Ministry cancels plan to prohibit discounts on online 'ojek' services

OJEK - JAKARTA. The Transportation Ministry said it would not prohibit online ojek (motorcycle taxi) service providers from giving tariff discounts, canceling its earlier statement that it wanted to stop discounts to avoid “predatory pricing”.

On Thursday, Minister Budi Karya Sumadi said the ministry itself would not be the one that initiated such prohibition. “If some stakeholder requested it, we would discuss it,” he said.

Last month, the ministry set a tariff regulation for ride-hailing service providers. The policy, which will be on trial for three months in five cities, regulated minimum and maximum tariffs for the service. The ministry issued the regulation after a series of rallies by ojek drivers that demanded increased tariffs for their welfare.

Weeks into the trial of the tariff regulation, the two biggest service providers, Go-Jek and Grab, have given customers discounts amid complaints from customers about the rising tariffs.

Grab Indonesia president Ridzki Kramadibrata said the ride-hailing company was open to discussion with the government over such a regulation.

“We will give our input, which will be more on how [discounts and promotions] affect drivers’ and merchants' incomes. In the end, the decision lies with the government,” he said.

He also said the Transportation Ministry would not go on with the plan to prohibit tariff discounts because they found out that they did not have any authority to regulate such a thing. Rather, the Business Competition Supervisory Commission (KPPU) is the one who has such authority.

"At first we were planning on issuing the regulation. However, after a discussion with the KPPU, we learned that it is beyond our authority to do so. Therefore, for the time being, we will not regulate the discount policy," he added.

Responding to the ministry’s attempt to ban discounts for ride-hailing service providers, Indonesian Consumers Foundation (YLKI) chairman Tulus Abadi said discounts were not supposed to be an issue as long as the discounted price was still within the ministry’s minimum and maximum price policy.

“The more important thing for the government to regulate is the safety issue, which is still neglected,” Tulus said.