Ride Apps in Southeast Asia Reveal the Challenge of the Institutional Framework

ride Apps in Southeast Asia

Source: blognone.com

In Asia’s emerging markets where the middle class is blossoming and smartphone penetration rising, a wealth of opportunity is presenting itself for ride apps in Southeast Asia, but so is the hostility against them.

A huge opportunity for ride apps in Southeast Asia 

Uber, active in 72 counties, Grab, Didi Kuaidi, Ola, Go-Jek and Blue Bird are some of the big ride apps in Southeast Asia catering to commuters who want cheaper fares and convenience rivaling local taxi services. Ride apps in Southeast Asia have been aggressively expanding as expected when smartphone sales grow briskly and traffic worsens.

Recognizing the limitations in Asia’s emerging economies has prompted e-taxi companies to tailor their services to fit the culture. Low credit card penetration rates mean that almost all companies accept cash payments along with cards.

Cheryl Goh, VP of Marketing at Grab said that safety was one of the app’s biggest selling points, resonating mostly with women users.

8 in 10 women in developing Southeast Asian countries now find taking a taxi safer with Grab.

The biggest players battling against each in the region are San Francisco-based Uber and Grab, which initially launched in Malaysia as MyTeksi in 2011.

Alongside car taxis is a growing demand in Asia for hailing motorcycle rides as an alternative to the local equivalent, a service that is driving companies’ regional expansion.

Since launching in 2011, Go-Jek, a motorcycle taxi and delivery service, has some 200,000 freelance drivers together with hundreds of other service providers.

But being innovative is not without its institutional obstacles

In Thailand, after pleading with authorities for their services to be made legal, Uber and Grab were dealt a blow when their moto services were suspended last month.

The department said their operations were also unfair to the roughly 100,000 motorcycle taxi drivers who are operating legally and threatening their jobs. The firms also failed to pay taxes, it said.

“Taking a step back, it’s important to understand that in many parts of the world, there aren’t regulations for e-hailing services because it’s still a new industry. We are working hard with governments to help them think about how these regulations should come into effect when they do,” said Goh.

Similarly, in Indonesia the transport ministry considers Uber, Grab and Go-Jek illegal because they lack the operating permits required.

As long as local governments don’t kill them off, the services are expected to prompt local taxi drivers to up their game rather than putting them out of business.

A version of this appeared in Bangkok Post on June 20. Read the full article here