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Go-Jek, Grab contribute Rp 93.1t to RI economy: Surveys
Go-Jek and Grab, a local ride-hailing duopoly, contributed a total of Rp 93
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Go-Jek and Grab, a local ride-hailing duopoly, contributed a total of Rp 93.1 trillion (US$6.56 billion) to Indonesia’s informal economy last year through additional income for drivers and food merchants, according to different surveys.
Grab, according to a survey released on Thursday, contributed Rp 46.2 trillion through three business units: GrabBike with Rp 15.7 trillion, GrabCar with Rp 9.7 trillion and GrabFood with Rp 20.8 trillion. Kudo, an Indonesia-based online payment start-up, which was acquired by Grab in April 2017, contributed another Rp 2.7 trillion. Including Kudo, Grab’s total contribution to the economy was Rp 48.9 trillion.
Homegrown ride–hailing company Go-Jek, meanwhile, contributed Rp 44.2 trillion to the informal economy last year via its Go-Ride and Go-Food business units, according to a separate survey released last month.
Go-Jek began its operation in the country in October 2010 while Grab, which was founded in Singapore in 2012, expanded into Indonesia in 2015.
Yose Rizal Damuri, an economist at the Centre for Strategic and International Studies (CSIS), told reporters in Jakarta the new data offered a fresh perspective on economic development.
“There’s never been a significant reduction of informal employment. Only a few points at best. So maybe we need a new paradigm where it’s not about reducing informality but increasing informal income,” he told reporters at the launch of the survey on Grab’s role in unlocking the potential of Indonesia’s informal sector.
He was referring to Statistics Indonesia (BPS) data showing that the percentage of informal workers in the working population decreased from 62 percent in 2011 to 56.8 percent last year.
Grab’s survey, jointly conducted by the CSIS, Tenggara Strategics (affiliated with The Jakarta Post) and Grab, also shows that ride-hailing is a popular means of informal employment, as 33 percent of Grab’s car drivers and 38 percent of its motorcyclists had no income prior to joining the company.
The Grab survey shows that ride-hailing doubled the average monthly income from Rp 1.9 million to Rp 3.9 million for motorcyclists and from Rp 3.3 million to Rp 7 million for car drivers.
Go-Jek and Grab’s drivers, who are considered self-employed, count as informal workers, and many of the companies’ food merchants are also informal because they don’t have formal business entities.
The Go-Jek survey, conducted by the University of Indonesia with Go-Jek, found that ride-hailing increased the monthly average income of the company’s motorcyclists by 44 percent from Rp 2.2 million to Rp 3.31 million. It did not measure the income increase of Go-Car drivers.
The survey also found that 75 percent of drivers were fresh high school graduates and 15 percent were higher education graduates.
Grab Indonesia president Ridzki Kramadibrata welcomed the survey’s positive results saying, “we [still] have more to do to ensure a larger portion of the Indonesian population can grow as well as develop the national internet economy,”
GrabFood merchants that took part in the survey, all of whom were micro and small entrepreneurs, also experienced an average 25 percent increase in daily sales from Rp 1.4 million to Rp 1.85 million.
However, the sales of 16 percent of vendors did not increase from the lowest income bracket of less than Rp 500,000 per day even after joining the company.
Furthermore, neither the Go-Jek nor Grab survey calculated drivers’ operational costs such as fuel, phone credit and repairs, which may drive profits below minimum wage as experienced by many Uber and Lyft drivers in the United States, according to a 2018 paper by the Massachusetts Institute of Technology.
Therefore, economist Yose urged policymakers to use more evidence-based research such as his organization’s survey instead of consultations when drafting new policies, especially for those involving the country’s fast evolving digital economy.
“Don’t be like a ministry that issued a policy then backed out a month later because they didn’t really have a base for the policy,” he said.
He was referring to the Finance Ministry’s revocation of its regulation on e-commerce tax, following mounting protest from digital economy players, who said it would slow down e-commerce growth.
“Our study shows the benefits [of ride-hailing]. It is now the task of regulators to find out its costs, then draft policies that can empower workers without creating friction in the economy,” he said.
