The App-Based Motorcycle Taxi in Indonesia : A Success Story of Fourth Industrial Revolution yet without Creating New Market

Tracing back the development of technology based-firms within the past few years, especially in my country, Indonesia, startups have been a hallmark among young entrepreneurs and it has just redefined the essence of the fourth industrial revolution which realized by the adoption of fast growing tech businesses.

Compared to previous patterns of industrial revolution, which outlined the importance of hard equipments, automation of manufacturing, and division of labor, this startup era accentuates more simplicity where everyone merely can build industrial zones in an iOS or Android by running an application and making transactions in an interconnected world. With a population of 255 million people, Indonesian startups have a healthy home market to work with. According to Tech in Asia, there has been an increased number of startups in Indonesia with consistent funding and considerable growth — ranging from consumer to consumer e-commerce, digital advertising, online games, and online retail to the entertainment provider. For example, MalesBanget.com, a well-known humor website featuring articles and videos that get funded by Rebright Partners and 500 Startups public, has attracted more than 700,000 visitors per month in 2015. Along with that, this startup also offers the wider job chances for freelancers to share their ideas by writing articles and then getting paid. In addition, Traveloka, has been ranked as Indonesia’s number one online travel agency for flight search and booking service, apart from the direct airline websites. In the end of 2013, this website reported processing two million flight searches, getting around 250,000 visits per day and additionally, nearly 10 percent of all ticket sales were made online via its services. Along with its achievement, Traveloka has not only been absorbing more employment, but also capably offering higher starting-salary for the qualified candidates, compared to the rates offered by banking and fast-moving consumer goods (FMCG) companies.

Optimistic as these stories are, no one can guarantee the sustainability of this enticing growth in startups. Learning lessons from advanced economies, less than one-half of startups survive for more than five years and only a fraction develop into the high-growth firms which significantly contribute to job creations. This sector is highly dependent on creativity and innovation in order to hinder market saturation. As a result, the pressure remains tougher than other sectors and high job turnover poses problem for employment security.

The development of business led by high tech strategy yields various degree of local opportunity and challenges in different countries as their survival also depends on the business ecosystem in which they exist. Go-Jek, one of the fastest-growing and most visible technology startups in Indonesia, exemplifies the aforementioned problem. Founded by Nadiem Makariem, the basic concept of this startup is to bring together experienced and trustworthy ojek (motorcycle taxi) to deliver a one-stop convenience service for Jakartans. Branded as “an ojek for every need”, its emergence has distinctively pushed the economic efficiency in the congested traffic of capital city, as this app also serves as a shopping courier and transportation provider all wrapped into one. Being the first app-based ojek in the world, Go-Jek has successfully transformed the business process from the form of conventional transportation to the modern booking like now. The apps work with Android, iOS, and Windows phones and the GPS capabilities of smartphone allow both drivers and passengers know each other’s location that eventually remove the question of when the ride will arrive.

I have also used this service and am fully satisfied with the fastest door-to-door transport and delivery booking services, which are very affordable and time-saving. Its socio-economic impact leaves no stone unturned in improving the livelihood of 30,000 drivers in Jakarta by providing them with higher incomes. Drivers on average earn around Rp 4 million (U$350) per month. Particularly for the highly productive drivers, they can earn more than 6 million as they are incentivised with a bonus of Rp 50,000 (U$4) for 10 trips in a day. Interestingly, a number of skilled workers have resigned from their working companies, and have applied for driver jobs in Go-Jek. More surprisingly, they have attracted many people, not only those who are unemployed, but also from the middle income group. Faridz Budhi Surya Kusuma, a hotel manager who had monthly income around Rp 8–10 million, recklessly resigned to join Go-Jek. As a result, he can earn Rp 10–15 million per month, without any job pressure and as he said “working as ojek driver with income level higher than a qualified manager is more enchanting”.

However, one simply cannot predict what kind of innovation that Go-Jek will be able to bring in the near future, and importantly how it can ensure the job security for those 30,000 drivers who are now mesmerizingly engaged with Go-Jek. This lucrative result is owing to the poor traffic in Jakarta, but Jakarta will not always be as worse as it is today. It is getting better nowadays with improvements of public transportation. In a few years, Jakarta citizens may finally be riding MRTs, LRTs, and an improved bus system. Despite many competitors, Go-Jek is yet to explain their long-term solution towards this problem and surely the legacy of this 30,000 drivers is on the hand of Go-Jek’s management. Some of them have given up their previous permanent jobs and there are no adequate ways to return to their previous careers. In sum, this is another boiling point in the startups business where only some are holding the capital, and others are the vulnerable players.

Another problem is government’s policy flip-flops towards online transportation have eroded the future of startups’ confidences. Few weeks ago, Transport Minister Ignatius Jonan has strictly announced the illegality of this massively popular app-based motorcycle. With a huge public backlash, just within few hours, President Joko Widodo cancelled the Minister’s circular regarding the prohibition of Go-Jek and personally expressed his objection to Jonan’s decision, considering the innovation and new ideas of online-based transportation businesses must be supported, instead banned. However, taking two problems into account, none can predict there would be another flip-flops over this startup in the future. First, app-based ojek has met the resistance from some traditional drivers (informal ojek), who are finding it hard to adapt to the modernization of their business and some also argues this app that connect drivers to passengers are creating competition and disrupting market established by taxis and traditional players. Second, success story of Go-Jek is overshadowed by another social-economic problems. Some who prefers the traditional way and are reluctant to join Go-jek, must be willingly depend on the ‘luckiness’ to find consumers, for such the pillions who could not find any Go-Jek around and is rush for time where she/he will be urgently forced to use informal ojek. Nevertheless, given the relatively low price and ease of access, there is no any further considerations for recent consumer to not using Go-jek services. Soon, their daily incomes slightly decreased and the situation become frustrated as these informal ojek drivers have been collectively using intimidation tactis and setting the backlash hotspot to reject Go-Jek existence in several areas. Given by that, until this day, despite the confusing policy, government has not yet issued clear policy to manage this disruptive innovation and fix wrong pattern of ‘sharing economy’. The enforcement of incentives regulations, tax amnesty between established taxis and app-based ones, and the regulations for human capital and accumulation of knowledge itself, remain challenges.

In sum, the startups business ostensibly looks simple and tantalizing, but as part of the fourth industrial revolution, they deal with multifaceted problems. Somehow, this sector is instantly growing, but forgetting the long-term solutions. They are basically prone to the economic fluctuations and politics games in the country where they must bear into mind that the capital injection is not the main guarantor for ensuring business survival nowadays. Without rapid innovations, well-managed policy, and accumulation of knowledge, some of them must be prepared for fail stories.