App-based Transportation Regulated

New requirements imposed on providers to continue operating in Indonesia

By Gilang Ardana
Tuesday, May 16, 2017

In a move aimed at finally settling the heated app-based transportation debate in Indonesia, the Ministry of Transportation has imposed stricter rules on such services through Regulation No. 26 of 2017 on the Organization of Non-Fixed Route Public Transportation Services.

The regulation, which came into force on April 1, introduced conditions that app-based transportation providers – such as Grab, Go-Jek and Uber – need to meet to continue operations, including providing access to data through a digital dashboard, and securing roadworthiness certificates.

Measures in the regulation enforcing price capping – the setting of minimum and maximum fares by the government – have raised fears that customers will be hit in their pocket books by higher fares, but the ministry says the regulation is meant to protect stakeholders and set a level playing field for similar service providers.

What are the new changes?

The new regulation has officially legitimized the use of app-based systems by transportation providers, either their own, or in cooperation with app providers. However, the app-based providers now need to be official legal entities in Indonesia and meet requirements including having an on-shore data center and providing call center services.

One controversial aspect is the introduction of fare caps. The new regulation shifts the authority to place maximum and minimum caps to the central government, which app-based companies must adhere to. This has been opposed by the public and the app-based companies, who argue that it will impact customers through higher prices. However the transportation ministry argues that the caps are intended to prevent future price wars between providers and to protect customers.

The new regulation also requires app providers to give the government access to data through what it terms a digital dashboard, specifically to ministry director generals, agency heads, governors, regents and mayors. The digital dashboard includes information on vehicle and driver data and provides access to vehicle spatial movement and tariff monitoring.

A special sticker is also required to be placed on the vehicle to identify it as an app-based transportation vehicle. This sticker will be made with radio frequency identification (RFID) technology to help authorities run the supervision and monitoring functions.

Other requirements are also imposed by the new regulation. Cars used for app-based services are required to have a minimum engine capacity of 1,000 cubic centimeters and have a road-worthiness certificate (KIR). The app provider also needs to provide an area for drivers to store their vehicles and create dedicated repair centers.

If the app provider cannot fulfill all of these requirements, they are not allowed to continue operating in Indonesia.

Transition period

The regulation includes transition periods for some of the requirements. The requirements for stickers, KIRs and digital dashboard access will become effective in June, while the fare cap will be effective from July.

You can download the full regulation here:

http://jdih.dephub.go.id/assets/uudocs/permen/2017/PM_26_Tahun_2017.pdf

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