LANSKAP: Grab’s Permit Could Revolutionize Indonesia’s Taxi Market

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Taxi Drivers Protest against Uber and Grab in Jakarta (22/03/2016)

Jakarta. The government’s decision to allow app-based car hailing services to operate with cooperatives permit could revolutionize the Indonesia’s taxi market as the largest taxi operator Blue Bird has demanded same treatment and stated readiness to compete, an expert said on Tuesday (22/03).

Blue Bird, which operates some 35,000 taxis, said it has committed as far as acquiring car-rental companies which are currently operating using US-based car hailing app Uber and Malaysia’s Grab. Yet, they want same flexibility as Uber and Grab, like allowing to charge fares based on real time taxi supply and demand.

The comment marks the country’s leading taxi company shifting to a less belligerent stance against car hailing apps, which during two years of operation in Indonesia has chipped away a chunk of market share from existing taxi operators.

Grab drivers and car owners have formed the Indonesian Car Rental Cooperative (PPRI) last Wednesday in a bid to legally operate in Indonesia. Uber drivers said it will follow this move as well.

Agung Wasono, executive director of the Institute for Economics Politics and Public Policy Analysis (Lanskap), said Blue Bird’s response to Grab’s permit could trigger a larger revolution in Indonesia’s taxi market.

For years, regional governments have been authorized to determine the taxi price while the ridesharing services come with unstandardized price, allowing them to set affordable fees for consumers.

“Blue Bird seeks to equal the playing field. With current regulations, they charge their passengers more expensive than Uber or Grab since the price is intervened by the government, not merely by market,” Agung told Jakarta Globe on Tuesday (22/03).

For the sake of business equality, the government could legalize the ridesharing services and at the same time allow taxi companies to shift to ridesharing services, Agung said.

“If they remains to be taxi companies, the price should be not determined by provincial government,” said Agung, adding that with this scheme, consumers receive the largest benefit with more affordable prices.

However, this policy would not come without consequences.

“There could be market failure. Taxi and car-rent companies who cannot compete with such affordable pricing will collapse,” said Agung.

Taxi drivers from Blue Bird and rival operators held a large-scale protest in the capital Jakarta on Tuesday with around 10,000 protestors participating. The rally collapsed into chaos as protesters stopped operational taxis and forced them to join the rally.

The presence of Grab along with similar ride-sharing application Uber, has been met with great criticism from taxi and public transportation operators since they were first introduced. Critics have said the newcomers should be banned for violating the 2009 Road Traffic Law, under which they are not recognized as a form of public transportation.

The argument has won over some key officials, most notably Transportation Minister Ignasius Jonan who issued a letter in November banning all app-based ride-hailing services, including motorcycle taxi apps GoJek and GrabBike. The move was overruled by President Joko Widodo less than 24 hours after the letter was issued, however.

Sensing the turning tide, Blue Bird has called on the government to allow them to operate like a car hailing app, allowing them to charge fares based on real time taxi supply and demand. ***

Source from The Jakarta Globe

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