Thu, 09 Jul 2015

Uber Technologies says it is working to establish itself as a technology company in Indonesia to avoid legal hurdles. Source: AP

Uber Technologies says it is working to establish itself as a technology company in Indonesia, to avoid legal hurdles after police launched an investigation into the company’s operations last month.

The move will also help underscore what Uber says is its role as a provider of smartphone applications, amid claims from traditional taxi firms that its business practices are ­illegal.

“We definitely want to be here long term,” Alan Jiang, head of Uber’s operations in Indonesia, said yesterday.

“In order to do that, we are currently in the process to set up a foreign investment company here and we would like to work closely with the government.”

Uber introduced its popular ride-hailing application to the local market in August last year, opening a representative office in Jakarta to supervise its business in three markets: Jakarta, Bali and Bandung. Traditional taxi firms, however, have called the start-up’s business practices illegal, saying it doesn’t have a taxi licence or use meters.

Their complaints led Jakarta police to detain five Uber drivers for questioning last month; they were released the same day without being charged although authorities said they could be called as witnesses as the investigation into Uber progresses.

Although Uber is still operating in Indonesia, the arrests forced the company to rethink how to avoid potential legal hurdles, which could affect its business in the future. Indonesia, the fourth most populous nation in the world with a fast-growing middle class, is one of the company’s key growth markets, it has said.

But Uber would not be applying for a taxi licence, as some of its competitors have demanded, Mr Jiang said. Instead, it would seek a licence to formally establish itself as an e-commerce company.

“Uber is only a smartphone application,” Mr Jiang said.

“We don’t need a transportation licence as all we make is a smartphone app that connects riders to drivers.”

The San Francisco-based company, which operates in more than 300 cities around the world, has faced regulatory hurdles in many parts of the world.

The problems have been especially acute in Europe. Courts in Spain, Germany, Italy and The Netherlands have banned a ­low-cost Uber service that uses ­non-professional riders. France prohibits companies such as Uber from showing the location of available cars other than traditional cabs on phone apps.

In Asia, the company has faced regulatory hurdles in Thailand, Singapore and Vietnam. An Indian court last month left in place a ban on the service in Delhi, where Uber has been banned since December, when a woman alleged that a driver booked through the firm’s app raped her. The driver is on trial and denies wrongdoing.

By establishing itself as a company in Indonesia, Uber would be allowed to gather revenue from inside the country.

Normally, Uber collects a 20 per cent service fee on every fare paid by a passenger, and the rest goes to the driver. At the moment, Uber doesn’t collect fees from the two services it operates in Indonesia, UberBlack and UberX.