Ride-hailing apps run Indonesia’s tuk-tuks off road

A three-wheeled bajaj taxi loaded with a passenger’s goods in Jakarta. Tech advances have left many traditional taxi drivers struggling to earn an income. (AFP)
Updated 26 March 2018
0

Ride-hailing apps run Indonesia’s tuk-tuks off road

JAKARTA: Auto-rickshaw driver Zainuddin used to make decent money navigating Jakarta’s congested roads and narrow alleyways.
But now US-based Uber, Google-backed Go-Jek and Singapore’s Grab are locked in a race for ride-hailing app supremacy in Southeast Asia’s biggest economy, denting the fortunes of traditional three-wheeled bajaj taxis that once ruled Indonesia’s roads.
“Our income has fallen between 70 and 80 percent since ride-hailing apps came on the scene,” said Zainuddin, who like many Indonesians goes by one name.
There were about 14,000 bajaj on Indonesia’s roads by 2015, according to the latest official figures.
By contrast, Go-Jek alone claims 900,000 drivers and about 15 million weekly active users. It launched in 2010.
Google and Singapore’s sovereign wealth fund Temasek have announced investments in Go-Jek, which has been valued at as much as $5 billion, although it is little known outside Asia.
Southeast Asia’s ride-hailing market more than doubled in two years to about $5 billion in 2017 and is expected to reach $20 billion by 2025, with Indonesia set to account for 40 percent of the
figure, according to research by Google and Temasek.
Go-Jek, which also reportedly won funding from Chinese
Internet giant Tencent, has said it is considering an initial public offering as it looks to grow in Indonesia and beyond.
That could inflate its army of motorcycle taxis, private cars and other services — from massage and house cleaning to
grocery shopping and package deliveries — all available at users’ fingertips.
Dragging behind its regional rivals, Uber is reportedly selling parts of its Southeast Asian operations to rival Grab in exchange for a stake in the Singaporean company.
The ride-hailing trio offers fixed-price rides that take haggling out of the equation, a welcome change for former bajaj customer Tetty Iskandar.
“I haven’t taken a bajaj in years,” said the 35-year-old housewife, who used to ride the three-wheelers to go grocery shopping.
“You had to bargain with the drivers to get cheap fares. And you would already have done bargaining a lot in the market. Sometimes I felt so tired and just wanted to get home.”
The vast archipelago of about 260 million people has a relatively low per-capita car ownership rate.
Vehicle owners often choose to leave their ride at home, opting instead for a fixed-price motor-cycle that can zip through Jakarta’s epic traffic congestion — at bargain-basement prices.
That is threatening bajaj — not to mention standard cabs and ubiquitous motorbike taxis known as ojek — which arrived in Indonesia during the 1970s.
The motorized rickshaw quickly made inroads under its namesake company, which hailed from India.
The name bajaj is now part of Jakarta’s lexicon after supplanting traditional bicycle taxis.
A distinctive blue model of the vehicle is still a common sight, and while pollution-spewing older models are outlawed, some still ply the narrow alleyways of Indonesia’s sprawling capital.
Government efforts to reduce traffic by reintroducing bicycle taxis could further chip away at the market share of bajaj, which cannot operate on highways.
Bajaj backers say the tiny tuk-tuks are safer than motorcycles, which have higher injury and fatality rates.
“They are still a very useful means of transport when you have to go through small alleys and roads in Jakarta,” said Danang Parikesit, president of the think tank Indonesia Trans-portation Society.
For some, sitting in a tuk-tuk as it teeters and rumbles over Jakarta’s roads offers a connection to an older way of life.
“Riding bajaj has a unique sensation, a nostalgic feeling,” said long-time customer Budiyanto.
In central Jakarta, bajaj line a curb, their drivers smoking or sleeping as swarms of motorbike drivers sporting Go-Jek or Grab windbreakers zip by on their way to collect customers.
Even if they wanted to switch to ride-hailing apps, it is too late for some older drivers.
“I cannot shift to an app-based motorcycle taxi because of my age,” said driver Sutardi.
“Companies require that their drivers not be over 60.”
Despite the threat of technology, some insist bajaj have a future, especially among customers who don’t want to get soaked on the back of a motorbike or while waiting for a hired car during the months-long rainy season.
“Customers don’t like to
get wet,” tuk-tuk driver Zainuddin said.
“It’s not good for people when the rain comes, but bajaj drivers will be happy.”


Ahmed Al-Habtoor: Portrait of a driven auto executive

Updated 19 May 2019
0

Ahmed Al-Habtoor: Portrait of a driven auto executive

  • There is no country on this planet where you will see Bentleys, McLarens and Bugattis as much as in the UAE.

DUBAI: Over the course of a morning in his office in Deira, Dubai’s traditional business district, Ahmed Al-Habtoor talked eloquently and expertly about the motor business in the UAE and the Arabian Gulf, about customers’ likes and dislikes, about the tough times the industry has faced recently, about his best-selling models, and about the importance of the sector within the UAE economy.
Then, he dropped a small bombshell. He is always chauffeurdriven, and seldom gets behind the wheel of any of the luxury vehicles he trades daily. “I don’t care about driving cars, I care about selling them,” he revealed.
From the youthful chief executive officer of Al Habtoor Motors, who could have his pick of Bugattis, Bentleys, McLarens and other “fast boys toys,” that was quite a revelation.
“I don’t like driving, I like to be on my phone checking emails and messages. I don’t have the patience to look for parking, and anybody who can afford to have a driver should do so,” he added.
So Al-Habtoor is, in more senses than one, a driven executive. The motor division is a key part of the Al Habtoor conglomerate, started by his father, the group chairman Khalaf, in the 1970s as an engineering business but which has expanded through real estate, hotels and hospitality, to education and entertainment.
Motors has been an integral pillar of the Habtoor portfolio since it was set up in 1983 to handle the Mitsubishi franchise in the UAE. “We have strict corporate governance, law, a constitution in the company. The rules are set and we are here to implement the directions of the chairman. We have our own ideas, we try to be creative, but it is a well-established, solid company with very strong roots,” he said.
here is still a large number of workers — whom he called “partners” — who can date their employment back to the very beginning of the Mitsubishi franchise.
He admits to two alternative frustrations in his job, depending on the economic climate.
“When the market is active and business is fantastic, I get frustrated at the pressure of delivering to my clients. I’m just busy, trying to meet the expectation of delivering the right product at the right time,” he explained. “The other frustration is when the market is challenging and low, I’m busy trying to be busy, trying to find business. It’s all about being busy.”
For the past few years, the “challenging” market has been to the fore, as he candidly admitted. The fall in the oil price in 2014-15 began to affect the economies of the energy exporters of the Arabian Gulf toward the end of the following year, and the motor sector was seriously hit. Sales volumes declined sharply — compounded by government spending cuts and some policy decisions.
“I think in 2017 the volume was acceptable. In 2018, it dropped when the government implemented VAT. I don’t think VAT was the wrong decision, but it had a negative effect. It was implemented when the market was in a weak situation. If the market was booming, it would have been much easier for us,” he said.
Al Habtoor Motors’ longevity gives its CEO a perspective on the forces that shape the industry. “It’s a cycle. There is always a cycle every 6-8 years. When oil prices started to fall it had an effect. In our region, government spending is the key to moving the economy. Not only in Dubai, but the whole of the UAE.”
He estimated that the motor industry was the second biggest sector in the UAE’s non-oil economy, behind real estate, but saw no real linkage in the simultaneous downturns in property and motor sales.
The other factor that affected car sales — especially in the high volume and fleet car business — was the increasing reluctance of banks in the UAE to continue previous levels of finance to small and medium enterprises (SMEs) during the worst of the downturn.

“It was not a very wise decision to withdraw support from SMEs. The economy depends on large companies, but at the end of the day, consumption comes out of the (medium) and small businesses. Uncertainty and insecurity in the market made a lot of people stay away from buying,” he said.
Al-Habtoor estimated that car sales volumes in the fleet business were down by 50 percent from the highs of 2015, as they were across the whole of the volume motor business. “Last year was very challenging, but thankfully we managed all the challenges,” he said, on the back of an upturn in business measured across the whole of last year.
He has reason to be more optimistic in the current year. “There has been stimulus to the economy, Expo 2020, and the confidence in the market improved. The changes to visa arrangements, the reduction of license fees — all these are having an effect,” he said.
On the “Expo effect” — the expected boost to the UAE economy from the huge business fair planned for next autumn — he was cautiously positive. “We’ve seen that coming through already. Now it is nominal, but we are seeing green shoots. It is not a big effect yet but it is happening, and the more we go toward October next year the more benefit will come,” Al-Habtoor said, adding that he was confident of getting back to 2015 levels eventually.
That is good news for the Mitsubishi, Fuso, Jac and Chery marks that are Habtoor’s staple. But the group also has an impressive stable of luxury cars, with the dealerships for Bentley, the McLaren sports brand, and the super-car Bugatti, in the UAE
The UAE’s reputation for glamorous, extravagant cars — even down to the Dubai police fleet — is a global phenomenon, and Al-Habtoor does not think it will change any time soon, even in challenging economic circumstances.
“A lot of people want beautiful cars and the best. It always was like that, it still is now and it will be in the future. The UAE and Dubai is always about the best. It’s in the culture of the city. There is no country on this planet where you will see Bentleys, McLarens and Bugattis as much as in the UAE,” he said.
The economics are different in the luxury brands, which were not as badly hit by the oil-related slump as the volume business. “The luxury end was affected by the downturn, but it’s more resilient, it’s OK,” he said.
“In the first four months of this year, we’re the number one dealer in the world for Bentley, and have consistently been among the biggest Bentley dealers in the world, if not the biggest. When luxury goods are moving, not just cars, but jewelry and other things, I feel that the economy will come back soon,” he said.
Bentley sales have been given a boost by the introduction at the end of last year of a new Continental GT, and by the continued appeal of the Bentayga, the company’s first move into the SUV market, which has huge appeal for motorists in the region. Deliberately priced at below 1 million dirhams ($272,250), the luxury SUV aims to take on other upmarket four-wheel-drive vehicles.
He seemed especially pleased with the performance of the McLaren range within his portfolio, vying with other more famous brands in the lucrative but very competitive sports car segment — another best seller in the region.
At the top end, McLaren competes with the best in the sports car market, and its BP23 model sells at more than 10 million dirhams. “There are only 116 vehicles around the world and we have six of them. In that ultimate series sector, McLaren is dominating,” Al-Habtoor said.
Then there is Bugatti, the French super-sports car whose Chiron model is one of the most expensive seen on the UAE’s roads, selling at around 12 million dirhams. Last year, the company sold 12 of them, Al-Habtoor said, but any ideas that McLaren is competing with, and cannibalizing sales, of Bugatti were dismissed.
“That’s like comparing a normal plane with a UFO. I once drove a Bugatti on a track at over 200km and it was as if I was having a picnic in the garden — you don’t even feel it,” he said.
Occasional high-speed track driving, apparently, is one of the few occasions he likes to give the chauffeur a day off.