THE cabinet’s approval in principle to introduce two-wheel e-hailing services in Malaysia has fuelled anticipation of the entry of Indonesia’s most successful start-up, Go-Jek, into the domestic market. 

This follows Go-Jek founder Nadiem Makarim’s meeting last week with Prime Minister Dr Mahathir Mohamad and Transport Minister Anthony Loke, brokered by Youth and Sports Minister Syed Saddiq Syed Abdul Rahman.

Go-Jek was founded in 2010 by Makarim, who is also the former managing director of Zalora Indonesia.

Makarim’s inspiration was the informal motorcycle taxi service known as Ojek, used widely around Jakarta by commuters to combat the city’s notorious traffic jams. Makarim himself was an avid user of Ojek.

In an interview with CNBC in June last year, Makarim said the frustration that stemmed from the lack of transparency over Ojek fares and the difficulty of securing a ride during peak hours drove his idea to start a two-wheel ride-hailing service. 

According to US-based market intelligence firm, CB Insights, Go-Jek, which is touted as  Indonesia’s most valuable start-up, is estimated to be valued at around US$10 billion (RM41.9billion).  

That makes it the first Indonesian company and second Southeast Asian company, after Grab, to have hit US$10 billion in market valuation. 

Go-Jek counts prolific names such as Singapore’s Temasek Holdings, Alphabet Inc’s Google, JD.com, Tencent Holdings Ltd, Mitsubishi Corporation and Provident Capital as its investors.

Visa Inc has also been reported as the latest addition to its list of investors.

Starting with ride-hailing, it has now expanded its offerings to over 20 different services ranging from transportation to food delivery, massages, e-money, and even a loyalty programme.

Besides its home-country, Go-Jek has a presence in countries such as Singapore, Vietnam and Thailand. 

However, its attempt to expand into the Philippines as part of its Southeast Asian expansion plan hit a snag after it was denied a licence to operate in the country by Filipino authorities. 

This was due to its domestic arm’s failure in meeting local ownership requirements. 

The Go-Jek application has seen about 142 million downloads in the first quarter of 2019. 

By the end of last year, Go-Jek’s contribution to the Indonesian economy stood at Rp44.2 trillion (RM13 billion).

Good intentions but several concerns

Syed Saddiq’s intentions in introducing Go-Jek may be to provide employment opportunities for Malay youths known as “mat motor”, for whom the humble motorcycle is the cheapest form of vehicle ownership they can afford. 

Go-Jek had after all, started with only 20 riders, but now has some 2 million registered riders.

In Malaysia, Grab, which offers similar services to Go-Jek has created income opportunities for some 10,000 motorcyclists through its GrabFood and GrabExpress offerings in Malaysia. 

However, in the reactions to Syed Saddiq’s proposal, some have raised concerns about safety, given the high rate of accidents involving motorcyclists in Malaysia.

This is evident with Bukit Aman’s Traffic Investigation and Enforcement Department statistics, which showed that motorcyclists accounted for 65.7% of fatalities in road accidents last year. 

Out of the 6,284 lives lost last year in road accidents, 4,128 were motorcyclists. Speeding and collisions were attributed as the main reasons for the deaths.

On the Indonesian front, while there are no statistics suggesting any road accidents involving Go-Jek services, motorcycles also accounted for the bulk of traffic accidents compared to other vehicles. 

There were 5,400 motorcycle accidents reported  in Jakarta, involving 524 cases of fatalities. 

Safety concerns have now caused Transport Minister Loke to make a U-turn, after he said in Parliament last year that Putrajaya did not intend to legalise motorcycle ride-hailing services.

Loke, however, yesterday said the recent decision to consider Go-Jek’s entry was a collective decision by the cabinet which all ministries had to adhere to.

Critics of Syed Saddiq’s idea have also asked why a foreign company should be favoured over local players, since local company Dego Rides had previously offered a similar service.

Dego Rides was banned in 2017 due to safety concerns. Loke had said it was a decision by the previous Barisan Nasional government.

It is not yet clear if Dego Rides will make a re-entry into the market once the motorcycle e-hailing ecosystem is legalised. Syed Saddiq has promised that Go-Jek will not be allowed to monopolise the sector.

Grab, Go-Jek’s closest rival, said it welcomes the cabinet’s in-principle approval for motorcycle-ride hailing services and urged for safety aspects and proper regulations.

Grab Malaysia head, Sean Goh has suggested that public service vehicle (PSV) licenses be mandated along with a separate set of stringent, motorcycle-specific safety features. – August 24, 2019.