Deal focus: Grab thinks local in Indonesia

For Southeast Asian ride-hailing app operator Grab, coming up with effective payments solutions is about catering to the needs of the region’s population of 620 million, not just Indonesia’s 250 million inhabitants or the 30 million residents of metropolitan Jakarta. At the same time, the pursuit of scale must be combined with ever more nuanced local awareness.

“We have been very deliberate in rolling out products because when handling other people’s money it is critical that our systems are trusted by consumers,” says Ming Maa, who joined Grab as president last year from SoftBank, one of the start-up’s biggest investors. “Less than 20% of Indonesia’s population has access to a bank account and the way you bring them into the modern financial world is different from what you would do in Vietnam or Thailand because the ways people spend and save money are very different.”

Grab’s initial financial services initiatives have focused on the fleet of more than 630,000 drivers who use the app to connect with prospective customers looking for taxi rides on two wheels or four, car-sharing services, package couriering or food takeout delivery. Having introduced credit programs that enable drivers to buy their own cars, the next step is consumer credit products that target people who already use GrabPay to pay for rides.

A $100 million social impact investment fund is intended to help Grab uncover ideas and entrepreneurs in Indonesia that are a good fit for its own product development and geographic expansion objectives. Separately, the company has established partnerships with Lippo Group and Nobu Bank that will focus on mobile payments and micro-lending services. “Anything that deals with expanding credit and expanding the population that has access to that credit will be very important for us,” Maa says.

The fund is part of a broader initiative developed in collaboration with the Indonesian government that will see $700 million put to work in the country over four years. Although Grab is competing fiercely in Jakarta with the likes of Go-Jek and Uber, Maa says the company’s balance sheet is healthy – it has raised more than $1 billion in private funding – and management is focused on long-term development.

In addition to the investment fund and the expansion of mobile payment services, Grab will establish a R&D center in Jakarta and look to hire 150 local engineers. Again, the focus is localization, whether it is helping drivers deal with traffic in Jakarta or address demand for half-day rental services in Bali.

“If you want to provide an end-to-end transport solution in Jakarta, you have to have both a motorbike solution and a four wheel solution, and those pieces must come seamlessly. That nuance is very different in other countries,” Maa explains. “That translates into quite a lot of engineering as well in terms of mapping and routing. The most efficient path from A to B is different for two wheels versus four wheels. You can’t rely on Google.”

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• Topics
• Southeast Asia
• Expansion
• Technology
• Financials
• TMT
• Indonesia
• Growth capital
• Softbank