Ride hailings are struggling – Should Gojek and Grab call it quits?

The problem is some of the populism on both the far left and the far right, it can make a Tweet but not make a policy. And, you know, when you are dealing with issues that are as important and serious as this, I understand why people search for simple solutions. --Tony Blair

Imagine waking up one day to a notification that Gojek and Grab have officially ceased operations in Indonesia. The streets become more congested as commuters scramble to find alternative transportation, leading to longer travel times and increased fares from traditional taxis and public transport.

Food delivery services grind to a halt, forcing small restaurants and home businesses to struggle with plummeting sales. E-commerce sellers face logistical nightmares, unable to fulfil orders quickly without an efficient delivery network. Millions of ojol drivers, who rely on daily rides for their livelihood, are left jobless overnight, with no immediate alternatives.

While this scenario may seem extreme, it is not entirely implausible. Gojek and Grab, despite their massive societal impact, are not invincible. If financial instability and policy pressures continue to mount, these ride-hailing giants could struggle to sustain their operations at scale.

The harsh reality: Gojek and Grab are running in Red

Despite their dominance in Indonesia’s mobility and digital economy, Gojek and Grab are struggling financially. Both companies have consistently operated at a loss. Their high operating costs—including driver incentives, promotional discounts, and platform maintenance—continue to outweigh their revenues. Grab Holdings reported a net loss of $434 million in 2023, and Gojek’s parent company, GoTo, has also been under pressure to achieve profitability.

These financial struggles are not sustainable in the long run. If investors lose confidence or if cost pressures increase, pulling out of unprofitable markets—including Indonesia—could be a real option. This has already happened in some markets: Uber left Southeast Asia in 2018, selling its business to Grab, because it couldn’t sustain operations in the region. What if Gojek and Grab decide that Indonesia, despite its market size, is no longer worth the financial bleeding?

Populist regulation and its risks for business viability

Instead of supporting these platforms that have revolutionized mobility and created millions of job opportunities, the Indonesian government has suddenly attempted to impose new financial obligations on them. The latest and most controversial example is the push to make Gojek and Grab provide Tunjangan Hari Raya (THR) or holiday bonuses to their drivers—despite the fact that these drivers are legally classified as independent partners, not employees.

While ensuring worker welfare is crucial, the real issue is not THR itself—which is a long-standing practice in Indonesia—but the sudden and arbitrary way the government is attempting to enforce it on companies already operating at a loss. Ride-hailing platforms have no legal obligation to provide THR because their drivers are independent contractors, not full-time employees.

By abruptly demanding this financial burden, the government risks further destabilizing an industry already struggling with profitability. If companies are forced to provide benefits similar to those of full-time employment without a proper regulatory framework, this sets a dangerous precedent. Will the government also demand health insurance, pensions, or severance pay in the future? If so, without restructuring the legal status of gig workers, these mandates could push platforms to downsize operations, reduce driver incentives, or even consider exiting the market entirely.

The government’s approach appears reactive rather than strategic—favoring populist measures that create the illusion of worker protection but actually risk harming the very businesses that provide millions of livelihoods. A more sustainable approach would involve collaborating with ride-hailing platforms to develop fair and feasible social security programs, rather than issuing sudden mandates that could force companies into deeper financial turmoil.

A Global Perspective: Lessons from International Markets

Indonesia is not alone in facing challenges in regulating ride-hailing and gig economy platforms. Similar debates have led to strict labor laws and increased regulatory scrutiny:

·??????? Spain (Glovo Case): The "Riders' Law" implemented in 2021 mandated that food delivery riders be recognized as employees. This forced companies like Glovo to transition thousands of drivers into full-time employment, leading to increased operational costs and regulatory fines for non-compliance. Glovo faced over €135 million in fines for misclassifying workers and had to allocate significant resources to legal battles and compliance costs. By 2024, Glovo announced plans to shift freelance riders in Spain to employee status, increasing its annual operational costs by €100 million, which significantly affected its financial performance.

·??????? United Kingdom (Uber Case): A 2021 Supreme Court ruling determined that Uber drivers are workers entitled to benefits like minimum wage and holiday pay. This forced Uber and similar platforms to restructure their employment models, resulting in higher costs and a shift in operational strategies.

A Path Forward: Government & Business Cooperation

Rather than introducing populist policies that jeopardize business sustainability, the government should adopt a strategic and cooperative approach with ride-hailing companies.

Define Clear Gig Economy Regulations

1. The government should create a legal framework for gig workers that protects their rights without forcing unsustainable obligations on platform companies.
2. A structured social security system (BPJS-style) tailored for gig workers should be prioritized over sudden policy mandates like THR. This ensures financial protection for drivers without distorting the gig economy model.
3. Public-private partnerships should be improved and strengthen within transportation infrastructure, making mobility solutions more efficient and accessible.

Recognize the Economic Value of Ride-Hailing & Avoid Policy Overreach

1. Policymakers must acknowledge that Gojek and Grab are not just transport apps—they are economic enablers supporting MSMEs, e-commerce, and logistics.
2. Instead of regulatory overreach, policies should focus on collaborative solutions that ensure both worker protection and business sustainability.

Gojek and Grab have transformed Indonesia’s urban mobility, logistics, and digital commerce. Yet, instead of recognizing their contributions, they are continuously pressured with policies that make operations increasingly difficult.

If the government truly cares about job creation, investment climate, and business sustainability, it must move away from short-term populism and towards strategic collaboration. Otherwise, Indonesia risks undermining the stability of two of its most vital digital economy players, triggering detrimental effects that could impact millions of people who rely on them daily.