What Malaysia can learn from Indonesia’s gig economy debate

 Good regulation should not simply redistribute income but create a stronger ecosystem that generates greater opportunities for everyone.

From Rahman Hussin

Imagine a Malaysian e-hailing driver reading headlines saying Indonesia is considering capping platform commissions at 8%.

At first glance the proposal sounds straightforward. If platforms take a smaller share of each fare, drivers should earn more.

For many people, it appears to be an obvious solution to improving driver welfare. But public policy is rarely that simple.

Across Indonesia, the proposal has sparked an intense debate involving drivers, digital platforms and policymakers.

Driver groups generally support the move, arguing that commissions have become too high and are eroding their livelihoods.

Platform operators, on the other hand, warn that a rigid cap could reduce their ability to invest in technology, safety features, customer support, promotions and service expansion.

Both sides are raising legitimate concerns. The real lesson for Malaysia, however, is not whether Indonesia ultimately adopts an 8% commission cap.

It is that the debate forces us to ask a much more fundamental question: what is the most sustainable way to improve driver livelihoods while ensuring the long-term health of the entire mobility ecosystem?

While the nation is not currently debating an 8% commission cap, it is navigating broader reforms affecting the platform economy through initiatives such as the proposed Gig Workers Act.

The proposed legislation extends beyond commissions to address service agreements, worker rights, dispute resolution, social protection, tribunal mechanisms and the responsibilities of contracting entities.

These developments demonstrate that the challenges facing the gig economy are much broader than the percentage retained by platforms.

If Malaysia eventually considers regulating platform commissions, policymakers should resist the temptation to focus on a single number.

A commission percentage is not, by itself, a policy objective. It is simply one policy instrument among many. The real objective should be sustainable earnings for drivers. Those two ideas are not necessarily the same.

A driver’s monthly income depends on a combination of factors, including passenger demand, fare structures, operating costs, incentive programmes, service reliability, platform efficiency and market competition.

Lower commissions alone cannot guarantee better livelihoods if they result in fewer ride requests, reduced promotional spending, lower technology investments or higher fares that discourage passenger demand.

Likewise, passengers also have legitimate interests. Malaysia’s digital mobility ecosystem has transformed how millions of people travel daily.

E-hailing services have improved accessibility, expanded mobility choices and provided flexible income opportunities for hundreds of thousands of Malaysians.

Any regulatory intervention should therefore balance three important objectives: protecting workers, maintaining affordable mobility for passengers and preserving an environment where platforms continue to innovate and invest.

This balance becomes even more important because Malaysia’s operating environment differs significantly from Indonesia’s.

The two countries have different market structures, regulatory systems, consumer behaviour, competitive dynamics and urban mobility patterns.

A policy that may work under one set of circumstances cannot simply be transplanted into another.

Malaysia should therefore learn from Indonesia’s experience, rather than replicate its solutions.

One area where Malaysia already has a strong institutional advantage is its regulatory framework.

Under Malaysia’s Good Regulatory Practice, significant regulatory proposals are expected to undergo a regulatory impact assessment (RIA).

The purpose of an RIA is not to delay reform, but to improve it by clearly defining the problem, evaluating alternative policy options, assessing economic and social costs and benefits, consulting stakeholders, and developing practical implementation strategies before regulation is introduced.

This is precisely the type of discipline that complex platform regulation requires. Before asking whether commissions should be capped, policymakers should first consider several critical questions:

• What specific market failure is the policy intended to address?
• Would greater fare transparency, improved dispute resolution, enhanced algorithmic accountability or stronger social protection deliver better outcomes than direct price controls?
• How would different policy options affect drivers, passengers, platforms and small businesses over the medium and long term?
  These questions matter because every regulatory intervention creates trade-offs. An intervention designed to improve one outcome may unintentionally weaken another.

International experience increasingly suggests that successful platform regulation is moving beyond debates centred solely on commissions.

Greater emphasis is now being placed on transparency, due process, portable social protection, fair dispute resolution and responsible platform governance while preserving innovation and market competitiveness.

Malaysia has an opportunity to take the same balanced approach. The future of Malaysia’s gig economy should not be measured by whether commissions are capped at 8%, 15% or any other percentage.

It should be measured by whether drivers can earn sustainably, passengers continue to enjoy reliable and affordable mobility, and digital platforms remain capable of investing in technology, safety and service improvements.

Good regulation should not simply redistribute today’s income. It should create a stronger ecosystem that generates greater opportunities for everyone tomorrow.

Good mobility policy should not seek to maximise one stakeholder’s share. It should optimise the entire ecosystem.

When policy focuses solely on redistributing value without protecting the system that creates it, everyone eventually risks receiving a smaller share of a shrinking market.

Indonesia’s current debate is therefore valuable, not because it offers Malaysia a policy template, but because it reminds us that durable reforms begin by asking the right questions before prescribing the answers. - FMT

Rahman Hussin is the executive director of MY Mobility Vision, a transport think tank.

The views expressed are those of the writer and do not necessarily reflect those of  MMKtT.