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Over the weekend, 11 vehicles were seized by police, local media reported. This involved cars from all three app-based ride-hailing services that operate in Jakarta – Uber, Grab, and Go-Jek’s Go-Car. A traffic police official told Detik the cars were taken because the drivers didn’t carry the required licenses.

License to drive

Ever since Uber-like ride-hailing services became popular in Indonesia in 2015, authorities have struggled to lay out rules for them.

Some demanded that ride-sharing apps bow to the same regulations as metered taxis. More progressive voices argued new rules must be formed for ride-hailing, because the system resembles car rentals rather than metered taxis.

In March, a truce between ride-hailing apps and the ministry of transportation was reached, with the latter passing a new regulation. It requires Uber and its competitors to have their cars go through a road safety test, and register them as commercial vehicles, for example through a car rental company.

The companies were given a period of time to comply. The latest deadline is said to be October 1.

Less tolerance

This raises the question why the raids took place now, some months before the compliance deadline.

It looks like authorities are enforcing a stricter interpretation of the “tolerance period.”

A spokesperson for the ministry of transportation yesterday confirmed that the tolerance time means only vehicles that have already obtained all necessary licenses can operate, not those still in the application process.

Only about 100 ride-hailing vehicles, from all three companies combined, have already fulfilled all demands, the ministry said.

All this indicates that the struggle is far from over for ride-hailing apps in Jakarta.

It’s possible the stricter enforcement has to do with the appointment of a new transportation minister on July 27. Budi Karya Sumadi has yet to come out with a position on the controversial issue.

Over the weekend, he told media that he plans to invite Uber, Grab, and Go-Jek this week to discuss the matter.

A version of this appeared in Tech in Asia on August 1. Read the full story here

Indonesia’s most popular ride-hailing app Go-Jek is in negotiations with two of the world’s largest investment firms, KKR and Warburg Pincus, to raise funds totaling $400 million. This financing round will see Go-Jek’s valuation increase to an estimated $1.2 billion, making it the biggest startup to date in Indonesia, as well as the largest fund-raising round in Southeast Asia. 

According to Wall Street Journal, Private equity major Kohlberg Kravis Roberts (KKR) is set to be part of this round, and may invest $100 million in the region for a minority stake in the Indonesian startup. Industry executive said the bulk of the remaining amount for this financing round is slated to come from Warburg Pincus.

The market buzzed about the company’s latest funding for the last two weeks, but Go-Jek remained silent on the issue. KKR’s investment in Go-Jek is likely to come from its $6 billion pan-Asian fund, which it closed in 2013. This would be the first time for both KKR and Warburg to invest in the ridesharing market, which until now was dominated by venture capital firms. 

Since the app is launched in 2015, Go-Jek is now estimated to have more than 200,000 drivers operating in 10 cities.

It offers more than just motorcycle taxis, and has been expanding services to on-demand groceries, cleaning, door-to-door masseuses, and couriers among others.

Go-Jek has been facing stiffer competition from Singapore-based transportation service app Grab, a regional transport service major which has also been intensively expanding its services and network, via partnerships with local companies. This week, Grab signed an agreement with Indonesia’s Lippo Group to develop an e-money payments platform. The partnership is an extension of a strategic deal signed between the two companies in March this year.

Go-Jek generates revenue from a commission charged for fares; a common model across most ride-hailing service providers. In addition, they often offer drivers cash incentives to maintain low fares and retain them on their platform. However, such subsidies have also driven up customer acquisition costs and expenditures, with many transport services seeking to reduce the subsidies paid out. Grab’s CEO, Anthony Tan, has already reported that its services in some cities are seeing profitability.

A version of this appeared in Deal Street Asia on July 27. Read the full article here.

Go-Jek's Insurance Model

Source: insightasia.com

Allianz Life Indonesia, the local unit of Munich-based multinational financial services company, will provide low cost health insurance for drivers  in motorcycle hailing service Go-Jek and their immediate family members. This is a part of the company’s efforts to deliver health services to low income families. This policy will allow Go-Jek drivers to have insurance coverage during in-patient hospital stays, consultation visits with general practitioners, surgery and other hospitalization benefits. Allianz will also pay for doctor bills, medication and diagnostic tests.

Go-Jek drivers in Jakarta typically make $375 dollars a month, about a third of the capital’s average income per capita. Service registration and payment of premiums of the insurance are done online, making it easier for Go-Jek drivers since they are always mobile. Allianz Life Indonesia is based on digitization, which aligns with the company’s effort to transform its services.

Go-Jek’s Insurance Model, A Blueprint For Other Companies?

Go-Jek’s new insurance policy adds a layer of visibility to the company’s conduct and also establishes a system currently lacking in other crowd sourcing startups.

Despite the fact that companies such as Uber have been quoted saying they create jobs and provide drivers with freedom, most of their drivers are covered by health insurance and do not receive benefits. In Thailand, Uber and GrabTaxi are constantly on the government’s watch as the applications are cited as illegal making it difficult for their drivers to be protected or on the government’s plans. A sharing economy leaves many drivers unprotected and vulnerable to exploitation.

Go-Jek’s implementation of health insurance to its riders raises the issue of insurance in the ecommerce marketplace models. By regulating these practices, the company protects employees’ interests and safety enhancing the drivers’ loyalty and in turn, produce better service for customers. Push for insurance reforms is seen strongly in the US but not yet in Southeast Asia, Go-Jek is taking a proactive step forward.

A version of this appeared in Jakarta Globe on June 18 . Read the full article here.

ride Apps in Southeast Asia

Source: blognone.com

In Asia’s emerging markets where the middle class is blossoming and smartphone penetration rising, a wealth of opportunity is presenting itself for ride apps in Southeast Asia, but so is the hostility against them.

A huge opportunity for ride apps in Southeast Asia 

Uber, active in 72 counties, Grab, Didi Kuaidi, Ola, Go-Jek and Blue Bird are some of the big ride apps in Southeast Asia catering to commuters who want cheaper fares and convenience rivaling local taxi services. Ride apps in Southeast Asia have been aggressively expanding as expected when smartphone sales grow briskly and traffic worsens.

Recognizing the limitations in Asia’s emerging economies has prompted e-taxi companies to tailor their services to fit the culture. Low credit card penetration rates mean that almost all companies accept cash payments along with cards.

Cheryl Goh, VP of Marketing at Grab said that safety was one of the app’s biggest selling points, resonating mostly with women users.

8 in 10 women in developing Southeast Asian countries now find taking a taxi safer with Grab.

The biggest players battling against each in the region are San Francisco-based Uber and Grab, which initially launched in Malaysia as MyTeksi in 2011.

Alongside car taxis is a growing demand in Asia for hailing motorcycle rides as an alternative to the local equivalent, a service that is driving companies’ regional expansion.

Since launching in 2011, Go-Jek, a motorcycle taxi and delivery service, has some 200,000 freelance drivers together with hundreds of other service providers.

But being innovative is not without its institutional obstacles

In Thailand, after pleading with authorities for their services to be made legal, Uber and Grab were dealt a blow when their moto services were suspended last month.

The department said their operations were also unfair to the roughly 100,000 motorcycle taxi drivers who are operating legally and threatening their jobs. The firms also failed to pay taxes, it said.

“Taking a step back, it’s important to understand that in many parts of the world, there aren’t regulations for e-hailing services because it’s still a new industry. We are working hard with governments to help them think about how these regulations should come into effect when they do,” said Goh.

Similarly, in Indonesia the transport ministry considers Uber, Grab and Go-Jek illegal because they lack the operating permits required.

As long as local governments don’t kill them off, the services are expected to prompt local taxi drivers to up their game rather than putting them out of business.

A version of this appeared in Bangkok Post on June 20. Read the full article here