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Competition watchdog to consider Go-Jek’s entry in assessment of Grab-Uber merger

SINGAPORE — Indonesian ride-hailing giant Go-Jek on Thursday (May 24) confirmed its foray into regional markets including Singapore in the next few months, signalling the potential resurgence of a sizeable competitor to Grab here following Uber’s departure this month.

Go-Jek announced on Thursday it will invest US$500 million (S$671 million) in its international expansion strategy, beginning with ride-hailing.

Go-Jek announced on Thursday it will invest US$500 million (S$671 million) in its international expansion strategy, beginning with ride-hailing.

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SINGAPORE — Indonesian ride-hailing giant Go-Jek on Thursday (May 24) confirmed its foray into regional markets including Singapore in the next few months, signalling the potential resurgence of a sizeable competitor to Grab here following Uber’s departure this month. 

Regulators and consumers will welcome the entry of a competitor with the financial muscle to take on Grab, as it assuages concerns over the lack of competition and provides “much needed options” for commuters, analysts told TODAY.

The Competition and Consumer Commission of Singapore (CCCS) said the announcement will have a bearing on its ongoing review of Grab’s acquisition of Uber’s South-east Asia operations.

“Competition from potential competitors is a factor CCCS will consider in its merger assessment. This will involve assessing barriers to entry and whether entry is likely, timely and sufficient in extent,” the competition watchdog said in response to queries by TODAY.

“In relation to our investigation into the Grab-Uber deal, our Competition Act prohibits mergers which substantially lessen competition. We will only be able to make a determination after we complete our investigation, taking into account all relevant facts and circumstances,” it added.

The Land Transport Authority said it has reached out to Go-Jek to share existing regulatory requirements. “We are also reviewing the regulatory structure of the point-to-point industry, to ensure that the industry remains open and contestable in the long term and no single operator dominates the market to the detriment of commuters and drivers,” said a spokesperson.

Go-Jek announced on Thursday it will invest US$500 million (S$671 million) in its international expansion strategy, beginning with ride-hailing.

The company said the expansion follows “many months of detailed planning and market research”. Its latest fundraising round to expand its presence in South-east Asia reeled in investors such as Astra International, Google, JD.COM, Meituan, Tencent and Temasek.

Go-Jek’s strong financial backing puts it in a prime position to compete against dominant player Grab, said experts.

“Go-Jek’s expansion is good news for consumers. Apart from US$1.5 billion in cash reserves, it has deep-pocketed backers like Google and Tencent, so it can easily raise additional funds if need be,” said Ms Corrine Png, chief executive of Asian transport equity research firm Crucial Perspective.

TODAY previously reported that commuters and drivers have been worse off after Grab’s acquisition of Uber in the region, with drivers’ incomes taking a hit and commuters forking out more for their rides due to a rollback in incentives and discounts.

The regulators will also likely welcome a credible competitor, which might supersede the need for CCCS’ investigations, said Singapore University of Social Sciences (SUSS) transport economist Walter Theseira.

Associate Professor Lawrence Loh from the National University of Singapore (NUS) Business School said “service offerings and product variety will also be raised” as players vie for market share.

That said, it remains to be seen if Go-Jek will indeed dole out generous discounts and promotions when it enters the market, said Ms Png.

Go-Jek and taxi operator ComfortDelGro have been reportedly exploring a partnership, although both have declined to comment on the matter.

Go-Jek said it wants to seek out local partners with interests and expertise in each of the new markets – Vietnam, Thailand, Singapore and the Philippines – to “ensure the new operations benefit from as much deep and varied market knowledge as possible”. The experts said this was sensible, given its lack of experience in regional markets.

“Apart from an investment in Bangladesh ride-hailing startup Pathao, Go-Jek does not have much experience competing outside of Indonesia. Go-Jek’s focus on seeking out local partners will help make up for its lack of expertise in these new markets,” said Ms Png.

Working with local partners could help the Indonesian firm to forge a reputation as a “trusted localised service provider”, as opposed to “just another typical foreign firm”, she said.

Go-Jek said its ultimate goal is to replicate the multi-service business model that has made it the market leader in Indonesia.

Set up eight years ago, the popularity of the ride-hailing app for motorcycle taxis – or ojeks – in Indonesia’s capital Jakarta allowed it to expand rapidly outside of the city and widen its breadth of operations to include a cashless payment app and even lifestyle services like pharmaceutical deliveries.

“It may prove to be costly and impractical to build other services on its own, so tie-ups with local businesses and start-ups could be the way forward,” said Dr Theseira.

Experts reckoned Go-Jek is likely to partner food delivery firms, like Grab has done. Uber ran a food delivery service through UberEats and service has been replaced by GrabFood following the merger.

It could also collaborate with providers of concierge services, retail logistics and grocery delivery. Assoc Prof Loh said entertainment and travel services are also possible.

However, the experts noted that not all services that have been a hit in Indonesia will fare as well here.

“The online booking of movie tickets – Go-Tix – for example, which is used by many in Indonesia, is not viable in Singapore,” said Dr Theseira.

Go-Jek is also unlikely to offer its services on two-wheels. TODAY previously reported that motorcycles are not allowed to be used for point-to-point transport services, unlike taxis and private hire cars.

If Go-Jek and Grab engage in a bruising contest, experts said what happened between Grab and Uber could again play out.

“I have some doubt that multiple sizeable private-hire companies can exist here. In the ride-hailing industry, companies typically pursue a strategy to acquire dominance or enough presence to force competitors to buy them out. When Go-Jek enters the market, they are entering to win or to force Grab to buy them out,” said Dr Theseira.

“Investors might not have patience for another few rounds of money-wasting promotional price wars. They may start getting cold feet, and wonder about making profits if players are constantly stuck in a state of fighting,” he said. ADDITIONAL REPORTING BY LOW YOUJIN

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