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.