Indonesia, explained.
Indonesia has some of the largest app-based companies for everything from deliveries to ride-hailing services (Grab/Unsplash)
Finding the right balance for ride-hailing platforms should be seen as securing a private safety net.
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Can Indonesia protect gig workers while allowing innovation to thrive?Can Indonesia protect gig workers while allowing innovation to thrive?
Countries across the world are trying to find the right approach to regulating the gig economy.
Indonesia’s approach has been increasingly prescriptive. The country has led the way on digital adaptation, with some of the largest app-based companies for everything from deliveries to ride-hailing services. The government has now cut the maximum commission on two-wheeled ride-hailing services from 20% to 8% (Opens in new window). It goes beyond the 10% cap (Opens in new window) initially sought by driver associations, which had cited rising operating costs, weaker incentives and falling take-home pay.
Enacted through a Presidential Regulation (Opens in new window), the policy further requires digital platforms to provide drivers with access to accident insurance, national health insurance and national employment insurance. It sits alongside existing Ministry of Transportation rules that set minimum and maximum fares (Opens in new window) across geographic zones.
Australia has faced similar tensions and taken a more outcome-based approach. The model preserves gig workers’ independent status while creating a legal category of “employee-like (Opens in new window)” workers. Australia has established (Opens in new window) minimum hourly pay rates linked to the national minimum wage, strengthens price transparency, provides accident and injury insurance while services are being delivered, and offers protection against unfair deactivation.
Rideshare platforms are allowed to set their own prices (Opens in new window) in some states, while requiring passengers to receive and accept a fare estimate before the journey begins.
Winston Tjia/Unsplash
The continued success of digital platforms depends on a stable and supportive policy environment. Yet the platform economy is not a zero-sum game. It operates as interconnected networks in which driver-partners, consumers, merchants and platforms are mutually dependent. Measures that improve outcomes for one group in the short term may, if poorly designed, have wider consequences – reducing investment, limiting innovation or affecting service quality.
The challenge, therefore, is to establish a governance framework that protects gig workers' welfare while allowing digital platforms to grow and evolve over the long term.
Ride-hailing platforms are no longer merely technology companies – they have become major labour-market institutions. In Indonesia, the ride-hailing sector supports around seven million drivers (Opens in new window), generating approximately US$4 billion (Opens in new window) in market value this year. During the Covid-19 pandemic and subsequent economic disruptions, these platforms effectively served as a private-sector safety net, absorbing workers displaced from the formal economy and offering low-barrier opportunities when formal jobs vanished.
The role extends beyond job creation, with platforms now a pillar of financial inclusion. By integrating technology and data, some platforms have evolved into SuperApps (Opens in new window) that bring together multiple digital services within a single app, from ride-hailing to financial services. Through embedded finance, these platforms can extend access to digital payments, savings and micro-credit for users who have historically faced barriers to formal financial services.
The future of platform capitalism may depend not on how quickly digital companies grow, but on how effectively they are governed.
In cities where public transit systems have struggled to keep pace with population growth and expansion, app-based motorcycle platforms also help address persistent first-mile and last-mile connectivity challenges. By connecting communities to transport hubs and economic centres, these platforms improve mobility, support productivity and help fill gaps in public transport.
Indonesia is also looking beyond commission caps to create broader pathways to improve gig worker welfare. The government plans to recognise ride-hailing drivers as micro-entrepreneurs (Opens in new window), enabling them to access government support programs, including training, business development assistance and subsidised credit through the People's Business Loan (Opens in new window) scheme. These initiatives could help drivers move beyond income earned solely through ride-hailing, enabling them to build businesses and develop new sources of income for themselves and their families.
Yet regulation cannot be considered separately from the economic reality of the sector. The industry’s expansion phase – when heavily subsidised fares attracted customers, generous bonuses brought millions of drivers into the gig economy, and profitability was deliberately sacrificed to achieve market share, scale and network effects – has come to an end. Digital platforms are now shifting from a growth-first model towards commercial sustainability. Recent quarterly results show that market leaders Grab (Opens in new window) and GoTo (Opens in new window) have achieved profitability, suggesting the sector is entering a more mature stage.
The shift towards commercial sustainability should create better outcomes across the platform economy. Gig workers need stronger earnings and social protections, while consumers depend on affordable and reliable transport. At the same time, commercially viable platforms are better placed to expand services beyond major urban centres and continue investing in innovation.
Good public policy should enable these interests to reinforce one another rather than treating them as mutually exclusive.
Indonesia is now defining the rules that will govern ride-hailing platforms. Its challenge is to support digital growth while ensuring that the benefits are broadly shared. The future of platform capitalism may depend not on how quickly digital companies grow, but on how effectively they are governed.
About the author
Hilman Palaon
Dr Hilman Palaon is a Research Fellow at the Lowy Institute’s Indo-Pacific Development Centre. His work focuses on digital economy issues in the Indo-Pacific region, including financial inclusion, economic empowerment, and technology innovation.
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