JAKARTA. Ride-hailing apps such as Uber and Grab are able to offer low fares not as a result of operational efficiency, but because of subsidies form their parent companies, the Organization of Land Transportation Owners (Organda) has argued.

Organda chairman Adrianto Djokosoetono accused such businesses of distorting the market by offering undercutting fares at the expense of their short-term financial health, leading to tariff wars in the field as well as at the corporate level. 

"If they were cheap because they were efficient, we'd love to learn from them. However, in China, for example, Uber lost US$ 1.7 billion, and only remains in operation because of subsidies from the profitable US parent company," he said in Jakarta on Tuesday.

Adrianto, who also chairs the Indonesia Chamber of Commerce and Industry (Kadin)'s Land Transportation Committee, said transportation companies' revenues had decreased 20 percent per annum since ride-hailing apps had entered the market.

“Decreases have not only hit taxi businesses, but also buses, angkot [public minivans] and bajaj [auto-rickshaws] as well,” he said.

Communications and Information Minister Rudiantara meanwhile said the debate over ride-hailing apps should not focus on technological issues, as the real problem lay with issues of licensing and regulation. "Technology is neutral," he noted. (Anton Hermansyah)

Editor: Yudho Winarto