Indonesia’s Transportation Ministry demands ride-sharing ban
By Masyitha Baziad March 15, 2016
- Such startups ‘disturb’ the conventional transportation business model
- Taxi drivers rally, demanding government disband Uber and Grab ops
INDONESIA continues to be a battleground between ride-sharing startups and conventional taxi companies, with the country’s Transportation Ministry now demanding such apps be blocked.
Its minister Ignasius Jonan sent a formal letter to the Ministry of Information and Communications on the morning of March 14, requesting it to block Uber and Grab apps.
Ignasius is the minister who last December had issued a ban on GoJek and GrabBike, only to see his decision reversed less than 24 hours later after objections from consumers and even by Indonesian President Joko ‘Jokowi’ Widodo.
In his letter to the communications ministry, he had alleged that Uber and Grab (especially with its GrabCar service) violate the 2007 traffic and transportation law, the 1983 taxation law, the 2007 investment law, the presidential decree on foreign company representative offices, and the 2012 implementation of systems and electronic transaction law.
“Neither Uber nor Grab cooperate with local public transportation companies; they deal with individuals directly [and with] unregistered transportation companies, and are therefore considered illegal,” his letter read.
The letter also suggested that ride-sharing apps raise uncertainty and disturb legal taxi drivers and registered transport companies.
Local app-based motorcycle taxi service Go-Jek was not included in the ban request, which focused only on foreign ride-sharing startups.
“Considering both Uber and Grab are foreign-owned, this increases national security risks. There is no guarantee of data protection and users’ privacy,” the letter alleged.
Ignasius urged Uber and Grab to comply with all Indonesian laws and regulations in order to operate in the country.
He also called for any ride-sharing startup that enters the country in the future to partner with registered transport companies to avoid such restrictions.
A clash of models
Ignasius’ letter came just as about 2,000 taxi and bus drivers under the Association of Road Transportation Drivers (PPAD) staged a rally in Jakarta, demanding that the Uber and GrabCar operations in the country be disbanded.
“The operation of app-based taxis has incited envy among drivers and yellow-plated (registered public transportation) vehicles,” PPAD chairman Cecep Handoko told The Jakarta Post.
“We urge the Government to close down the ride-sharing apps that have led to this ... strike,” he added.
Cecep argued that the conventional taxi business model could not compete with the ride-sharing app business model since the latter operates private cars and does not pay taxes.
Holding a similar view was Noni Purnomo, president director of the country’s biggest taxi company, Blue Bird Group.
“We are not threatened by competition from the technology sector; however, we want a level playing field.
“Blue Bird pays taxes to the Government, we build car-pools, we make sure all our drivers have health insurance, we renew our transport licences every cycle. The competitors should do the same,” she told Digital News Asia (DNA) at The Economist Summit last month.
Defending the legality of its operations, Grab Indonesia managing director Ridzki Kramadibrata (pic) argued that the company is a technology company that connects drivers and passengers, and is not a transportation services operator.
“We are a legal entity in Indonesia, we are registered as a taxpayer, and we respect and are committed to complying with every local prevailing law and regulation,” he said in an official statement.
According to Ridzki, Grab Indonesia aims to raise the transportation standard in the country by investing up to Rp50 billion (around US$3.8 million) in its Elite Driver programme.
“We also only allow cars that are below five years old to offer GrabCar services – this is below the existing requirement of 10 years for buses and seven years for taxis,” he added.
The Ministry of Information and Communications has yet to respond to its sister-ministry’s request, saying that content or app-blocking needs to be approved via a meeting of its illegal trade panel.
“The illegal trade panel of the ministry will have to come together and discuss the matter. Minister Rudiantara will then get recommendations from the panel. We have not decided yet,” its spokesperson Ismail Chawidu told DNA via text.
Rudiantara and Transportation Minister Ignasius will meet Uber and Grab representatives today (March 15) to try and resolve the issue, local news agency Antara reported.
“We cannot block the apps just like that, we will try to find a win-win solution,” it quoted Rudiantara as saying.
“We are not against the apps as they help our people to commute every day – yet their business model does not comply with local transportation regulations.”
Jakarta task force keeping an eye on Uber … and GrabCar
GrabCar fully legalised as a transport company in the Philippines
Is Indonesia trying to have its digital cake and eat it too?
Indonesia’s tax crackdown on foreign Internet/OTT companies
For more technology news and the latest updates, follow us on Twitter, LinkedIn or Like us on Facebook.