Ride-Hailing Commission Set to Drop by 8%, Economists Issue Warning

The Indonesian government plans to reduce commissions for ride-hailing application providers from the previous 20% to 8%. Piter Abdullah, an economist from the Prasasti Policy Center, highlighted the potential impact of this policy on the industry.

“This will certainly impact the industry. Typically, the industry responds by passing these costs on to the customer—in this case, the passengers,” said Piter during the launch of research by the Paramadina Public Policy Institute and Indef, titled “The Future of Online Motorcycle Taxis in Indonesia,” in Jakarta on Wednesday.

He explained that passing the burden to consumers would necessitate fare adjustments, despite passengers being highly price-sensitive. Consequently, the commission reduction intended to improve driver welfare might fail to materialise and could even lead to a decrease in orders. “This means that if a reduction in commission leads to an increase in fares, those higher fares could cause a drop in orders,” he clarified.

Furthermore, there are concerns regarding the industry’s reduced capacity for investment and innovation, which could ultimately affect service quality. “What we fear is that the industry’s quality will decline, even though this is a digital industry that we know relies on speed,” added Piter.

Eisha Maghfiruha, Program Director at Indef, stated that the specific details of the new profit-sharing regulations and how application providers implement them must be closely monitored. She noted that adjustments in services and pricing are likely to follow. She emphasised that the government must evaluate the broader impact of such policies, including the ability of consumers to afford services if prices rise. “Consumers may not be able to afford it if prices increase,” said Eisha.