Indonesian government’s shock move to slash ride-hailing fees is putting fresh pressure on sector profits – just as operators begin to hit their stride.
On May 1, President Prabowo Subianto has ordered a steep cut in commission caps, dropping them from around 20% to just 8%. The policy, unveiled during Labor Day events, is designed to boost driver earnings and will also require platforms to provide accident and health insurance. At about $1 for each driver per month, it could then cost ride-hailing platforms an additional $84 million per year.
It’s a win for gig workers. But for ride-hailing giants Grab and GoTo, it’s a potential margin squeeze in their most profitable market.
Indonesia is South East Asia’s largest ride-hailing arena, with millions relying on app-based transport and delivery services. Protests over pay and conditions have been mounting, adding political urgency to reform.
Analysts say the impact could be significant. Citi Bank estimates Indonesia accounts for a mid-teens share of Grab’s mobility gross merchandise value. If the new cap applies only to two-wheel services – which dominate the market but generate thinner margins – Grab could see a US$5m–US$10m hit to annual EBITDA.
If four-wheel services are included, the downside grows sharply. Citi pegs the potential impact at a loss ranging between US$35m US$40m, about 5% of Grab’s projected 2026 mobility EBITDA.
Investor sentiment is already under scrutiny. Analysts expect markets to react cautiously as details of the policy remain unclear.
Two-wheel rides could be the most affected by cuts
Grab is meanwhile moving quickly to steady the narrative. Chief Financial Officer Peter Oey said the company will recalibrate its Indonesian business, particularly its two-wheeler segment. But he downplayed the broader impact, noting the regulation is likely to apply only to motorcycle rides – a relatively small slice of Grab’s overall mobility mix.
“We have enough levers to cushion the impact,” Oey said in public, adding that pricing structures and the business model will need to be adjusted.
Chief operating officer Alex Hungate echoed the cautious optimism, stressing that Indonesia’s two-wheel segment accounts for less than 6% of Grab’s mobility volume. He said the company is actively engaging with regulators to clarify how the rules will be implemented.
Despite the regulatory curveball, Grab’s financial momentum remains intact. The Singapore-based firm recently posted stronger-than-expected quarterly earnings, with EBITDA beating forecasts by about 5%. Revenue also came in ahead of expectations.
The company reaffirmed its full-year outlook, guiding for up to US$4.1 billion in revenue and as much as US$720 million in adjusted EBITDA.
Even so, the policy shift underscores the risks of operating in fast-evolving regulatory markets. For ride-hailing firms, Indonesia remains a critical growth engine – but one where the rules of the game can change overnight. The costs of premiums could also translate into a reduction in the number of bike drivers allowed on ride-hailing platforms. And finally affect consumers in a time of shrinking purchasing power with the crisis in the Gulf.
