The four words sesuai aplikasi aja bang (‘according to the application bro’) are all a hungry or commuting urbanite needs today to have food delivered or navigate the clogged streets of the country.

Convenience being the order of the day, the on-demand world of Go-Jek has even created a template that saves our tired fingers the hassle of typing out the magic four words.

Best of all, the services offered by app-based ojek (motorcycle taxi) drivers are a bargain. When combined with the seemingly infinite supply of promo codes, short journeys cost as little as Rp 2,000 ($0.14) and food delivery is often free.

An app-based ojek driver is never more than a few minutes away. Green-helmet services have become a ubiquitous phenomenon across the country, with estimates claiming over 2.7 million driver-partners under the duopoly of Grab and Go-Jek.

Millions in the country have become dependent on these services. The wheels of change, however, are in motion and the days of low prices are coming to an end.

Marking the latest intervention from the government in regulating the ride-hailing industry, a transportation ministerial decree announced on July 4 prohibits app-based ride-hailing companies from offering 'excessive' promotional discounts.

The decree followed a transportation ministerial regulation effected in May and expanded to 41 cities from July 1—the first of its kind to target minimum fares for ride-hailing services. The regulation also recognises app-based ojek as a form of public transportation.

The idea behind both regulations is simple: to raise the incomes of workers in the on-demand transportation industry. What’s not to like?

Increasing labor market intervention of this sort reflects a shift in the policy direction of President Joko 'Jokowi' Widodo’s government, which initially advocated 'light touch' regulation of app-based ride-hailing.

In 2015, when the Transportation Ministry tried to outright ban the operations of ride-hailing applications, Jokowi himself intervened, pointing out that these services fulfilled a vital public transportation function.

The issue of driver welfare reflects a broader, indeed a global, trend in the debate about app-based ride-hailing services.

The policy shift also reflects a growing 'developer’s dilemma', in which the government has to balance rapid structural transformation in the transportation sector while ensuring that these developments remain 'inclusive', meaning that the economic benefits are shared widely. But how to achieve that?

The laudable goal of better pay for drivers—the May regulation means fare rises of between 11 and 20 percent—is not without ambivalence.

Despite frequent complaints about incomes, driver-partners had enjoyed significant wage increases prior to government intervention.

Tenggara Strategics found the average monthly income of GrabBike driver-partners had risen 113 percent to Rp 4 million per month, while the income of GrabCar driver-partners had risen 114 percent to Rp 7 million per month from Rp 3.3 million, well above the national average minimum wage of Rp 1.9 million.

These wage rises mean driver-partners are now part of an expanding 'new middle', referring to a group of people that are neither poor nor completely secure from poverty. Fittingly, this social group has been called a 'scooter class' for its preferred means of transport.

Increasingly, the scooter class is politically assertive and sees the state as responsible for further improvements in its economic wellbeing. In a country with endemic clientelism and state-connected business, this leaves a slightly bitter taste.

The duopoly of Grab and Go-Jek and their millions of driver-partners has also created a consolidated interest group with national political clout.

The main target of driver grievances is increasingly the government rather than ride-hailing companies themselves. This is in stark contrast to when conventional ojek operated informally and their bargaining power was localised and dispersed.

Adding weight to critics who argue that this was just 'cosmetic' policy, a survey by the Research Institute of Socio-Economic Development (RISED) showed 75 percent of users were unwilling to pay the prices stipulated in the regulation. The price hike, the institute said, would therefore not necessarily raise driver incomes because there would be fewer services demanded.

Go-Jek also said the number of orders fell in the three days after the price hike was enacted, voicing concerns that the drop in services demanded would actually harm rather than increase driver-partner income.

Consumers of ride-hailing services, meanwhile, appear to have less of a lobby.

According to RISED, 75 percent of users of ride-hailing applications earn below Rp 3.5 million a month—which is less than most drivers earn. This further accentuates the developer’s dilemma: in trying to cater to driver-partners, it is the service’s low-income users that could be harmed the most.

Furthermore, employment as a driver-partner is flexible and lucrative, but offers few opportunities for training, upskilling or the promise of rewards or managerial positions for greater experience. Driver-partners thus find themselves in a skills-trap.

This raises a more fundamental question: how much 'greener' does the country want its economy to get? Should the transport gig economy be drawing in an ever-larger group of young, talented people—in a country with an existing vast supply of private transport opportunities?

While the new regulations might diffuse tensions, it will not solve the question of long-term driver—and rider—welfare. Resolving the developer’s dilemma will require more than 'cosmetic' policymaking of the sort that we have seen lately.

The article was previously published in The Jakarta Post, a part of Asia News Network.

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