Grab rides up Indonesia with $700M investment

Ride-sharing operator says it will invest US$700 million in the Southeast Asian market by 2020, including plans to set up a research facility as well as fund to support mobile payments.
Written by Eileen Yu, Senior Contributing Editor

Grab has announced plans to invest US$700 million in Indonesia over the next four years, as part of efforts to increase its footprint in a market where it has seen growth.

The Southeast Asian ride-sharing operator said Thursday the new investment would support the Indonesian government's ambition of becoming the region's largest digital economy by 2020. It would include plans to set up a research and development (R&D) facility in the capital city of Jakarta, focused on developing technology innovations for the local market.

A US$100 million funding initiative also would be introduced to support startups and entrepreneurs keen on driving "financial inclusion" in smaller communities.

Grab added that its investment followed "a strong year of growth" in the country, with its GrabCar and GrabBike businesses each clocking more than 600 percent growth in 2016. Its range of ride-sharing services were available in several Indonesian cities, including Bali, Bandung, Medan, and Surabaya.

According to Grab, one in three of its customers in the country used more than one of its services. It said its drivers earned 40 to 70 percent more per hour than the average transport or delivery driver in Indonesia, where it helped generate more than US$260 million in income for its driver partners.

Indonesia's Minister of Communication and IT Rudiantara said: "We want all Indonesians to benefit from IT to improve their lives, develop new skills, and build the next wave of global leaders in technology. Grab's investment to train and hire more ICT professionals and mentor young entrepreneurs will accelerate the growth of Indonesia's digital economy. This kind of app has to be positioned as a tool to spur and empower people and the economy."

Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan added that Indonesia's growth would require the continued development of its infrastructure, including its public transport network. Stressing the role of technology, he said services that tapped data analytics would better enhance the efficiency and reliability of the national transportation infrastructure.

According to Grab, the R&D facility in Jakarta would hire 150 engineers over the next two years and focus on developing localised services, including algorithms to support new road regulations as well as a bike-pooling service for nearly 1.4 million commuters in the city. Engineers also would be offered training in Grab's other R&D centres in Singapore, Beijing, and Seattle.

By pumping up to US$100 million into the investment fund, Grab said it hoped to nurture Indonesian startups and technopreneurs focused on mobile and financial services, with the aim to better serve smaller cities and communities that had yet to experience the digital economy.

The ride-sharing operator also would be looking to launch mobile services to bolster access to mobile payments across Indonesia, expanding its own mobile payment services through GrabPay Credits.

This would further build on its announcement last July to extend its partnership with Indonesian consumer services company, Lippo Group, and enable the payment of retail goods and services its mobile app. With more than 50 million customers between the two companies, the new e-payment platform would allow these consumers to tap their mobile phones or the Grab mobile app to pay for goods and services under Lippo's retail network, which included department stores, hypermarts, cinemas, coffee shops, and e-commerce portals. Nobu Bank also was participating in this initiative.

Grab currently operated a network of more than 630,000 drivers across the Southeast Asian region.

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