Govt Formulates Ban on Wild Online Taxi Discounts

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Markus Wisnu Murti

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  • Thousands of drivers of online motorcycle taxis participate in a convoy to stage a demonstration at the Merdeka Palace in Jakarta, March 27, 2018. TEMPO/Subekti

    Thousands of drivers of online motorcycle taxis participate in a convoy to stage a demonstration at the Merdeka Palace in Jakarta, March 27, 2018. TEMPO/Subekti

    TEMPO.CO, Jakarta - Transportation Minister Budi Karya Sumadi is set to essentially ban the fierce discounts in the online taxi industry. It will ensure that there will be no more direct or indirect discounts offered by online ride-hailing application companies.

    “We are formulating a Minister’s Decree or Circular that will prohibit discounts,” said Budi at the Transportation Ministry headquarters in Jakarta on Monday, June 10.

    He maintained that online or application-based transportation services must fulfill the principles of equilibrium and equality.

    Moreover, Budi sees that the discounts currently being offered by online taxi services only create short term gains for the companies, and that in the long run will spark an unhealthy competition where ride-hailing app companies will basically “kill” one another.

    “That is what we do not intend to see,” said Budi. 

    Read: Govt to Reevaluate Online Ojek Tariffs

    The ministry’s director general of land transportation, Budi Setiyadi, said he had communicated the ministry’s plan to the Business Competition Supervisory Commission (KPPU), which sparked discussions on the competition creating predatory pricing.

    “Because that is a business competition and it will terminate other [competitors]. [The KPPU] is able to decide whether the discount strategy is killing its competitors or not, if it leads to that, the KPPU will summon them (online ride-hailing companies),” said Budi.

    CAESAR AKBAR