Could Gojek be third time lucky in cracking the Philippines market?

Gojek driver helmets are seen during Go-Food festival in Jakarta, Indonesia, October 27, 2018. REUTERS/Beawiharta

Indonesian ride-hailer Gojek has resubmitted its application to operate in the Philippines where arch-rival Grab currently enjoys a virtual monopoly.

Twice rejected because it failed to meet strict foreign ownership rules, Gojek has now secured a partnership with local e-commerce pioneer Paulo Campos, according to documents submitted to the Philippines’ Securities and Exchange Commission.

“We have seen the documents and we have endorsed it to the DoTR,” Land Transportation Franchising and Regulatory Board chairman Martin Delgra told the Nikkei Asian Review, referring to the Department of Transportation, which has final say over the license application.

The latest developments mark the most significant progress yet in Gojek’s quest to enter the Philippines after the LTFRB first rejected its application for a Transport Network Company license in December 2018, and again in March this year.

That has allowed Singapore-based ride-hailer Grab to extend its lead in the Philippines where the SoftBank-backed company has operated virtually unchallenged since taking over Uber’s Southeast Asian business last year.

Gojek sees the Philippines, Southeast Asia’s second-most populous country after Indonesia, as crucial to its regional expansion. In January, Gojek acquired a majority stake in mobile payment service coins.ph in a deal reportedly worth around $72 million.

Valued at around $10 billion, Gojek’s backers include Google, and Singaporean sovereign wealth fund Temasek Holdings. Its founder Nadiem Makarim was recently named education minister by President Joko Widodo, further boosting the company’s profile.

According to regulatory filings seen by Nikkei, Pace Crimson Ventures Corp., a Philippine company, has acquired a 60% stake in Gojek’s local affiliate, Velox Technology Philippines, the minimum local ownership requirement for transport companies under the Philippine constitution.

Pace Crimson’s largest shareholder with a 35% stake is Paulo Campos, the chief executive and co-founder of e-commerce platform Zalora Philippines, which is 49% owned by powerful conglomerate Ayala Corp.

“Velox Philippines is thus 60.01% owned by Philippine nationals and thus compliant with foreign ownership limits,” said SEC General Counsel Camilo Correa in an opinion uploaded to the SEC website.

Transport Undersecretary Mark De Leon said Velox’s papers were now in the hands of the department’s franchise review staff.

“Transportation Secretary Arthur Tugade will sign the decision,” said De Leon, referring to Gojek’s application, adding that he could not comment on the timing of the decision.

In a sign that Gojek is gearing up for a more serious lobbying effort to obtain a license, the company advertised for a “head of government relations” in the Philippines on LinkedIn earlier this month.

On Monday, Philippine Competition Commission Chairman Arsenio Balisacan called for “more viable players” to “let real competition take place on the roads and in the market” after announcing a series violations committed by Grab.

Without naming the Department of Transportation, Balisacan said that “other agencies” must help foster a regulatory environment conducive to competition.

While the antitrust watchdog wasn’t trying to favor any specific challengers to Grab, PCC Commissioner Amabelle Asuncion said that “looking at other markets, in Singapore, they are saying that Gojek is providing efficient competition to Grab.”

The PCC fined Grab 23.5 million pesos ($500,000) for a range of regulatory violations, including overcharging passengers. Grab said it will comply with the PCC ruling and will reimburse passengers.

The competition authority also ordered Grab not to restrict drivers with exclusivity contracts that prevented them from changing employers if viable competitor entered the market.

This article was first published on Nikkei Asian Review.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.