Uber feel financial pressure in Indonesia because of Grab investment

The move by the Southeast Asian ridesharing company is affecting the ridesharing giant of the United States along with the local company.

Grand investment in any country

The leading market giant in the Southeast Asia in the transportation industry is the GrabTaxi and the company announced that it has plans to spend seven hundred million dollars in Indonesian market because the company faced some regulation problems with the local taxi operators in the country. According to the sources close to the company says that this is the most expensive investment made by the company in any of the countries.

The strong move by the Southeast Asian ridesharing company will affect the local ridesharing operator, Go-Jek and the famous ridesharing giant Uber. The Southeast Asian ridesharing company said that it will allocate part of its investment in Jakarta for building a research center in the city. About one hundred million dollars will be invested by the fleet tracking software company in the local financial technology firm.

The ridesharing company is backed by the Softbank, the Japanese telecommunication and internet Service Company and it said that the company also has plans of expanding the payment platform in Indonesia and is going to hire around one hundred and fifty engineers for the Research Center that it is going to start by 2019. Apart from the Japanese investors, the company has the Temasek Holdings from Singapore State Wealth Fund and the Chinese ridesharing giant Didi Chuxing.

Apart from the ridesharing service, Grab offers motorcycle hailing service and food delivery and packages service and the company has raised seven hundred and fifty million dollars from the funding round in September 2016 and at that time the local ridesharing operator Go-Jek received five hundred and fifty million US dollars in that funding round and was invested by Warburg Pincus and KKR.

The Singapore State Wealth fund Temasek Holdings and Google reported that the ridesharing market of Indonesia will be valued at 5.6 billion dollars by 2025.

The Research and Development center

The Southeast Asian ridesharing company has plans to establish a Research and Development center in Jakarta in 2019 that will give jobs to more than a hundred engineers of the country. The company also hired the former National Police Chief of the country to head the Corporate Governance. The main aim of the Research and Development Center is to develop a localized solution like the designing of algorithms that will address the road administration in the Capital of the country the company will invest 100 million dollars for all the aspiring techno-preneurs and upcoming startup companies.

According to the Chief Executive Officer of the ridesharing company, Anthony Tan said that the Indonesia market is a complex market that consists of both success and failure stories and so the company is taking precautionary steps to meet with complex issues. Ridzki Kramadibrata, the Managing Director of the ridesharing company will be taking care of the Research and Development Center. The Lippo Group is another investor of the ridesharing company that is collaborating with Nobu to improve the electronic payment system in Indonesia

The techno company in Southeast Asia

GrabTaxi is also called the Grab is a technology company that provides a wide range of ridesharing service and logistic service using its mobile application, more specifically in the southeast Asian thirty five countries including the Indonesia, Malaysia, Singapore, Philippines, Vietnam and Thailand.

The ridesharing service was started in 2012 in Malaysia that focused on the students because it was hard to hail in the taxis in the country. The mobile application of the service will assign the cars that are in the nearby location to the requested riders using the location sharing technology and the mapping technology. As of 2016, the number of drivers registered in the ridesharing network has increased to six hundred and thirty thousand and the GrabTaxi mobile app was downloaded by Casperon more than nineteen million mobile phone users across all the countries in Southeast Asia. The GrabTaxi service was founded by Anthony Tan and Tan Hooi Ling.

Legal issues faced by the ridesharing operator

The ridesharing company faced serious issues in Indonesia. As the ridesharing service in the country is cheaper than the local taxi ride people chose Grab instead of the local taxis. This affected the taxi industry service in the country that led to the protest by the local taxi driver association in March 2016.

The protest took place in the capital of the country, where a large number of taxi drivers grouped in the capital and protested against the ridesharing service and the city became standstill as the roads were blockaded and the taxi drivers demanded the government of Indonesia to impose tougher regulation for the ridesharing application companies.

The local ridesharing company

The Go-Jek is the hyper local logistics and transportation company and payment startup in Indonesia that was founded in 2010 and is the first startup company of Indonesian origin and is classified as the Unicorn after closing its funding round in August 2016. The company’s fleet services are more than two hundred thousand drivers and it includes the trucks, cars and motorcycles and people from fourteen cities in the country can hail via Go-Jet ride hailing service.

This company operates many services apart from the ride hailing service, like food delivery service, massage service, medical service and another service. The company launched most of its service in 2015 from designing the Android and iOs version of the mobile app, the courier services and shopping service in the satellite cities and Jakarta. It expanded its food delivery service in Bandung and expanded its service in Surabaya.

The company launched its on demand shopping service in September 2015. The ridesharing service increased its fleet service to thirty thousand riders and expanded to Makassar. All of the online ride services were banned by the Minister of transportation and the ban moved a day later. The jet service of the company was expanded to Balikpapan, Yogyakarta, Semarang, Palembang, and Medan.

Later in 2016 it launched the ride hailing service through the LINE service and the company announced the acquisition of the C42 Engineering and Codelgnition, they are the 2 engineering startup that is based in the India. They established the product development center in Bangalore in India and the fleet strength grew up to two hundred thousand riders.

Uber’s situation in Indonesia

Uber is the leading ridesharing company in the United States that has its headquarters in San Francisco in California and the company operates its ride hailing service in more than five hundred and forty cities in sixty six countries.

The company uses the mobile application to connect the drivers and the riders and the payment process is also included in the mobile application. The ridesharing giant has faced many legal and regulatory issues in many countries. The American ride hailing company has faced opposition from the local taxi drivers in many parts of the world like Africa, Australia, and in many other Asian and European countries. Similarly, the company has faced regulatory and legal issues in Indonesia.

It is not new for the ridesharing giant to face strong business pressure from the local ridesharing services, and so the ridesharing company will think of another business strategy to meet up with the grand investment made by the Southeast Asian ride hailing company.