One step forward, one step back for Uber in Indonesia. After the company last week claimed to have received the “green light” from Jakarta’s Governor to operate in Jakarta, the governor responded that he had never made such remarks and that Uber’s statement was a “one-sided claim.”
How did this misunderstanding come about, and what does it mean for the company?
The big meeting
Uber’s statement on Tuesday last week followed a milestone meeting between Uber, GrabTaxi, Jakarta governor Basuki Tjahaja Purnama (often referred to by his nickname Ahok), and Jakarta’s transportation agency (Dishub).
There’s a recording of the meeting:
Governor Ahok clearly states his support for ride-sharing apps like Uber and GrabTaxi, welcoming the competition they bring. He lashes out at the Dishub on several occasions, saying it was not quick enough to adapt to the new era and failed to provide adequate safe and affordable transportation options for Jakartans.
The meeting was a breakthrough because the parties for the first time collectively laid out the rules that app-based transport companies need to follow to operate in Jakarta.
So is Uber legal?
Uber’s application to set up a foreign technology company in Indonesia has been accepted and is currently being processed by the Indonesian Investment Coordinating Board (BKPM).
Karun Arya, Uber’s spokesperson in the region, tells Tech in Asia that Uber has completed six out of the ten points required for a foreign company to set up shop. You can look up here what these ten points entail. Karun expects the set-up process to be finalized by early next year.
GrabTaxi, Uber’s competitor in the region, is actually a step ahead in this process as it has already established a local company.
The more complicated question, however, is that of the legality of the cars in Uber’s network.
Uber works with independent “driver partners,” as the startup likes to call its uncontracted workers, who themselves have to comply with a set of rules before they can join Uber. For example, they cannot join as individuals, but need to be part of a car-hire company. For this reason, several such companies have recently sprung up in Jakarta – “more than 100,” according to Karun.
Car-hire companies need an operational license from Dishub. This process has previously been a bottleneck. “There used to be a quota,” Karun explained. Dishub would only give out a certain number of those licenses a year.
If you watch the video documenting Monday’s meeting, you can hear Mike Brown, Uber’s regional manager for APAC, make the case for this quota to be lifted (30m 29s).
Uber continues to emphasize it is a technology company – implying it’s not responsible for the drivers using its app. But obviously it has an interest to make sure potential drivers receive the necessary operational licenses and insurances as easy as possible so that Uber’s network can grow quickly.
Beyond the operational licenses for car companies, Uber and its drivers will need to figure out taxation. According to the rules laid out in the meeting, Uber’s drivers need a tax number. And the income they generate through driving for Uber will be subject to taxation. How exactly this will be handled by Uber is still in negotiation, Karun said. “We are looking into whether we can pay that for the drivers.”
Uber and its drivers also need to get the necessary insurance and ensure that cars are inspected for safety at regular intervals by authorities.
Uber, in its press release on Tuesday after the meeting, chose words like “greenlighted,” and other statements which made it appear that Uber’s compliance process was already completed rather than a work in progress.
Governor Ahok, known for his short temper, shot back to emphasize that some aspects of Uber’s operation still need to be figured out.
This public spat was particularly confusing because the head of Jakarta’s transportation agency, Andri Yansyah, had previously confirmed to the Wall Street Journal that Ahok gave the nod to car-hailing apps such as Uber and GrabTaxi to operate in the capital.
Karun maintains that the statements made in the press release are clear and correct and that all quotes attributed to the governor were approved by him. He said Uber wasn’t sure how the misunderstanding came about. “It’s something we’ll speak about with [the governor’s] office and [the governor], and make sure we clear the air.”
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