Uber’s Taxi App Lands in Jakarta

Jakarta Globe, Vanesha Manuturi, Aug 13, 2014

A woman shows the Uber apps on her smartphone in Jakarta,
Wednesday (13/8). JG Photo/Jurnasyanto

Jakarta. Traditional taxi companies in Indonesia may soon face a big shift in the market, as new competition from smartphone-based transportation services like San Francisco’s Uber taps into the insatiable demand for transportation in the world’s fourth-most populated country.

Uber — a software company focusing on transportation services — officially launched its eponymous smartphone application into Indonesia on Wednesday, gunning for the growing middle class population in the capital city Jakarta.

The company, which has established its presence in 43 countries worldwide, had previously arranged a soft launching in Jakarta earlier in June and rolled out its service in the Sudirman Central Business District (SCBD).

“There are currently tens of thousands people who have signed up for Uber. That’s what’s exciting about Jakarta — things go viral very easily,” said Chan Park, Uber’s head of expansion for the Asia-Pacific region, to the Jakarta Globe on Wednesday.

The Uber app assists Indonesian commuters in finding transportation — private driver included ­— through its partnerships with local limo and car rentals, offering brands ranging from Toyota Camry to Hyundai Sonata.

Its base fare currently stands at Rp 7,000 (60 cents), with each additional minute costing Rp 500 and each kilometer Rp 2,850 — placing Uber at par with local taxis.

“You can think of [Uber] like Expedia,” said Park, referring to a travel booking website. “We’ll facilitate the transactions and that transportation experience by connecting driver and transportation provider with the rider, and we provide the app that enables that.”

Uber will be jumping into a competitive market that’s already filled with various public transportation options for the Indonesian middle class, such as taxis and ojeks , or motorcycle taxis.

The company is not the first smartphone-based transportation service to break through the Indonesian market. Brazil’s Easy Taxi and Malaysia’s Grab Taxi — both of which allow customers to hail a taxi from their smart phones — had already launched their services in the capital in June and April respectively.

Mixed reactions

The presence of Uber and other similar transportation apps in Jakarta has so far been met with a variety of responses by prominent business figures and taxi companies in the area.

Teguh Wijayanto, head of public relations at Blue Bird Group, the country’s largest taxi operator, said new competition is not unusual, adding that the company had already anticipated the growing use of smartphones among Indonesians with the launch of its own Blue Bird smartphone application back in 2011.

“Competition is something that’s expected and is needed … As long as the company continues to push for the best services, it’s in the public’s hands,” Teguh said.

Sandiaga Uno, an Indonesian businessman and the country’s 45th wealthiest person according to Globe Asia’s 150 Richest Indonesian list, echoed Teguh’s sentiments, noting that tighter competition from Uber and other similar transportation-related smartphone apps will eventually lead to better service for customers as traditional transportation providers work toward improving themselves.

“The prospect looks good for Uber in Jakarta with the increasing demand for more innovative modes of transportation from the country’s fast-growing and highly mobile middle class,” Sandiaga said on Tuesday.

Sandiaga is also advocating the use of the smartphone app.

In contrast, some remain skeptical as Uber’s business model remains unclear against Indonesia’s regulatory backdrop.

Daniel Podiman, president director of taxi operator Express Transindo Utama, said that Express, along with the Organization of Land Transport Operators (Organda), is currently reviewing how Uber’s business model fits into the country’s public transportation scene.

“We’re waiting for more clarity on the issue … Something that’s new will always be assessed and examined. But if it goes against regulation, then something must be done,” Daniel said.

Regulatory pushbacks are not new to Uber, considering its history of numerous legal hurdles in some countries. Uber has faced lawsuits from taxi companies in Chicago, San Francisco and Washington DC. Reuters recently reported that Hamburg, Germany and Seoul, South Korea is seeking to ban Uber’s operations in the area.

However, Park said that the company has not yet been approached by regulators in Indonesia.

“How will the regulators react? I’m not sure. I haven’t heard anything from them,” Park said. “But we’re not trying to come in and cannibalize [the market]. We’re trying to provide an alternative.”

Uber is backed by Google Ventures and Goldman Sachs.

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