After Indonesia introduced minimum tariffs for online motorcycle taxi rides, platforms are already seeing a dip in demand

On-demand motorcycle taxi drivers lobbied hard for minimum tariffs. Now that they’re here, passengers aren’t willing to pay.

Since the Indonesian government implemented minimum tariffs for online motorcycle taxi on May 1st, customers have taken to social media to complain about the expensive new fares from ride-hailing providers.

The local Research Institute of Socio-Economic Development (RISED) followed up with a research paper titled “Consumer Perception of the Increase in Online Ojek Rates in Indonesia” (Ojek is how motorcycle taxis are known locally).

The survey results were launched yesterday in Jakarta, shedding some light on customers’ willingness to pay for online motorcycle taxi services. These have become quite a phenomenon in Indonesia, in part because the fares have been extremely cheap. Now that prices are rising, customers are hesitant.

As reported by local media outlets, RISED’s survey shows that 75% of customers are unsatisfied with the new rates. The increase made people reluctant to use online motorcycle taxis. The survey was conducted on 3,000 users spread across nine regions in Indonesia from April 29 to May 3.

With the new rates, customers faced increases of up 15.000 (USD 1) depending on which region they live in. The study showed that the average customer outside of Jakarta is only willing to spend an additional IDR 4.900 (USD 0.34) per day, while Jakarta’s customers are willing to spend an additional IDR 5.200 (USD 0.36) per day.

RISED noted that the majority of online motorcycle taxi users are from the middle to low-income group. As daily transportation costs contribute around 20% to consumer expenditure per month, the fare increase has a direct impact on their spending. If people are booking fewer rides because of concerns over the price, this will ultimately also reduce drivers’ income, RISED warns.

The Ministry of Transportation asked ride-hailing operators Go-Jek and Grab to trial the new tariffs for a week but Go-Jek had lowered its tariff back after three days after noticing a significant decrease in Go-Ride orders. This reduction raised concerns among drivers who had lobbied hard to implement base line tariffs in the first place. They planned to strike again yesterday but decided not to carry it out as Go-Jek adjusted its rate again in accordance with new regulations. Go-Jek is using a tariff discount strategy instead to attract users.

Editor: Nadine Freischlad