Indonesian ride-hailing industry set for shake-up under draft presidential decree

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By Stefanno Sulaiman Millions of Indonesian ride-hailing drivers would receive major increases to financial and social benefits under a draft decree being considered by President Prabowo Subianto, two sources said, threatening profitability of ride-sharing platforms in their largest market in Southeast Asia.Prabowo is under pressure to respond to drivers' demands for better pay and conditions, particularly after their involvement in widespread student-led protests in August demonstrated the political clout of the sector's workforce.Concerns about driver welfare have been stoked, meanwhile, by a potential merger between the two largest ride-hailing platforms in the country, Indonesia's GoTo IDX:GOTO and Singapore-based rival Grab NASDAQ:GRAB. Critics of the deal say it will create a monopoly that will work against drivers.The draft rules, seen by Reuters, details of the concessions and potential immediate enforcement via a presidential decree have not previously been reported. It was not clear if this was the final draft or when it would be enforced.The decree under consideration would reduce caps on commission ride-hailing companies take from drivers for each trip to 10% from 20%.Indonesia is the only country in Southeast Asia that places caps on commission for two-wheel ride-hailing services, and a cap would further limit the platforms' margins.Platforms would also have to pay for drivers' accident and death insurance in full, which could cost companies about $1 a month for each of the roughly seven million delivery drivers in the ride-hailing industry.It would also split health, old-age and pension premiums for industry workers, potentially driving up hiring costs further."Most of the players in the industry cannot sustain these changes," an industry source, who has seen the draft, told Reuters, expressing concern that the insurance fees would send annual spending sharply higher.A second source, who also confirmed the proposals, warned that costs of premiums could lower margins and reduce the number of drivers companies allow on their platforms. Such benefits have for years been resisted by companies that insist drivers are gig workers who not eligible for the same insurance available to full-time employees. The draft also authorises the government to review agreements between the companies and online transportation workers, and protects the right to un...

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