JAKARTA (TheInsiderStories) – What is known as the ‘sharing economy’ began to gain popularity in Indonesia from 2013, marked by the entry of ride-sharing applications such as Uber, Grab and home-grown brand Go-Jek. Since then, the ride-sharing app business has grown exponentially, creating millions of jobs and (to a certain extent) helping boost the country’s business activities.
A sharing economy is defined as an economic system in which assets or services are shared between private individuals, either free or for a fee, typically by means of the Internet.
On global scale, sharing economy or shared economy is projected to continue to grow. According to Price WaterHouse Coopers, five key sharing sectors —travel, car sharing, finance, staffing, and music and video streaming — have the potential to increase global revenues from roughly $15 billion in 2016 to around $335 billion by 2025.
Sharing economy currently has been popular for transportation and tourism sectors. However, such a concept has also been adopted in other sectors of the economy such as in logistics, manufacturing, property and others.
The big difference between conventional business and ride-sharing applications is the difference in business models. Conventional transportation operators such as Blue Bird and Express taxis own assets, fleets, workshops and operational permits from regulators to conduct taxi operations.
However, in the ride-sharing business, application owners only provide a platform that bridges car owners (supply) and consumers (demand), without having to own any assets.
In the first business model, the owner owns the assets, while in the second business model, the platform providers optimize the idle capacity of assets owned by any party, in this case cars or motorcycles, without having had to own assets.
The second business model is what we call the ‘sharing economy’, or in some cases it is called a ‘collaborative economy’.
Such ride-sharing applications have not been fully welcomed. Certain countries object to the presence of such ride-sharing platforms, while other countries fully embrace their entry into the transportation business.
In Indonesia, such a business model initially faced strong resistance from existing business players in the industry, as well as from certain parties within government institutions. The reason is that these ‘disruptive ‘business players break or ignore existing regulations and do not play on an equal footing with the existing players.
Initially, the regulators in this country opposed these ride-sharing applications; however, the government finally accommodated their presence by issuing more accommodative regulations, although to some people, the regulations appeared to be half-hearted.
Regardless of the pros and cons of the ride-sharing economy, the sharing economy model has benefited business participants, in this case car owners and idle home owners, in the case of the AirBnB platform. Those who have taken part in the ride-sharing applications can optimize their asset value, instead of just leaving it idle or unused.
The downsides of this ride-sharing application is maintaining standard service. In conventional business, the business owner can set and monitor closely business and service standards. However, in ride-sharing applications, the providers often find it difficult to maintain service quality, although they have created a system in which customers can vote for or against the service. Those who consistently fail to meet required standards or show poor performance will automatically be eliminated.
The simple model of the sharing economy is using, renting or borrowing other people’s assets. Andrias Ekoyuono, former Business Development Ideosource Venture Capital, noted that a sharing economy can grow well in a situation where consumers have difficulties in securing the products and services they need. This stimulates people to find ways to provide services to such consumers through innovative ways, such as a sharing economy or marketplace model.
Sharing economy is not relatively new. Sharing economy has shifted to the next level, thanks to the development of technology, in particular smart phones, through which consumers can easily find the goods and services they need through mobile applications.
According to Andrias, the technology has changed business relations, from consumer-product/service-company to consumer-platform-product or service.
In the retail market, companies that make use of the sharing economy business model include Indomaret and Alfamart. Some business players can own and operate a convenience store by obtaining a franchise from Indomaret or Alfamart and rent other people’s houses or buildings.
Sharing economy business model can also be adopted to other sectors of business, such as the energy sector. As publicly known, there are a lot of idle assets owned by production sharing contract (PSC) contractors. These assets, which are purchased through a cost recovery scheme, can be used by other PSC contractors; therefore, the contractors can save money and use assets more efficiently.
State-owned enterprises may also adopt the sharing economy business model as a way to increase efficiency and optimize products and asset value.
Certainly, there are issues that need to be addressed and resolved, including tax and accountancy issues. Regardless of the obstacles, a sharing economy offers benefits to the country’s economy. The country will gain more benefits by embracing the sharing economy business model.
Written by Roffie Kurniawan, email: email@example.com