Indonesian Online Taxi Investment Scam (Part 2)

At the beginning of March, North Jakarta Police Department knocked on our door asking for the ownership of a car. That specific car has been hold as a proof of criminal in their office. It was very shocking to us. Later that day, we called the Car Rental as our car operator. She said that according to their GPS, the car is still running on the field of Jakarta. Hearing that, one our staff loses her calm and wreaked all havoc on the telephone. Turns out, they did not even know that the car was in the police office. Their voice began to tremble. We would like to meet them in the police office to take care of this problem.

For the last two months, the car rental has also paid only close to quarter of the amount of money promised in our contract. They also tried to prevent us to meet with all of the drivers and to inspect routinely on our cars. The only time they paid full and on time is when my uncle asked his personal staff to push their payment. The rest is of course peanuts.

Upon arriving, the police officers told us that our car has been given by a man named Irwan Manaf to a victim. Let’s call the victim as Mr.Z. So this Irwan Manaf offered online taxi investment scheme to Mr.Z where Mr.Z provide cars for Irwan Manaf, and Irwan Manaf provide Mr.Z with drivers. Mr.Z ended up trusting three cars to Irwan Manaf. But Irwan Manaf also paid only peanuts to Mr.Z. Not rich enough to cover for the monthly credits, Mr.Z came to Irwan Manaf and decided to pull all of his cars. Irwan Manaf told Mr.Z that all of the cars are running on the field and blab la bla blabla. In the end, Irwan Manaf gave Mr.Z a car as a guarantee that he will paid all the money due and return Mr.Z’es car. That car, was unfortunately ours. Curious Mr.Z decided to check the real owner of the cars as he was also afraid to be deemed as stolen car broker. In the end, police officer knocked on our door.

The modus operandi of Irwan Manaf was thought to dig-and-cover. Basically, Irwan promised one investor let’s say Rp 5,000,000 a month. Next, he found a driver to give him Rp 5,500,000 a month. So he made Rp 500,000 from one car. This was actually quite common way before online taxi era in Indonesia said the police. However, this Irwan Manaf is still on the wanted list. The police advised us to call the Car Rental and told them to come to the office.

Ow dear ow dear, how they tried to avoid the meeting. Thousands of excuses. By the way, they mentioned before that the name of the driver assigned to the car was Iwan. Similar name ay? In the end, they came near midnight and the police started to investigate them.
In the next 60 minutes, they lied a lot. Having GPS on the car for example. Iwan’s fee has been nice. Their only business process is operating with drivers. Iwan’s area of operation is around Depok and Bogor. They inspect the cars routinely. And so on.

After the investigation and we looked at the car that has been hold, the police put his doubt on the car rental. He told us that the car rental might probably one of the syndicate members. So for the best of our business, we need to pull all of our cars first before doing anything rash. We also investigate each of our cars and driver to find out more about the truth.

Turns out that this Car Rental only got 9 drivers for our cars. Around 4 cars, they rented without ownership contract. The other 5 cars were rented through contract with companies for their employees. Yup, the one car that was held in the police was one of four cars. It took the car rental three weeks to get us all of our cars. The first week we asked for our cars, they were able to present 9 cars with 9 drivers. Of course they were very nervous entering the second week since we still wanted to pull all of our cars.

Amid the second week, they finally told us the truth about contracts and their drivers also told us the truth. These drivers were asked Rp 5.000.000 in advance before they could drive. It is not a deposit that will be returned to them at the end of contract. It’s more like a joining fee. I think, it was the Car Rental’s intention to acquire these cars at the end of the five years contract.

Entering the third week, our side had started to show our intention to take this problem into legal area. They panicked even more. Once, they even tried to pacify us by saying that they were related to some polices and law enforcer. Oh sun of a gun! This is starting to get ridiculous.

All the logical fallacy aside, this is certainly not the first time that my uncle’s company faced legal problems. And certainly this Car Rental knows no boundary. Yo, pick someone else your own size. Y’all look like Kevin Hart picking on Dwayne Johnson.

Certainly it is not finished, but I don’t think I am going to tell you much about the ending (it is still on progress). Probably through some tweets later. But hey, justice!

Well, how’s that for sharing economy? Probably online taxi startup should take a look at these investment scheme as their own business. It will not only become safer for investors, but also for drivers and the sake of keeping it ‘sharing economy’.

Intended to be peer to peer, ended up business to business. Welcome to Indonesia.

Indonesian Online Taxi Investment Scam

Despite the positive friendly characters that most travelers know, Indonesians are also famous for having the tendency to bypass procedures and find niches between giants. Being a broker is one of our preferred jobs. Online taxi services such as Uber, Grab and local Go-Jek were no exceptions. This story that I am about to tell you are real and still in investigation by the police.

An Offering
At the beginning of May, my uncle asked me to help him meeting someone who offered him an investment in Grab Car. I thought I was going to meet with someone from Grab. Investing in startups is not a beginner’s game. A lot of report to analyze and I do not think I have the capacity to do so. Nonetheless, I was still curious and decided to accompany my uncle.

Turns out, the investment was only in the cars. To illustrate, let’s call this guy CR1 for Car Rental. Basically the guy was some sort of car rental that have little to nothing seed money. So he told investors to pay DP for Avanza or Xenia as the initial investments. CR will operate and manage the car by looking for drivers. Drivers will then work 30 days a month and deposit Rp 275.000/day for the investor. From these deposit, CR1 will cut Rp 5.000/ day as operation charge and Rp 400.000/month as car maintenance reserve. Despite those charges, at the end of 5 year contract (following most online taxi rules of maximum age of car), the car will be given to the driver. Another catch is that investors must order and buy the car through CR1.

One of the reason why they use this car is because of it’s high demand even if it’s used car.

When asked about safety, he said that he would put GPS on each car and watch their tracks through monitors in his office. He also said that he already have 70 cars in his armada running around Jakarta in the last 4 months since he started the business. However, he did not have any company or legal organization to back this business.

At the end of the meeting, I was given the responsibility to find out more about this investment.

And thinking that he faced a teenager, CR1 was very very very pushy. He called me like every 4 hours. He gave me contracts even when we have no progression on the deal. I was very much suspicious.

The Investigation
The first stop was the car dealer. His DP offering was quite high. So I checked on one of the dealer on my way home. The real DP was actually Rp 6.000.000 cheaper. And it was without negotiation at all. Cr*p. He forced us to buy through him so that he could get that much money for each car.
Another problem was with the interest rate that reaches 1.8% per month compared to 1.5% from the random dealer I stopped at. He thought my uncle and me were easy targets.

In the next meeting with CR1, my uncle told some of his staff to accompany me. My uncle had lots of businesses that he needs to take care of and this is a good way for me to learn. So in this meeting I asked why the car has to be given to drivers (assuming it was really given to them). I don’t think the profit percentage is right for investors since we are going to pay for all the taxes, maintenance and spare part for 5 years. I think it could be better if we could split the sales from the car and put DP to more cars in the end. That way, we could teach the driver how to generate more money and take care of their own businesses.

From this point, all CR1 do is dodging bullets. He said that he do not care what the drivers are going to use the money for. He also said that all investors did was to “ongkang-ongkang kaki” or “sit back and relax”. Our investment will be paid off in 9 months. So he thought I was an idiot?! -____-
At that point all that I wanted to do was to cut him off of our investment plan. But we have already paid a significant amount of money for DP. Also, it is not my decision to make. It was my uncle’s plan and my only right is to give consideration.

So to finish that meeting, I asked him again how many car he managed right now. He answered 17. You know what I want to say don’t you? He answered it like it was the first time asked. Also, at that time Grab was having a problem with authorities. Turns out, they were told not to accept any drivers since 3 months before.

When you want to invest your money, just remember that it’s not only the business you put your investments on, it is also about the person you’re investing on. In conclusion, Investing on this person would be a really bad bad decision. However, we have already put Rp 152.000.000 for 16 cars and we need another way out. One of my uncle’s employees had a friend in similar business. We contacted her for comparison.
Another Car Rental

Let’s name this second car rental as CR2, because why not?

They are not as bold as the first car rental. CR2 offered Rp 250.000/day for 24 working days in a month with weekly payment. Maintenance fee will be split equally between owners and the driver. They claimed that they are one of only three biggest car rental that have official partnership with Uber. Despite lacking proof, this is a more rational offer than from CR1. During the first meeting they brought a legal documents named after PT BBM as their business company.

The following week, I checked on Uber about whether or not it was true. Well, it’s much more difficult checking on Uber than checking on Go-car and Grab. I could easily talk to Grab and Go-car staff and ask if we could build a partnership since we are going to put more cars in the future. Uber required me to bring STNK, SIM, BPKB and car insurance before I could even enter their office. The office is also full of rentals seeking for drivers that looks confused. Later, I talked to one of the driver that said that those rentals are seeking to find drivers. But if the drivers were to enlist under the rentals, these rentals could play with the drivers’ bonuses and play with their accounts if they were not to pay certain fee to the rentals. Of course this is not a mistake in any of online transportation apps.

Not finding any info, I changed my strategy and checked online for car rentals that have partnership with Uber.

After I called several rentals, none of them able to receive any car and they only look for drivers rather than looking for cars. Even if they could receive cars, their offer was very low which is around Rp 200.000/day. The interesting fact is, they are offering their car to drivers with daily fee of Rp 300.000/day. Both CR1 and CR2 probably lied about their fee and put more pressure on the drivers.

Anyway, I told CR2 that we would like to put GPS on our cars. They told us at first that we do not need to put GPS on our cars because we could check it on our smartphone from the Uber application. The following week, on contrary, they told us that they would not accept our cars if we don’t have GPS on our cars. They also offered us a GPS package from their partners. What kind of cr*p is this really? How easy it is for people to lie? This put doubts on our side. It’s like between mad and evil.

I presented my final assessment between the two to my uncle. I concluded it is best for us to actually create our own management in handling these cars. A little bit different, my uncle has a really much more gentle heart. He reminded me not to take another person’s fortune. It was those car rentals that opened our eyes on this opportunity. Yes, we are able to manage them by ourselves but let this first experiments on online taxi investment be handled by one of the car rentals.

By comparing several factors, we decided to put our trust on the second car rental as it gives us more convincing and rational conditions. Of course, this is only the beginning of something more complicated.

This is the end of part 1. I will work on part 2 and post it as soon as possible.