Monopoly SG, Second Edition: Go-Jek in The Mix

SINGAPORE- On Thursday, May 24, Indonesian ride-hailing company and online payment service provider Go-Jek announced its plans to invest US$500 million over the next four months to enter four key markets in South East Asia: Singapore, Vietnam, Thailand and the Phillippines. While the company plans to provide only ride-hailing services in the short run, it also plans on expanding to other sectors once it establishes itself. 

In a press interview, CEO Nadiem Makarim claims that “people in Vietnam, Thailand, Singapore and the Phillippines don’t feel that they’re getting enough (choice) when it comes to ride-hailing.” This is especially true considering the recent acquisition of Uber by Singapore-based Grab. On this, he added, “I think a lot of governments and regulators have been actively welcoming competition in each of their countries because that’s healthy and good for the consumer.” 

The Land Transport Authority is currently working with the Indonesian Giant to ensure that all the regulatory requirements in order for the company to operate in Singapore are met. The firm showed an inclination to work with regulators and other parties to ensure a smooth entry into the market and even claimed that it has received positive responses so far. 

This should be viewed as a positive move in the right direction as, not only is it opening up the industry and making it competitive in the long run, it is also ensuring that a monopolistic market is avoided. When there is competition, all the providers are equally engaged in always improving their services and introducing new features to please their customers. The competition also ensures that the best market price is used. Customers will hence not pay extremely high prices and companies will not receive extremely low prices. However, when the market is under the control of a single operator, the market lacks innovation and riders often feel like they have no choice and have to pay high prices for sub-par services. 

Go-Jek’s expansion is possible today because of a fundraising campaign it conducted in February. It made US$1.5 billion, surpassing the original target of US$1.2 billion, and attracted big investors like Google, Astra International, and Temasek among others. In several Indonesian cities, Go-Jek currently provides transportation, logistics, mobile payments and food delivery. However, when it branches out to other countries, all these services will not be available. For instance, the motorcycle taxi will not make it to Singapore. 

CEO Makarim added that this decision was made in order to respect the market atmosphere and regulations in the various nations. He hence said that majority of the operating decisions will be made by autonomous entities based locally in the countries Go-Jek is expanding into. 

“Our role will be to act as advisors, giving the new companies the benefit of our operational and development experience so they can take the spirit with which we created Go-Jek and find the best way to achieve that locally,” said Makarim. For the same reasons, it is also unclear whether Go-Jek will retain its name in its Singaporean/Phillipino/Vietnamese/Thai counterparts, or take on a new one that works better locally. 

The main concerns around a move like this would be sustained if the foreign company were unwilling to cooperate with local standards or respect the market culture. However, Go-Jek has exceeded expectations in negotiating and complying with regulations. This has been complemented by their move to re-brand the organizations to suit the varied demands of customers in the four organizations. This is not new news, considering Go-Jek announced late last year that it plans to expand into other Southeast Asian markets, starting with the Phillippines. Now that we have more information about its plans, we might warm up to the idea more than we did in 2017!

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