American Tech Firms Adapt to Indonesian Challenges

Share this:
by Benjamin Nathan
Transportation in Indonesia comes in many varieties. Uber has recently added to the mix by introducing a cash-based version of its taxi hailing service in the country. Image: Benjamin Nathan.

In early March, taxi hailing app Uber introduced a cash payment system for its services in Jakarta, part of a broader effort to expand its presence in the Indonesian market. The San Francisco-based company has relied exclusively on online transactions for most of its seven-year history. But Indonesia’s unique economic landscape presents a new challenge. Roughly 43% of Indonesians own a smartphone, making it easy enough for many Jakartans to hail a ride with an app, but only 1.1% use a credit card. Cash payments are the only available option for most potential users.

Indonesia’s population of over 250 million, the fourth-largest in the world, represents an extremely significant potential market for Uber. The company claims it has already invested tens of millions of dollars in its operations in the country and plans to open a permanent office in Jakarta. In the process, it has recognized the need to adapt its innovations to help Indonesians contend with problems related to the country’s uneven pace of development—problems that may not have been foreseen during initial product development.

With the adoption of a cash payment system, Uber becomes only the latest American company to adapt the design of a high-tech product to the basic needs of its Indonesian users. In 2014, Twitter partnered with an Australian research institute to create a data-driven real-time map of flooding in Jakarta, a chronically inundated city that is home to more Twitter users than any other in the world. Also in 2014, New York communications company Tone began testing an app called mFish, designed to help smartphone-toting inhabitants of small fishing villages maximize their catch. Last year Google announced the launch of Project Loon in Indonesia, an undertaking with the ambitious goal of bringing internet access via balloon to inhabitants of the country’s farther-flung areas.

While many of these innovations are proving invaluable to Indonesians, not all American forays into the country’s market have been met with universal praise. Uber has faced particularly stiff resistance from meter-based taxi drivers who have seen their income drop in recent months and are keen on leveraging Indonesia’s sprawling array of transport regulations to protect their market share. The long-term outcome of that regulatory dispute remains to be seen.

Benjamin Nathan is a research intern at the East-West Center in Washington. He is a recent graduate of Williams College.