KPPU recommendations on taxi versus online hire vehicle.

Commission for the Supervision of Business Competition (or KPPU) gave special attention to help governments solve the chaos in the policy of transportation services industry, particularly related to taxi versus online hire vehicle. At least, there are three KPPU recommendations issued to the government policies to encourage the fair competition in the transport service industry.

Syarkawi Rauf, Chairman of the Commission, said recently it held an internal meeting to discuss the issue of transportation services which recently escalated. From the meeting, the Commission produced three main advices which expected to be implemented by the government.

“The results of our analysis related to the revision the Minister of Transportation Regulation No. 32 of 2016, the Commission supports the government to establish arrangements to ensure equal business opportunities for all transport providers, be it a taxi both conventional and cab-line categorized as the transportation of special lease (hire vehicle), “said Syarkawi on Tuesday, March 28, 2017.

The three recommendations are: first, the Commission asked the government to remove the policy-setting on floor tariffs applied to conventional cab. Instead, the KPPU suggested that the government to set just the upper limit.

According Syarkawi, floor tariff setting will have an impact on the inefficiency of taxi services industry as a whole and lead to the high cost of tariffs for consumers. Floor tariff also inhibit innovation to improve the efficiency of the transportation services industry. Further, the floor tariff can be a source of inflation rates. “We recommend that the central government or local authority based its policy on the ceiling tariff only, not for the floor tariff. Regulation on ceiling tariff may protect consumers from the exploitation of the taxi operators whom known to be oligopolistic, “he explained.

Secondly, the Commission recommends that the government do not set a quota or a taxi fleet of both conventional and online operating in an area. Thus, determination of the number of fleet for transportation businesses shall left to the market mechanism. Each of businesses will adjust its fleet according to customer needs. The setting by the government would reduce competition and ultimately harm consumers.

However, the government as regulator must closely monitor licensees of taxi transport services. The government should be firm to revoke the operating license alias remove businesses from the market, if it violates the regulation. Thus, the super strict supervision will maintain the performance of conventional and online hire vehicle to meet minimum standard for services.

Governments should also establish a detailed minimum standard of service and must obeyed by all taxi service providers. The government must act decisively against any violations committed by the businesses.

Lastly, the Commission advised the government to remove the policy on vehicle registration of online taxi that want to be changed the ownership of their fleets to a legal entity, instead of personal owned. “Obligations of the online hire vehicle on behalf of the legal entity has meaning the transfer of ownership from individuals to legal entities,” he said.

Syarkawi said, the government should develop regulations to accommodate the online hire vehicle to coordinate under Cooperative whose assets are owned by the members. Thus, even though the vehicle registration remains registered as private property, but can fulfill all its obligations as a transportation service company in the shade of a Cooperative. The transfer of vehicle registration of private owned into a Cooperative is not in line with the principle of mutual cooperation, which has built up and adopted by the Indonesian economy. The transfer is also not in line with the Law on Cooperatives.

Thus, the pattern of vehicle registration settings can provide an opportunity for individual who want to work in the online hire vehicle. “The government should see an opportunity to develop the extraordinary sharing economy through online hire vehicle, by changing the regulation which accommodate individual to enter the industry,” he said. Supervision shall be strictly done in accordance with the fair competition regulation.