The industry is currently dominated by homegrown ride-hailing service Go-Jek and Singapore-based Grab, which are both burning cash at an eyewatering rate to become the one and only super-app for Indonesians. (B1 Photo/Danung Arifin)

Indonesia Wants Neither Grab, Nor Go-Jek to Win

BY : OKTAVIANA MARIA & HERMAN

JUNE 13, 2019

Jakarta. The government's plan to ban discounts and promotional fares by online-based motorcycle taxis is based on a long-term view: preventing consumers from ending up at the mercy of monopolistic corporations. 

The industry is currently dominated by homegrown ride-hailing service Go-Jek and Singapore-based Grab, which are both burning cash at an eyewatering rate to become the one and only super-app for Indonesians. 

But the government fears this race could end up in an absolute monopoly for one of them, and a situation similar to what is now happening in the country's airline industry, where customers no longer have the power to bargain for lower prices. 

"We will not want one of them to disappear. Thus, the duty of the government is to maintain a way these two companies can compete, but in a healthy manner," Ahmad Yani, director general of road transportation at the Ministry of Transportation, said on Monday. 

The ministry is planning to ban discounts on online-based motorcycle taxi fares by the end of this month, after earlier setting a floor on the minimum fares they may offer.

"It is very important to think about the sustainability of these businesses because when fares do not reflect sustainability, it eventually kills the business," said Tulus Abadi, chairman of the Indonesian Consumers Association (YLKI).

He said consumers would be at the losing end if there was only one online-based motorcycle taxi service.

Hendri Saparini, an economist and founder of the Center of Reform on Economics, or CORE Indonesia, said the government should place greater emphasis on improving public transportation, so consumers do not have to rely on online-based motorcycle taxis. 

"The progress of a country should be: the higher the per-capita income, the safer public transportation is available," Hendri said. 

"Motorbikes are among the most unsafe modes of transportation. In developed countries, they have very strict regulations on motorbikes. It's a lot more difficult to get a license than for a car. But here, the situation is reversed," she said.

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