Here's the full letter banning Gojek, Uber, and others

Indonesian social media has exploded this morning with the news that Gojek, Uber, Grab Bike, Grab Car and all other app-based transportation services have been banned by order of the Minister of Transportation.

The implement of the supposed ban is surat pemberitahuan, or circular letter No. UM.3012/1/21/Phb/2015 sent to the head of the National Police, and copied to the Coordinating Minister for Politics, Law and Defence, the Coordinating Minister for Economic Affairs, all Governors of Indonesia, all regional heads of police, the head of the traffic corps of the National Police, the Director General for Land Transportation, and the Chairperson of ORGANDA.

Aktualita thoughtfully posted the full text, which I am reproducing here:

If you can't read Indonesian, in short, it says that the services named in paragraph one (Uber Taxi, Go-Jek, Go-Box, Grab Bike, Grab Car, Blu-Jek, Lady-Jek) are not in line with various laws and regulations governing traffic and road transportation. The letter asks the police to take steps in accordance with the laws.

Predictably, in the face of massive popular protest, and even personal intervention by the President, the Minister of Transport has clarified that all named services can keep operating, as reported by Detik.com. 

So, after one ill-conceived policy, Jakarta has had a morning full of sound and fury, ultimately signifying nothing. 

These sort of extreme policy backflips are regrettable, and don't do a lot to help build Indonesia's reputation as a stable place to do business... Hopefully we see less of these going forward.

If regulation of taxis and public transport interests you, I previously wrote about it here.

Jakarta taxis need peak pricing

I took a Kopaja bus from Polda Metro to Blok M during rush hour the other day because it was starting to rain and I couldn't find a cab. I got to Blok M and wandered over to SMAN 6, where taxi drivers often hang out. Like usual, there were 5-6 taxis parked there, all from good companies, but all seemed like they were eating or sleeping, so I wandered a bit further. 

As I walked, two available Blue Bird taxis drove past me before one stopped. He said he was actually on his way to take a rest, but he'd take me because I was close. 

I was confused: why would taxis be choosing to rest during peak times? Surely that's when it's easiest to get a passenger. 

The taxi driver said, yes, it is easiest to get a passenger during peak times, but you have to sit in traffic longer to get to them, the meter runs slow because of the heavy traffic, and, if you get someone that takes you to a really out of the way place, you can get stuck in traffic trying to get back to a place where you can get your next passenger.  In this sort of situation, as a taxi driver, you're better off waiting out the peak, and jumping back in your cab when the traffic dies down.  

If you work in Jakarta, you're familiar with the queues for taxis at peak times. At certain buildings like the Stock Exchange Building or Sampoerna Strategic Square, an hour's queue at 6pm is pretty standard, two hours is not unheard of. 

The taxi queue times have negative impacts on society. Massive amounts of time is wasted that citizens could put to better use, and some people will choose to buy private cars further adding to congestion. On the plus side, some people will choose to take buses, but the length of the taxi queues suggests that there's a significant population that won't*. 

Peak pricing, or allowing taxis to charge more during peak times, would have two major positive impacts. First, it would encourage drivers that currently sit out the peak to come back on to the road. Secondly, as drivers and taxi companies would be making more money, they would be willing to put even more taxis on the road. Both of these things would decrease queuing times, making riding a taxi relatively more attractive compared to private cars.

On the negative side, there would be people that wouldn't be able to afford the higher tariff, but those people could still ride buses, or choose to travel before or after the peak times.  

So, if all these good things follow from peak pricing, why haven't we got it already? My guess would be that it's because companies are scared to be the first one to do it. It might be more economically efficient, but it's usually not popular among your customers. Being the first company to do it would most likely mean you would lose customers to your competition.

It's also unclear what the provincial government of DKI Jakarta would have to say about this. My understanding of taxi fare regulation is that it is governed by Perda 12/2003, pasal 77 of which says that taxi companies are allowed to set their own tariffs, but they must be approved by the Governor**. It's not impossible that if a taxi company did try to implement peak pricing, someone within the Jakarta government might think they could score political points by opposing it. 

As I said earlier, I think there are benefits to broader society from peak pricing that would accrue in the form of less congestion. Unlike shorter waiting times for customers, and higher profits to the taxi companies, the lower congestion is a positive externality that accrues to society from these two parties undertaking the transaction. 

On the basis of this externality, I think there's a role for DKI to not just not oppose peak pricing, but to encourage taxi companies to take it up. If DKI Jakarta were to publicly encourage taxi companies to adopt peak pricing and to talk about the broader benefits to society, citizens would be less likely to react poorly. 

I, for one, hope they do soon!

*I've actually been in both the populations that buy cars in response to taxi queues and those that ride buses. I would be using my private car now, except for my own peak demand problem, where my wife and daughter want to use the car in the morning and evening. Lowest value users get sidelined... Buses and taxis for me. 

**Note that this is the same regulation under which various people are complaining that Uber is illegal, because it is charging "illegal" tariffs that haven't been approved by the governor.