Fair play matters

Customers are surely the beneficiaries when rival players in a given industry engage in a price war, such as the current one taking place between app-based transportation service providers grouped under Grab and Uber versus conventional transportation service operators.

But given the generously discounted prices offered by the new players, which seem to go beyond business common sense, the outrage of many who make a living working in the traditional transportation industry has a strong basis.

On Monday around 2,000 public transportation and taxi drivers vented their anger against what they say is unfair competition created by the operation of app-based taxis and motorcycle taxis.

A taxi driver complained that his earnings have nose-dived from 100,000 rupiah ($7.55) on a very slow day to a mere 30,000 rupiah since the arrival of ride-hailing apps.

With these new kinds of businesses thriving, taxi drivers are moving closer to the World Bank poverty threshold of $2 per day, unless they can find better-paying jobs.

As the issue concerns fair competition, which is guaranteed by the law, the government has a responsibility to intervene. Whatever the government’s decision will be, it has to provide a level playing field.

President Joko “Jokowi” Widodo, through presidential spokesman Johan Budi, has shown consistency in his support of apps, which are a must in the contemporary business world. Jokowi, and probably us customers, do not want to heed the call of Transportation Minister Ignasius Jonan, who has threatened to ban Uber and Grab for violating the 2009 Transportation Law.

Just last month Jokowi also overruled Jonan’s order that Go-Jek, an app-based motorcycle taxi, be banned for the same reason.

Disunity in the government is testament to confusion on the part of policymakers regarding the emergence of this new business model. In fact Indonesia is not alone. Other countries face the same dilemma, but are seeing it from different perspectives and taking a variety of responses.

For one thing, app-based transportation service players have forced their conventional, if not established, competitors to make several innovations their business model, including the use of information technology.

As we enter the fourth industrial revolution, mobile devices give people all that they need, including transportation services.

Uber, Grab and Go-Jek are capitalizing on the opportunities that their traditional competitors may have overlooked. Some taxi companies say they have already turned to apps to accelerate their businesses, but are still unable to match the comparative advantage of the new players, who do not pay and report their taxes, as well as the powerful financial backing that enables them to keep their fares low.

The fact that foreign investors are behind Uber and similar companies is not the reason why the government’s presence is imperative. As the regulator, the government must create rules that lead to fair competition and ensure that all companies comply with them.

Competition will help businesses grow. And fair play will sustain, if not multiply, the growth of such businesses.

(The Jakarta Post /Asia News Network)