Higher Fares for Motorcycle Ride-Hailing Apps in Indonesia

Indonesia, ride-hailing, fare increases

The government has introduced a new rule regarding fares for people using motorcycle ride-hailing apps, conducting to a sharp rise of 25% to 30% since May 1st. he increase was due to come into force in March but was delayed due to elections. 

A ministerial decree setting a price floor for ojek (motorcycle taxi) services offered through smartphone apps  went into effect on May 1. The government’s decision was taken as drivers’ protests increased considerably over the last few months over declining salaries from both largest ride=hailing companies Grab and Go-Jek.

Indonesia’s Supreme Court blocked a previous transport ministry attempt to fix ride-hailing rates in 2017 after drivers sued saying the rules favoured the taxi firms. Both ministry officials said the new regulations met anti-competition standards and followed extensive discussions with driver syndicates. However, increased competition has taken its toll on the income of ride-hailing drivers.

Until early May, Grab was paying IDR 1,200 (US$0.085) per km with a focus on bonuses, while Go-jek’s rate was IDR 1,400 (US$0.099) per km. Transport ministry’s public transportation director Ahmad Yani by then declared that the driver’s dependency on incentive-driven payments and low fixed rates per km was causing a safety risk as it pushed drivers for overworking. 

Fixed rates for ride-hailing cars have been set at IDR 3,500 to  IDR 6,000 (US$0.43) per km in the islands of Java, Sumatra, and Bali. This represented a far-higher increase compared to the original driver’s demand which was fluctuating between IDR 3,000 to 4,000 per km. This puts now the minimal fare to IDR 10,000 equivalent to US$0.70. Limits are also now implemented on promotional price cuts. T

Grab and Go-jek drivers welcomed the implemented regulation of standard fares. While the increase will certainly help improving living standards of motorcycle drivers, consumers start to feel the pinch of higher prices. The Jakarta Post talked to some ride-hailing users who now complain to pay on average 25% to 30% higher fares than prior to May.

There are however 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. Singapore-based Grab and Indonesia-based Go-jek have been locked in price wars in Indonesia, part of a wider fight to bring banking, e-commerce, ride-hailing, food-delivery and other services to every corner of Southeast Asia. This merciless fight in Indonesia among the two ride hailing providers made fares among the cheapest in Southeast Asia. By comparison, a bike ride with Grab in Bangkok starts at least around THB40, equivalent to US$1.25.