Corporate News

By Robert J.A. Basilio, Jr.,
Opinion and Engagement Editor

Grab stays on course, sets goal beyond ride-hailing


Posted on June 13, 2017

FIVE YEARS, seven countries and 45 million downloads later, Southeast Asia’s leading ride-hailing application remains dead set on fulfilling its core mission: to take more cars off the streets by encouraging more drivers to share their trips.

Nowhere is this goal more evident than in Singapore, the island-state where Grab is headquartered and one of the 55 cities where it operates.

Thanks to Grab -- combined with its ancillary Singapore-only services (GrabHitch, a carpooling service that’s purely social, not commercial, and JustGrab, which allows taxi drivers to charge higher prices during peak demand), car ownership in the city-state has been drastically reduced.

Ever since Grab was launched on the island three years ago, the number of privately owned cars have been cut by as much as 20,000, said Lim Kell Jay, Grab’s country manager for Singapore, citing government statistics.

“People don’t need to own cars in Singapore,” he told reporters whom Grab had flown in from Vietnam, Thailand, Malaysia, Singapore and the Philippines during a briefing at the company’s offices in Singapore last week. “Utilization of cars are much higher because instead of being parked in garages, they are out there moving people.”

Although Mr. Lim did recognize that the government has helped control the state’s car population (currently at 600,000) through what is called the Certificate of Entitlement -- which need to be secured (and paid for) before owners are allowed to buy a car -- Grab’s array of transport services has nevertheless made car ownership less attractive.

“We want to keep our roads as empty as possible in a good way and keep the environment clean,” Mr. Lim said, emphasizing the role of ride-hailing in bringing people to their destinations faster, and, in some cases, cheaper.

Grab, considered as Uber’s Southeast Asian rival, has come a long way.

In 2012, when it was first launched as MyTeksi in Kuala Lumpur, the company provided an initial 11,000 rides, according to Anthony Tan, one of Grab’s cofounders.

Now, with more than 930,000 driver-partners in seven countries, it offers 2.5 million rides daily, according to the company’s five-year report entitled “Moving SEA Together.”

Despite these milestones, the company’s journey, let alone its road to profitability, is far from predictable.

In Malaysia, where it was first introduced, Grab is trying its best to keep things on an even keel.

Drivers of both Grab vehicles and taxis in Kuala Lumpur have reportedly come to blows when competing for passengers, Malaysian media told their Philippine counterparts while in Singapore. To settle scores, some have also resorted to damaging their rivals’ vehicles.

That’s not all.

Grab’s driver-partners in Malaysia are raising an outcry over a move -- to take effect in July -- that will triple insurance premiums for cars used for ride-sharing to 2,000 ringgit from the current 700. Ride-sharing increases risks of accidents because cars are out on the road more often than before, or so the logic goes.

The situation is only slightly better in the Philippines, supposedly the first country to legalize ride-sharing.

The local supply of driver-partners continue to be constrained after the government stopped issuing permits to cars that have signed up on the ride-sharing bandwagon last year. As a result, Grab drivers in the Philippines have remained at 10,000 since end of last year, compared with Uber’s 7,000.

“We know that there is going to be a path forward where we can find a good way of working together [with the authorities],” Tan Hooi Ling, one of Grab’s founders, told reporters in a separate briefing in Singapore that marked Grab’s fifth year.

Her optimism is not misplaced.

After all, while the company is looking forward to resolve its transport service issues across the region, it is also focused on what lies ahead.

Executives are betting that Grab’s future lies in electronic payments, confident that the company is in a perfect spot to leverage GrabPay, its digital wallet that allows cashless transactions between drivers and passengers.

Using GrabPay, driver-partners can easily transfer payments to their Grab-linked bank accounts and withdraw cash from nearby ATMs. Conversely, they can also reload their GrabPay accounts so that they can continue using Grab, which collects a fee for each passenger pick-up.

Meanwhile, passengers using GrabPay can earn rewards points for every ride, allowing them to enjoy discounts with Grab partners such as, Kentucky Fried Chicken, among others, in the Philippines. Its rewards program are most developed in Singapore, where users are most comfortable with digital transactions.

After it was launched late last year, GrabPay has posted an 80% increase in users month on month, a company statement said.

Grab is on track to “double our user base every quarter in 2017,” Ms. Tan said, adding that the digital payments industry is soon expected to breach $500 billion globally, an amount “20 times the worth of the total addressable market for transport in Southeast Asia.”

This exponential rise in GrabPay usage has prompted Jerald Singh, Grab’s head of product, to say that Grab’s “goal is to become the number one consumer platform in the next five years.”

So far, Grab has refused to be specific about plans for electronic payments, keeping mum about the number of cashless transactions in the Philippines and elsewhere.

It recently partnered with nine banks in Thailand, Ms. Tan said, adding that it may soon enter into similar arrangements with lenders in the Philippines and Malaysia.

Right now, the company is simply focused on building up its GrabPay user base, Mr. Singh said.

“We’re still making sure that we give passengers and drivers more ways to top-up their credits,” Mr. Singh said. “We still need to get people comfortable as a trusted payment provider.”

And that means you still can’t grab some grub and watch a movie using GrabPay rewards points despite being a loyal Grab user.

But who knows? That may come sooner than later.