Post by : Saif Rahman

A significant transformation is on the horizon for Indonesia’s ride-hailing scene as the government contemplates new regulations aimed at bolstering the welfare of millions of drivers. A draft presidential decree under President Prabowo Subianto is on the table, intending to reduce company commissions and enhance social protections for drivers, potentially reshaping one of Southeast Asia’s largest gig economies.

This legislative proposal emerges as ride-hailing drivers have gained prominence as a political force, actively participating in major student-led protests highlighting issues such as insufficient wages, lack of insurance, and unsafe working environments. These movements have amplified calls for a prompt governmental response.

According to the proposed rules, ride-hailing services would be limited to a mere 10% commission per trip—down from the existing maximum of 20%—ensuring that drivers retain a larger portion of their earnings. Indonesia uniquely restricts commissions on two-wheel ride-hailing services in Southeast Asia, and this additional reduction could further strain company profit margins.

Another crucial aspect of the draft is the mandate for companies to provide comprehensive accident and death insurance for drivers. With an estimated seven million delivery and motorcycle taxi drivers nationwide, this requirement could significantly elevate operational costs for these platforms. Furthermore, firms would be obliged to contribute to health, pension, and old-age insurance schemes, which could escalate hiring costs.

Industry insiders caution that implementing such changes may not be entirely feasible. There are worries that heightened expenses might erode profits, compelling firms to restrict the number of drivers on their platforms. Traditionally, ride-hailing companies have argued against classifying drivers as employees, contending that they should not receive the same benefits due to their gig worker status.

Conversely, driver organizations have welcomed the proposed decree. Labor unions assert that these regulations could finally establish fair compensation and fundamental protection for workers whose livelihoods depend on ride-hailing. Union leaders have urged the government to clarify the application of benefits to eliminate hidden stipulations.

The proposal’s timing is critical, given the ongoing concerns over competition. Discussions regarding a potential merger between prominent ride-hailing firms have prompted fears of diminished competition, along with weakened bargaining power for drivers. Critics advocate for stronger regulations to safeguard workers against such outcomes.

President Prabowo’s administration has consistently endorsed drivers, acknowledging their economic significance. Experts remark that the tragic death of a motorcycle taxi driver during prior protests ignited public awareness, intensifying the urgency around worker safety and rights.

If implemented, this presidential decree could be enacted swiftly, potentially improving drivers' lives. However, it also poses challenges regarding how companies will adapt. The upcoming months will be vital in determining Indonesia’s ability to balance worker protections with a viable ride-hailing sector.

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