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Politics

A ruckus in Indonesia as ride-hailing rules take effect

App-based services have provided thousands with a new vocation

Taxi drivers come out against ride-hailing services, which have been undercutting their livelihood, on a main road in Jakarta on March 22, 2016.   © Reuters

JAKARTA -- Indonesia for the first time on Thursday put companies like Uber and Grab under a legal umbrella.

But as the car-hailing regulations took effect, the transportation ministry promised not to impose penalties on non-compliant drivers for at least another month.

The problem is that tens of thousands of Indonesians have already become dependent on the fast-growing industry, both to get around and to earn a living.

"This is the government's good intention to provide clear legal ground," said Lilik Wachid Budi Susilo, a researcher at Gadjah Mada University's Center for Transportation and Logistic Study. "But it should have rolled out the regulations much sooner, when there were not a lot of online taxis. Now the problem has widened -- it is no longer just a transportation problem but a social problem."

The regulations, initially issued in October, require drivers who use hailing apps to formally register with the government by putting stickers on their vehicles. Drivers must also obtain a special type of driver's license. In addition, the rules allow local governments to determine the maximum number of vehicles allowed to operate as well as to set floors and ceilings on fares.

The rules do not apply to motorbike-hailing services, which are popular in Indonesia. 

They were drawn up in response to a violent demonstration by traditional taxi drivers frustrated by severe competition from the deep-pocketed ride-hailing service providers. But they have also triggered protests from the other side. Earlier this week, hundreds of drivers working for app-based car-hailing services gathered in Jakarta to protest requirements that they say are too costly and burdensome.

"The government is trying to take money from us," a Grab driver said.

A driver who gets rides from Go-Jek said he fears a sticker on his car will make him more vulnerable to intimidation from taxi drivers.

On Thursday, the three most popular apps -- Grab, Uber and Go-Jek -- were hooking up riders and drivers as usual. In a statement on Monday, Transportation Minister Budi Karya Sumadi said his ministry will continue to discuss "how the mechanisms [of the regulations] can take place better."

The enforcement delay highlights the ride-hailing industry's growing clout. Uber entered Indonesia in mid-2014. Grab and later Go-Jek, which initially provided motorbike taxis, followed.

The majority of Indonesia's working population toils in the informal sector, running food stalls, for example. For nearly four years now, ride-hailing apps have given people a way to earn some extra money, if not an opportunity to take up a new vocation. And the services have been widely accepted by commuters frustrated by unreliable buses and trains. 

They have not been cheered by the country's 60,000 conventional taxi drivers, a number provided by the transportation ministry.

The new service companies do not disclose the number of their automobile drivers, but Susilo said he believes there are now more app-hailed ride providers in Indonesia than conventional cabbies.

Nikkei staff writier Erwida Maulia in Jakarta contributed to this story.

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