Indonesia E-Hailing Taxi: The Competition Between Law and Technology

Indonesia E-Hailing Taxi: The Competition Between Law and Technology

Yordan Gunawan (Universitas Muhammadiyah Yogyakarta, Indonesia) and Hanna Nur Afifah Yogar (Universitas Muhammadiyah Yogyakarta, Indonesia)
DOI: 10.4018/978-1-7998-4984-1.ch028
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Transportation development has revolutionized ride-hailing to e-hailing. This alteration impacts many aspects, mostly in economics and employment opportunity. However, this triggers competition with the traditional; moreover, the absence of significant regulation and standards for operation raises conflicts and an uneven market. This research concerns how e-hailing taxi must be regulated under Indonesian law for its certainty and expediency. This considers that the operation of e-hailing taxi in Indonesia is not sufficiently regulated, neither from security risks, tariff limits rates, nor in terms of skilled quality for the labor and so on. The researcher found, if there is no certainty for tis app-based transportation laws, the effects will create an unhealthy and imbalanced market, high-risks, and double standard operation.
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As the era is transforming rapidly including transportation (Singh, 2002), all countries all over the world, including Indonesia have welcomed every revolution as it is needed to be added or even be replaced; from the conventional to be digital one. For Indonesia, one of the signs is the era of online transportation (technology-based transportation) that has begun since 2016. The entry of the online transportation is considered to be advantages, however, this epoch comes across with several issues.

Technology-based transportation in the digital era essentially brings out so many advantages, regrettably, conflicts and uncertainties also become similar concerns. In response to the online transportation, Indonesia has set special regulations concerning online transportation, namely: Ministerial Regulations Number 118 of 2018 concerning Special Rental Services. However, this regulation does not cover the whole elements needed in order to regulate and protect the whole aspects of its operations in Indonesia. The regulatory framework is vital in conjunction with the work risk, tariff limit rates, the protection of customers (Çetin & Deakin, 2019), the vehicle ownership status and most importantly is creating a competitive and healthy market, between the conventional and online-mode one.

E-hailing mode taxis in Indonesia are still becoming the question in terms of their legal status. Their presence is absolutely undeniable and has become the most significant choice as a transport mode in the society (Zico, 2018). After all this time in Indonesia, the conventional taxi has monopolized the market, despite that, the apps-based taxi also need to compete fairly by being regulated both from the operators and drivers (Harding, Kandlikar, Milind & Gulati, 2016). It does not merely focus on comparing the services provided by both competitors (conventional v. e-hailing), yet rather than focus on how they can create a level-playing field in the transportation sector in Indonesia.

The failure of Indonesian Government can be observed from the protest voiced by interest parties, conventional drivers and apps-based operators in 2017. E-hailing taxi regulation is also becoming a concern in several ASEAN countries members, such as Malaysia and the Philippines. The concerns are also the same with Indonesia’s. Some deliberations are really becoming the fundamental step to protect so many aspects of executing e-hailing transportation, especially taxis under legal framework (Renckens, 2007).

Key Terms in this Chapter

E-Hailing Taxi: A process of ordering forms of transportation (e.g. a taxi) pick up via virtual devices: computer or mobile device.

Information and Communications Technologies (ICTs): Technologies that provide access to information through telecommunications. It is similar to Information Technology (IT), but focuses primarily on communication technologies. This includes the Internet, wireless networks, cell phones, and other communication mediums.

Disruptive Era: The era in which technology and society are evolving faster than businesses can naturally adapt.

Surge Pricing: The practice of charging more for a product and or service during periods when it is in high demand.

Brick-and-Mortar Company: A traditional street-side business that offers products and services to its customers face-to-face in an office or store that the business owns or rents.

Transportation Network Company (TNC): A business model that offers prearranged rides or car rentals for a fee, utilizing an online application (app) via a mobile device to connect passengers or automobile renters with drivers/car owners.

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