Popular ride-hailing service Grab has just announced a $700 million investment in Indonesia over the next four years, as it steps up its fierce battle with rivals Go-Jek and Uber for market share in the region.
This investment is part of the company’s ‘Grab 4 Indonesia’ 2020 master plan and, according to the Malaysia-born tech transportation giant, is designed to support Indonesia’s goal of becoming Southeast Asia’s largest digital economy by 2020.
The plan involves the opening of a Grab Research & Development centre in Jakarta, which aims to hire 150 engineers over the next two years and focus on developing their existing innovations, including their algorithms to address new road regulations in Jakarta and their “bike-pooling” service GrabHitch.
Grab has also promised to invest up to $100 million in start-ups in the mobile and financial services industries, “to grow the next wave of Indonesian companies with social aspirations.”
The company also hopes to enhance its mobile services to increase Indonesians’ access to mobile payments and provide its drivers with access to greater financing opportunities to purchase their own smartphones and vehicles.
The plan is endorsed by Badan Koordinasi Penanaman Modal (BKPM), the Government of Indonesia’s Investment Coordinating Board. BKPM Chief H.E. Thomas Lembong said he welcomes Grab’s interest in strengthening “the nation’s competitiveness in the global marketplace.”
This announcement comes on the back of a strong year of growth for Grab in Indonesia, with its GrabCar and GrabBike businesses each growing more than 600 percent throughout 2016, making Indonesia Grab’s largest market in Southeast Asia.
Last year also saw Grab expand to several new cities in Indonesia, more than any of its competitors, including Jakarta, Bali, Bandung, Padang, Makassar, Medan, Surabaya and Yogyakarta.
In a press release, Anthony Tan, Grab’s co-founder and Group CEO, said he sees tremendous opportunities in Indonesia to help advance the country’s digital infrastructure.
“As the largest homegrown technology startup in Southeast Asia, we are excited to make this significant investment in Indonesia’s future and accelerate their transition to a fully integrated digital economy.”
Grab is not the only ride-hailing service investing in Indonesia, with rivals Go-Jek and Uber also making a heavy investment in the region.
Last year Go-Jek raised $550 million in funding to grow its services businesses, days after Uber sold its China operations to greater focus its efforts and money in Southeast Asia.
The ride-hailing market in Southeast Asia is set to grow significantly in coming years, with the number of monthly users expected to rise from 7 million in 2015 to 29 million in 2025, according to joint research by Google and Singapore’s Temasek.
Grab already has 630,000 drivers across the region and up to 1.5 million bookings on their app daily.
With Indonesia’s ride-hailing industry worth around $15 billion annually, Grab hopes this latest investment will give it the edge in Indonesia’s increasingly competitive transportation service market.
This week also saw Grab name Indonesia’s former national police chief, Badrodin Haiti, to the position of president commissioner of Grab Indonesia, a move which should also help the company clear a path forward through the thick layer of governmental red tape and bureaucracy currently facing the ride-hailing industry in Indonesia.
