Jakarta cut app commissions to 8 per cent, and analysts ask what it costs

Indonesia has cut the biggest fee that ride-hailing apps can take from motorcycle drivers, from 20 per cent of each fare down to 8 per cent. Driver groups had asked for a cap of 10 per cent, and the government went lower than the drivers themselves requested. Writing for the Lowy Institute's The Interpreter, Hilman Palaon says a presidential regulation now also makes the apps pay for accident insurance, national health insurance, and employment insurance for their drivers, while the Ministry of Transportation sets minimum and maximum fares zone by zone.

That is a lot of rules for one industry, and the industry is not small: about seven million drivers and roughly $4 billion a year in market value. Palaon calls the approach "prescriptive," meaning the state writes the exact number into the rule instead of naming the result it wants and letting companies find a way there. He sets it next to Australia, which built an "employee-like" category: workers stay independent, but they get a minimum hourly rate, clear pricing, and accident cover. The timing matters, because Grab and GoTo only recently began making a profit after years of paying for discounts out of investor money.

His wider point is that these platforms have stopped being just apps. During COVID-19 they worked as "a private-sector safety net, absorbing workers displaced from the formal economy," and they are now one of the main ways ordinary Indonesians reach banking and credit. Palaon argues good policy should make worker welfare and company health support each other rather than treating them as a straight trade-off.

Why it matters

If you drive for an app, a smaller cut for the company means more of each fare stays with you, at least on paper. Watch the parts of your pay that are not the fare, the bonuses and incentives, because that is where a squeezed platform can quietly take the money back. And if you have ever taken app work between formal jobs, note what Palaon is really saying: this industry now does the job a social safety net would do, so how well it is run is a public question, not just a business one.