GRAB’s operations in the Philippines has become its slowest growing in Southeast Asia as the company remains in a complicated relationship with the government after a P10-million fine and a prohibition on adding new cars, its local official said.
Brian P. Cu, Grab Philippines country head, told reporters on Friday that the government’s “overregulation” of the company is the reason for its struggle to move forward.
“How can we grow, we can’t add cars? You can’t grow if you can’t add cars. So we’re the slowest growth. We’re zero growth,” he said. “Everyone else can add cars. So by virtue of us being able to add supply, we have zero growth.”
The Land Transportation Franchising and Regulatory Board (LTFRB), the regulatory body for transport network companies (TNCs) like Grab, has set a 65,000 cap for vehicles allowed to move around Metro Manila. This has limited Grab’s capability to accept new cars to add to its supply pool.
The LTFRB also suspended in April part of Grab’s charging matrix — the P2-per-minute waiting time component — which the company said significantly hit the income of its drivers. Issues with the charging scheme also led the LTFRB to impose a P10-million fine on the company last week, which Grab plans to appeal.
Mr. Cu noted that even with these problems, the Philippines continues to receive sufficient budget from its regional headquarters to fund its operations.
“Philippines is maybe 6% to 10% of our portfolio. So it’s an important piece of our portfolio,” he said. “But in terms of growth and the prospects, until the pricing is fixed, until supply is allowed to come back in, we’re in a tough spot.”
LTFRB Chairman Martin B. Delgra III was not able to pick up calls for comment on Sunday.
Mr. Cu said despite a jump in income when Grab acquired Uber Technologies, Inc. in March, it immediately flattened because of regulations that limit its success in the country.
“There’s still several [Grab units in other countries that are also struggling], but there are some that are profitable already,” he said.
The company expects to record a loss by the end of the year as it launched new services like GrabFood and GrabAssistant, and soon, GrabPay. Mr. Cu said in June that the losses for the next 12 to 18 months were within forecast.
“Grab has not made any net income for the past years since it entered the Philippine market… We are still in investment mode and are not expecting to make money anytime sooner,” he said.
Amid the challenges, Grab’s regional headquarters continue to grow its business with a plan to acquire another company that will boost its technology.
“We’re in talks with a lot of companies. We’re looking to acquire someone with certain assets, but there’s a lot of people with those assets. We’re just looking at what’s the best for us,” Mr. Cu said.
He said he expects the deal by the end of 2018 or the first quarter of next year, but declined to disclose the company’s name or the industry it is involved in.
He noted, however, that the company is not in the transportation sector and the acquisition is not as big as the Uber buyout. But the deal will surely affect Grab’s operations in the Philippines, he said.
“It’s a back-end provider. There’s several [companies we’re talking to]. There’s one back-end provider, the others we’ve spoken to are front-end providers,” Mr. Cu said.
“You know what we wanna do? We want to open a tech office, if there’s enough talent that we can find here. We have in several [locations already]. We have in Vietnam, Singapore, Seattle, Beijing. We want to be able to expand our technical presence,” he added. — Denise A. Valdez
