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China’s Didi Chuxing and SoftBank Group Corp. are leading a new round of funding in the Southeast Asian ride-sharing service Grab that could exceed $600 million, according to Bloomberg. Grab is also seeking to raise a separate $400 million in the following weeks.

The talks signal that the truce between Didi and Uber Technologies Inc. in China this week is far from a global accord. Didi bought out Uber’s operations in the country and became a shareholder in the US company but the Chinese firm’s investment in Grab shows it will continue to clash with Uber in Southeast Asia and perhaps other regions.

Now Didi will be able to put the reserves in new growth markets like Southeast Asia and back a player they believe has a strong chance.

Grab CEO Anthony Tan said he expected Uber to concentrate on the relatively untapped Southeast Asian market after agreeing to sell its China business. Grab currently operates in 30 cities across six countries, and was valued at $1.5 billion in 2014. It is not clear yet what the company’s current valuation will be.

The alliance that Didi forged last year with Grab also included India’s Ola and the US’s Lyft Inc. It’s unclear what impact the Didi-Uber deal will have on the other members of that tie-up.

It seems that Didi is making a very complex, interwoven play at the ride hailing app market, no official word has been announced from Didi, regarding the operations of both deals. Didi’s move in Southeast Asia is perhaps a counter move to fight against Uber, which is poised for a more aggressive strategy in Southeast Asia following the sale of its business in China.

A version of this appeared in Bloomberg on August 3. Read the full version here.

Over the weekend, 11 vehicles were seized by police, local media reported. This involved cars from all three app-based ride-hailing services that operate in Jakarta – Uber, Grab, and Go-Jek’s Go-Car. A traffic police official told Detik the cars were taken because the drivers didn’t carry the required licenses.

License to drive

Ever since Uber-like ride-hailing services became popular in Indonesia in 2015, authorities have struggled to lay out rules for them.

Some demanded that ride-sharing apps bow to the same regulations as metered taxis. More progressive voices argued new rules must be formed for ride-hailing, because the system resembles car rentals rather than metered taxis.

In March, a truce between ride-hailing apps and the ministry of transportation was reached, with the latter passing a new regulation. It requires Uber and its competitors to have their cars go through a road safety test, and register them as commercial vehicles, for example through a car rental company.

The companies were given a period of time to comply. The latest deadline is said to be October 1.

Less tolerance

This raises the question why the raids took place now, some months before the compliance deadline.

It looks like authorities are enforcing a stricter interpretation of the “tolerance period.”

A spokesperson for the ministry of transportation yesterday confirmed that the tolerance time means only vehicles that have already obtained all necessary licenses can operate, not those still in the application process.

Only about 100 ride-hailing vehicles, from all three companies combined, have already fulfilled all demands, the ministry said.

All this indicates that the struggle is far from over for ride-hailing apps in Jakarta.

It’s possible the stricter enforcement has to do with the appointment of a new transportation minister on July 27. Budi Karya Sumadi has yet to come out with a position on the controversial issue.

Over the weekend, he told media that he plans to invite Uber, Grab, and Go-Jek this week to discuss the matter.

A version of this appeared in Tech in Asia on August 1. Read the full story here

Anthony Tan, group chief executive and co-founder of ride-hailing service Grab said his company will be in Indonesia for the long term to provide multi-platform services to help solve the country’s perennial problems related to inadequate transportation infrastructure.

Grab operates in 30 cities in six countries in the region – Indonesia, Singapore, the Philippines, Malaysia, Thailand and Vietnam. The company competes against United States-based ride-hailing service Uber and local app-based service Go-Jek to provide services using private cars, taxis and motorcycle taxis.

Sustainability means removing subsidies

Indonesian drivers who are partners of Grab, like many other ride-hailing services, receive subsidies from their companies to ensure that they earn enough money, while also keeping customers happy with affordable fares. But Tan said he fully realizes that Grab must gradually remove the subsidies.

“How do you build a sustainable business model? The only way [to operate] without subsidies is to ensure [there are] many jobs for drivers,” said Tan, who prior to founding Grab, was the head of supply chain and marketing at Malaysia-listed automotive giant of Tan Chong Group. Tan appeared happy when he explained that his company’s business model did not involve burning huge amounts of cash to attract regular users.

“How much cash someone can burn is not a good relevant example to building a long-term solution. We have to solve a long-term problem,” – Grab Co-Founder

GrabBike in particular, he said, has seen 300%growth in its business since January, despite a 50% cut in its fare subsidies.

The key aspects of the business are technology and people

In his illustration of how he prioritizes Grab’s spending, he said, “if we have $100, we have to put $90 in IT,” referring to Grab’s back-end technology business that includes its consumer application team, application design team, database team, engineering and infrastructure engineering. He also mentioned Grab’s partnership with the World Bank to provide real-time traffic data to improve the startup’s mapping technology.

Tan said Grab is also not forgetting about security aspects. He was proud to reveal that he snatched his IT team from Palantir Technologies, an American software and services firm, which has served clients, including the US government and the Central Intelligence Agency (CIA), National Security Agency (NSA) and Federal Bureau of Investigation (FBI).

Grab is not shaken by regulatory challenges

Offering what he calls “constructive disruptive” technology, Tan is fully aware that Grab must maintain a good relationship with the government and calm discontent among traditional players in the industry who feel that their businesses are under threat. Protests have occurred in Indonesia, with people employed in the taxi industry, and those working as traditional motorcycle taxi, or ojek, drivers, accusing the company of introducing unfair business practices.

The deadline for this controversial regulation, expected to discourage driver partners from participating in the business, is Oct. 31 this year. When asked about the regulatory hurdles, Tan was largely unshaken by the challenge. “In the end, I believe the Indonesian government wants the best for the people of Indonesia. In the higher principle, I believe you are aligned, it is no longer me against you […] we both want to help Indonesian people have a much more efficient transportation system,” he said.

A version of this interview appeared in Jakarta Globe on July 26. Find the full version here

Grab adds Alipay in Southeast Asia

Source: Google images

Following Uber’s move last May, Grab adds Alipay, China’s largest digital payment service, to support its taxi on-demand services in Southeast Asia to tap into Chinese tourism.

Grab only began accepting credit card and digital payments this year — it started out resolutely cash only. Visitors from China made Southeast Asia the world’s fastest growing tourism region, as Skift recent reported.

Grab’s move mirrors the efforts of Alibaba and other Chinese consumer companies who want to follow the money into Southeast Asia.

The addition of Alipay is unlikely to make a huge impact on Grab’s business initially  since the app is very much localized in each of its six countries in Southeast Asia, thus a huge roadblock for Chinese tourists, particularly when Uber sells itself as an easy international option.

However, as part of its alliance with Ola, Lyft and Didi Chuxing, Grab is working to link its service with that of Didi. The integration between Didi and Grab is expected before the end of this year.

Grab, which has raised over $650 million from investors including SoftBank and Didi, is initially making Alipay available for users in Singapore and Thailand, two hugely popular destinations for Chinese tourists, but it plans to expand it across its other markets.

A version of this appeared in Techcrunch on June 21. Read the full article here.

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