Southeast Asia’s ride-hailing sector had a sharp turn when local unicorn Grab, originally founded in Malaysia and now headquartered in Singapore, acquired global ride-hailing giant Uber’s operations in the region last March.
The company has been driving in the fast lane since then, steering into more regional markets while busy onloading piles of capital from a shining roster of financial and strategic investors consisting of tech, venture, and industrial conglomerates, the likes of software powerhouse Microsoft, Chinese ride-hailer Didi, Japan’s SoftBank, as well as automaker Toyota amongst others.
Grab’s expansion ran into a head-on competition with another SEA’s homegrown ride-hailing giant, Jakarta-based Go-Jek, which, eyeing its regional archrival’s aggressive territory grab, also speeded up its own expansion into neighboring countries.
The southeast Asia ride-hailing duo now have dominated the region’s tech-enabled transportation space. According to a Frost & Sullivan report out last May, Grab has taken the market leadership in Southeast Asia with a 90% share while Go-Jek continues with its regional expansion plan in addition to further growing in its own domestic market. In terms of funding, Crunchbase indicates that Grab has raised US$6.8 billion over 20 rounds since its inception in June 2012, while Go-Jek has raised US$3.3 billion in funding over seven rounds since 2014.
However, their joint dominance is not deterring young upstarts from attempting to stake their own claims in the rapidly growing market. After all, there should be space for everyone as consumer adoption of ride hailing services continues to increase, with an estimated 35 million Southeast Asians actively using these services and booking 8 million rides on an average day.
“Ride hailing services continues to have a huge headroom for further growth, by considering that more than 80% of Southeast Asian internet users are not yet actively using them,” according to a study released by Google and Singapore’s Temasek Holdings.
These are some of the ride-hailing companies that are challenging the major players in Southeast Asia.
Philippines
When Grab announced its acquisition of Uber’s operations in Southeast Asia, transport network companies in the Philippines were ecstatic, because one of the two largest players in the market has abruptly left, leaving them huge space to operate.
But the Singaporean transportation company’s business was soon characterized as a “monopoly” in the country. It wasn’t long before six firms—MiCab, Hirna, Hype, Owto, GoLag, and ePickMeup—received accreditation from the Land Transportation Franchising and Regulatory Board (LTFRB) to break Grab’s dominance.
“Any competition is good for any industry because it benefits the riding public,” LTFRB board member Aileen Lizada said in a media briefing in March.
MiCab is a taxi booking app available in five cities—Cebu, Bacolod, Baguio, Iloilo, and Metro Cebu. The company claims to have 4,000 taxis using its platform to offer rides in the Philippines, and has plans to expand within the country as well as to Malaysia. Hirna is another taxi-hailing service. The company admits that it cannot match Grab’s perks for drivers, so it will only offer services in Metro Manila if consumer demand is high enough. Owto plays up its local roots, presenting itself as “fair, safe, and Filipino”, emphasizing that its system is developed by a team of Filipino programmers.
Hype launched its ride-hailing app in April last year. So far, it hasn’t released information about its fleet size. GoLag, the third player to enter the country’s ride-sharing industry, got a permit to operate in the Philippines for two years starting last April. It initially serves the Laguna area but is keen on applying for a Metro Manila permit. ePickMeUp, which offers the same service, jumped into the fray in June.
With Grab offering taxi services under GrabTaxi, MiCab’s head of operations Kris Montebon acknowledges that the market is crowded. “Competition is fierce, especially with global multinational companies and very rich companies in the Philippines. There’s Hype, and Grab is a multi-billion-dollar company,” Montebon told Filipino news outlet Rappler.
Vietnam
Vietnamese transport businesses face the same obstacles of well-funded foreign rivals operating in the country. After Uber’s departure from Vietnam, ride-haling firms FastGo, Vato, Taxigo, T.net, and Xelo entered the market, hoping to pick up where the global ride-hailing giant left off.
FastGo acquired the second-largest market share in Vietnam after Grab in terms of user numbers and rides served, according to The Saigon Times. The company also launched its service in Myanmar on December 28th, making it the first Vietnamese ride-hailing firm to develop a foothold overseas. It plans to expand to Indonesia, the Philippines, Cambodia, and Thailand.
Vato launched in May after being rebranded from Vivu Technology Development JSC. It received US$100 million in investment from Phuong Trang Tourism Service and Transport JSC, according to Vato’s founder Tran Thanh Nam. It is the only Vietnamese ride-hailing firm that has report external investment.
TaxiGo was introduced in 2017 as a taxi booking app, targeting passengers going for a long trip. Xelo, on the other hand, pursues a special pricing policy that allows drivers to set up prices for services. T.net, on its Vietnamese website, said that it connects passengers with vehicle owners in just two touches using its smartphone app.
Notably, Grab is facing difficulties in Vietnam. As 2018 wrapped up, a Vietnamese court ordered the ride-hailing giant to pay Vietnam Sun Corporation (Vinasun), the country’s largest taxi company, VND4.8 billion (US$207,000), ending a legal dispute that lasted 18 months.
Singapore
With frequent metro breakdowns and shutdowns, Singaporean commuters are highly receptive to ride-hailing services. The city-state also saw a flurry of local and foreign apps hastening to fill the gap left by Uber. Filo Technologies, Ryde, Jugnoo, Tada, Kardi, Urge, and Go-Jek immediately expressed interest to operate in Singapore, where regulators are keen to preserve a competitive business environment. Some have made promises of no dynamic pricing, zero commission, or better benefits to coax drivers and users to sign up.
It didn’t take long for one firm to bow out. In August, less than four months after its launch in Singapore, the Indian ride-hailing service Jugnoo shut down its Singapore app. The Straits Times reported in August that Jugnoo will be providing tech expertise and engineering support to Kardi, a local ride-hailing startup that launched in June.
Ryde made the news when it was hit by at least 2,000 fake bookings last June. The company said it started noticing the fake bookings in early May following the launch of its private-hire car service RydeX. It filed a police report after receiving these “ghost bookings” from fake accounts, some of which were allegedly made by its rival Grab.
Launched in April, Filo, which is a 100% Singaporean company, charges 12% commission while TADA, which means “let’s ride” in Korean, launched in Singapore on July 26. It does not collect commission fees from drivers using its platform. Urge, on the other hand, aims to differentiate itself from other companies by offering not only private-hire cars, but also food delivery, logistics, and courier services.
Malaysia
When the merger of Grab and Uber was announced, Malaysian regulators immediately launched a monopoly risk study on Grab. Much more, when the transport ministry received many complaints on Grab raising fares since the merger. As the government opens up the market further for competition, existing firms doubled down its efforts to attract more drivers and riders. New players also emerged to fill the gap.
Mycar, JomRides, MULA, Dacsee, Riding Pink, and DIFF emerged in the picture following the Grab-Uber merger while Uber drivers seek out other outlets to continue their livelihood. According to reports, more than 2,000 Uber drivers all over Malaysia trooped to the registration counters of MyCar, which claims to be the “third e-hailing force” in the country, following the Grab-Uber merger, prompting the firm to open registration counters in different areas. In a press conference in November, MyCar founder Mohd Noah Maideen announced plans to expand the firm’s services in Sabah. “We want the service to be used in all districts and not only focus in big city,” he said.
JomRides also beefed up its driver recruitment efforts to attract those displaced by Uber’s exit. MULA, on the other hand, launched with a focus on providing company-owned vehicles, alongside its ride-hailing services. The firm, however, charges higher rates compared to other players. DACSEE entered Malaysia’s ride-hailing market as a social ride sharing platform, which means customers can book rides using a social ride sharing app and share similar interests within a social media community. It also allows drivers to recruit other drivers to create their own “fleet”, modeled after a multi-level marketing system, to earn higher commission levels.
Riding Pink, a ride-sharing platform launched even before the Grab-Uber merger, markets itself as a niche platform – all of its drivers and riders are women! The business has grown from a mere 10 rides a day during the first week of launch in 2016 to a couple of thousand of rides monthly, according to founder Denise Tan. Another new player, DIFFRIDE, launched in August, claims it is the first ride-hailing firm to charge flat fee to its driver partners for daily access to connect them to potential passengers. As of August, the company expects up to 6,000 drivers by the end of 2018, with a ridership of 500,000. It has not updated its data yet.
Thailand
GoBike, a Thai-created mobile software application for motorcycle taxi and parcel delivery services, launched in Bangkok in July, under agreement with the Motorcycle Taxi Association of Thailand. The company said it will not collect fees from motorcycle taxis who join its scheme. Instead, it makes money from parcel delivery and advertisements. The app now competes with Get, the motorbike-hailing app developed and launched by Go-Jek in December for the Thai market.
Conclusion
Asia is a huge market for ride-hailing services. The ABI Research study on mobility estimates that ride-hailing firms provided 24 billion trips globally in 2018, the bulk of which comes from Asia. In Southeast Asia, the ride-hailing sector reached US$7.7 billion last year, with services available in more than 500 cities in the region, according to a study released by Google and Singapore’s Temasek Holdings. The ride-hailing sector is predicted to be nearly US$30 billion by 2025. Though Grab and Go-Jek already have deep roots in the region, there might just be room for a few other stars in the arena.
Editor: Brady Ng & Ben Jiang