The report does not specifically mention what is currently happening in Indonesia, but Crist said the findings may also apply to the archipelago and other countries that are currently facing new developments in transportation services.

The report finds that ride-hailing apps are popular because they often provide better consumer value than most existing services. It has managed to cut transaction costs and reduce misinformation among drivers, fleet operators and passengers. The report said customers also get an easy and consistent service.

On the other hand, these transport-hailing apps also create job opportunities, which will help the economy.

"Regulation of for-hire passenger transport, therefore, is still necessary, but it needs to adapt," the report said. "Active regulatory oversight is required in order to ensure public safety, consumer protection and tax compliance."

The Ministry of Transportation's director general of land transportation Pudji Hartanto Iskandar told the Jakarta Globe that Indonesia has already regulated app-based transportation services and given enough room for technological developments.

However, the expert said the new regulation — which is only an updated version of a 2014 government regulation — has yet to be able to cater to the possibility of new types of transportation.

Izzul Waro of the Institute for Transportation Studies said the country does indeed need a new regulation to encourage the use of public transportation.

On the same day, Uber Indonesia showed that the industry will keep inventing new ways to cater to the needs of customers with the introduction of its ride-sharing service known as UberPool in Jakarta. The new service allows customers to share a ride with other people going in the same destination for a lower price.

This service is not specifically mentioned in the government regulation.

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