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The company claims that it has not been taking any profit from its Indonesian operations

Mobile ride-hailing app Uber announced that it is going to set up a corporation in Indonesia following controversies about the company’s status in the country.

According to company spokesman Karun Arya, its Indonesian operations will be in the form of a foreign investment firm. Registration of the corporation is expected to be completed by early 2016.

“We have submitted a corporation permit request to the Investment Coordination Agency’s (BKPM) Foreign Investment division. The company will be officially established around the end of this year or in the beginning of 2016. Everything is still in process,” said Arya as quoted by Kompas.com on Friday.

The San Francisco-based company has been managing its Indonesian operations through its Southeast Asian representative office, which oversees operations in Bali, Bandung, Bangkok, Ho Chi Minh City, Kuala Lumpur and Melbourne.

Arya also stated that Uber has not been taking any profit from transactions made in Indonesia, with all fees paid by consumers going to drivers or car owners who partner with the company.

This decision was taken due to the absence of clear regulation on mobile application business.

“Up to now, we have not yet received money. We didn’t take any portion of the revenues obtained. All of it went to drivers, but we will regulate a profit-sharing mechanism in the future, in which 80 per cent of the revenues will go to the drivers while the remaining 20 per cent will be for us,” he said.

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Uber’s operations have been met with controversies in various countries. In Indonesia, up until November 18, the Jakarta police traffic directorate had been working together with Jakarta Transportation Office to perform raids on Uber cars and drivers. Twelve cars were impounded in the raids.

As with many other countries, Indonesia still has no clear regulation on tech companies that use the principle of sharing economy such as Uber. Opponents have been stressing how Uber has been using private cars for service, which is illegal under Indonesian transportation law.

However, under the principles of a sharing economy, Uber can not be put under the same category as a traditional transportation provider.

As a solution, tech companies such as GrabTaxi position themselves as tech-provider partners for local transportation companies.

“In every city that we operate [in], we always try to build a good partnership [with] taxi drivers and owners, offering ways to strengthen and help their operations to become more efficient with the management system that we have,” said Cheryl Goh, Group VP of Marketing at GrabTaxi, as quoted by DailySocial.

Uber itself seem to give more focus on lobbying the government side.

“We have met with Governor Ahok (Basuki Tjahaja Purnama, Governor of Jakarta) and all parties have given their positive responses to innovations from Uber,” said Arya, adding that he had also met stakeholders in Bali and Bandung.

He is positive that the Indonesian government would be attracted to working with Uber in coming up with such regulations.

The Philippines’ Land Transportation Franchising and Regulatory Board introduced regulations on cars and drivers using ride-hailing apps like Uber and GrabTaxi early in 2015.

More on this story as it develops.

Image Credit: picjumbo.com

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