Indonesia is making it mandatory for Go-Jek and Grab to register as transportation companies within two months to ensure they meet safety requirements as public transportation providers, potentially increasing costs and scrutiny of the ride-hailing firms.
The Southeast Asian nation and some other countries have been grappling with how to regulate ride-hailing companies. The app-based companies say they should not be treated as a public transportation providers since they do not own cars or employ drivers.
But Transportation Minister Budi Karya Sumadi said the Indonesian government has finalized a new regulation to require ride-hailing companies to obtain licenses from his ministry for providing public transportation. The new rules would be discussed with all stakeholders “within one or two days,” he told a news conference on Monday (02/04).
Go-Jek and Grab are the dominant ride-hailing providers in the country.
Budi Setyadi, director general of land transportation, said at the conference that once a ride-hailing company obtained a license it would need to follow the rules of a public transportation provider.
A licensed public transportation provider, among other things, must ensure that its vehicles regularly pass a safety test and its drivers have a special license for driving a public transportation vehicle. These rules would only apply for car transportation and not for motorcycles.
Grab Indonesia declined to comment and Go-Jek did not immediately respond to a request for comment.
The Transportation Ministry issued a decree in 2016 to try to pressure companies to follow safety requirements, but faced resistance from ride-hailing companies, which often say they only offer transportation services in partnership with drivers.
Several points in the decree were annulled by the Supreme Court last year.
The minister also pledged that the government would ensure competition in the ride-hailing sector after Uber Technologies’ deal to sell its operations in Southeast Asia to Grab.
Separately, Taufik Aryanto, a spokesman for the Business Competition Supervisory Commission (KPPU), said once it had received notification and full information on the deal it would assess in 30 days whether any investigation was required.
The Competition Commission of Singapore said last week that it has commenced an investigation into the deal and proposed interim measures that would require Uber and Grab to maintain their pre-transaction independent pricing.