Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Indonesia’s President Prabowo Subianto has slashed the commission ride-hailing companies can take from drivers as the economy struggles with low wages and rising prices.
Speaking to tens of thousands of people at an annual Labour Day demonstration in Jakarta, Prabowo said he had signed a presidential regulation cutting the percentage that platforms, such as Grab and GoTo, can take from each order to a maximum of 8 per cent, from up to 20 per cent.
“Revenue sharing, from 80 per cent for drivers, is now a minimum of 92 per cent,” Prabowo said. He did not specify when the order would take effect, but warned companies that refused to comply “should not do business in Indonesia”.
Ride-hailing and delivery drivers in Indonesia have been calling for a reduction in the commission rates, which Garda Indonesia, the driver’s association, said was “putting pressure” on drivers and adding to a mounting cost of living crisis.
Indonesia’s economy has struggled to create high-paying jobs, driving millions into informal work such as ride-hailing and deliveries. About 7.5mn Indonesians are unemployed, according to government figures, while inflation hit 3.48 per cent in March on a year earlier, down from 4.76 per cent in February.
Delivery drivers, who are estimated to number about 7mn, also played a significant role in protests last year after one 21-year-old motorbike taxi driver was run over by a police vehicle and killed.
Garda Indonesia welcomed Prabowo’s announcement on Friday, saying it “does not only address demands for economic justice, but also reinforces the state’s recognition of the motorcycle taxi drivers as an integral part in the modern, digital transportation ecosystem”.
Singapore-based Grab and Indonesia’s GoTo, the dominant ride-hailing companies in the region, did not immediately respond to requests for comment.
Prabowo outlined a string of other measures at the May Day rally, including a pledge to build 1mn houses for workers and ordering state-owned banks to soon disburse low-interest loans to the public.
The general-turned-president has prioritised big spending policies, including a flagship $28bn free school meals programme.
Prabowo on Friday also offered reassurances that national energy supplies were secure in light of the crisis in the Middle East.
Indonesia imports about a quarter of its oil from the Middle East and 30 per cent of its liquefied petroleum gas (LPG), which is widely used in cooking. But prices of subsidised oil and LPG have remained relatively stable.
“The whole world is in crisis, many countries are already in a state of panic,” Prabowo said. “Our fuel [supply] is still safe.” He also claimed that Indonesia would reach energy self-sufficiency in “a few years”, without elaborating.
Energy minister Bahlil Lahadalia said last month that Indonesia would import more LPG from the US and Australia. The ministry has also said that it will “gradually” import 150mn barrels of oil from Russia.
