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Uber's Indonesia exit sets off driver hunt by Grab and Go-Jek

Both companies need drivers to expand into food and goods delivery

Grab and Go-Jek drivers wait for customers in Jakarta. (Photo by Shinya Sawai)

JAKARTA -- The departure of ride-hailing company Uber Technologies from much of Southeast Asia has sparked competition between Grab and Go-Jek to recruit the American rival's former drivers in Indonesia.

Uber ceased service at midnight Sunday in Indonesia, Thailand, Vietnam, Malaysia, Myanmar and Cambodia following its recent deal to integrate Southeast Asian operations with Singapore-based Grab. Though Grab cited a smooth migration of drivers and users from Uber in most of those countries, the company faces heavy competition in Indonesia from homegrown Go-Jek, which operates only in Southeast Asia's largest economy.

Grab Indonesia said Friday that it brought over 75% of Uber drivers in Indonesia, though the company revealed no figures. Drivers reported the opportunity to migrate to Grab with an easy online application that took just one day to complete.

But Go-Jek sees the change as a chance to expand its fleet. The company operated recruitment stalls in Jakarta and its satellite cities during the past week, targeting former Uber drivers. A Go-Jek officer said "thousands" were registered on Saturday alone.

Go-Jek wants drivers from Uber to continue receiving "decent earnings," Nila Marita, director of corporate affairs, said in a statement. "Each individual driver has a right and freedom to choose their partners."

Drivers wearing the trademark black-and-orange jacket and helmet associated with Uber Indonesia motorcycle taxis were seen on local television lining up at a Go-Jek recruitment booth. Many drivers may prefer migrating to Go-Jek rather than Grab.

"Grab has too many rules," one such driver said.

Another Uber driver who migrated to Grab noted the loss of some incentive pay when breaking rules, such as obeying a passenger who wished to be dropped off during the trip instead of continuing to the destination.

Some users said they prefer using Go-Jek services because its electronic wallet platform, Go-Pay, makes payment simple and offers good discounts. Grab's GrabPay, a similar platform, is still suspended pending review from the Indonesian central bank. Some other users said they're more familiar with Go-Jek because it launched first in Indonesia before Grab arrived. Many Indonesians have two or all three apps installed on their smartphones -- and make different choices depending on discounts offered and availability of drivers in proximity when ordering a ride.

Go-Jek had 1 million motorbike and car drivers in Indonesia as of December, the company said. Grab cited having 2.4 million drivers across eight Southeast Asia countries in March. It remains unclear how many Uber drivers operated in the region, or how many migrated to Grab or Go-Jek.

The Go-Jek app boasted 9.7 million unique visitors in Indonesia as of December, followed by Grab with 9.6 million and Uber with 2 million users, data analytics consultancy ilmuOne Data said.

Go-Jek and Grab both said they need drivers to support expansion plans, which include not only car and motorbike rides but also deliveries of food and goods.

But as the number of drivers in major cities like Jakarta reaches saturation, the fleet expansion largely targeting these cities has raised questions. Yoga Adiwinarto, the Institute for Transportation and Development Policy's director for Indonesia, said individual drivers are earning less than before due to this saturation. Motorbike drivers rallied recently in Jakarta, demanding tariff hikes.

"Seeing [the companies'] business models, they don't seem to really care" about the saturation, Adiwinarto told the Nikkei Asian Review. "To Grab and Go-Jek, the drivers are just points of sales. They're not employees. The companies receive fees from each transaction, so their focus is maximizing the transaction volumes."

Elsewhere in Southeast Asia, Grab faced serious competition only from Uber. But not all of those Uber drivers migrated happily, or at all.

Hoang The Trung, a former motorbike driver for Uber in Ho Chi Minh City, said he received fewer orders on his first day with Grab. He thought some Uber passengers may be unwilling to use Grab for a while. He was considering moving to local operators, such as Mai Linh's app or Phuong Trang's Vato app.

Another Vietnamese driver said he lost faith in technology providers after Uber's departure, fearing Grab will suffer a similar fate. He wants to quit ride-hailing in favor of another business.

Uber will continue operating for now in Singapore and the Philippines, where national competition authorities are investigating the antitrust aspects of the deal. Yet a Grab spokesperson said "thousands of drivers" in Singapore have already joined the company.

With the Philippine Competition Commission requiring the Uber app to remain open during its review, Grab said it will shoulder Uber's operational costs until April 15. But Grab urges the commission to consider "practical hurdles," noting that Uber clearly stated "its incapacity to fund the operations" in the country.

Nikkei staff writers Cliff Venzon in Manila and Kentaro Iwamoto in Singapore contributed to the story.

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