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Grab partners with Bukalapak investor as Indonesia tech fight grows

Deal with media conglomerate Emtek highlights country's e-commerce potential

Grab and e-commerce platform Bukalapak's top shareholder are raising the stakes in Indonesia's increasingly competitive tech landscape. (Source photos by Reuters) 

JAKARTA -- Singapore-based Grab has formed a strategic partnership with Elang Mahkota Teknolog, a major Indonesian media conglomerate, in a move poised to further realign the tech landscape in the region's biggest economy.

The Indonesian company -- Emtek for short -- is the largest shareholder in Bukalapak, one of Indonesia's largest e-commerce platforms. The new tie-up means Indonesia's tech industry is now in a three-way battle between the Grab-Bukalapak alliance, Singapore-based Sea and GoTo, a company born out of the merger between two of Indonesia's largest tech companies Gojek and Tokopedia.

The announcement on Monday came as both Grab and Emtek confirmed that they have invested in each other's businesses.

Grab took a 4.6% stake in Emtek when it participated in the latter's 9.3 trillion rupiah ($642 million) private placement in March along with other investors, while Emtek now holds 5.8% in Grab's Indonesian unit after a transaction in April, according to a filing to authorities.

On Monday, Emtek Group managing director Sutanto Hartono said that the company has invested $374 million in Grab Indonesia so far.

The alliance between Grab and Bukalapak, one of Indonesia's biggest e-commerce companies, will focus on the digitalization of Indonesia's micro, small and medium-sized enterprises. According to the government, there are over 64 million MSMEs in Indonesia, employing 97% of the workforce and contributing 60% of the country's GDP.

In particular, the digitalization of warung -- as mom and pop shops are known locally -- has drawn the interest of a myriad of Indonesian tech companies, including GoTo.

Grab and Emtek on Monday announced a new initiative called Kota Mapan Festival, essentially a joint accelerator program involving Bukalapak to support digitalization of various MSMEs in Indonesia's second- and third-tier cities. It is set to start in Solo, a town in Central Java Province, in September -- targeting 1,000 MSME participants.

"We will focus on [giving them] integrated support -- training programs, curation, technology solutions" as well as customized needs of the MSMEs, Grab Indonesia managing director Neneng Goenadi said during the event.

Emtek's Hartono said the new initiative will add to existing digital services for over 7 million warung owners and other MSMEs within Bukalapak's ecosystem -- including for accounting, inventory management, payments and the purchase of insurance.

In a news release, both companies said they will also explore potential collaborations in logistics, financial services, telemedicine, advertising and digital media. A source in the industry said both companies are exploring bringing merchants on Bukalapak to GrabMart, Grab's in-line grocery shopping platform, and vice versa.

Grab already has partnerships with a number of Indonesian e-commerce companies for deliveries and through its payment platform OVO, but the latest announcement looks to take its relationship with Bukalapak further.

"Through our alliance with Emtek we look forward to deepening the level of collaboration we have with Bukalapak and believe we can escalate the level of impact we deliver to Indonesian MSMEs," Neneng told Nikkei Asia separately. "We're also thankful that many of Indonesia's leading companies have chosen to invest in us or work with us, demonstrating their confidence in our strategy and road map here," she added.

Grab's decision to deepen ties with Bukalapak contrasts with the path its perennial rival Gojek took -- a merger with Bukalapak's rival Tokopedia.

Their difference stems from the way they hope to better harness the growth of the e-commerce market, one of the fastest growing in the country, partly due to the coronavirus pandemic.

Grab believes that running an e-commerce business itself will consume too much cash and resources in a cutthroat competitive landscape, and hence favors a looser engagement in the sector. It also believes casting its net wide by partnering with various platforms is the better option for capturing the growth of the industry.

Gojek, meanwhile, believes that directly running an e-commerce business is the best way of harnessing the sector's growth. GoTo executives also believe that by merging, the companies can provide a more granulated service and better customer experience by combining user data.

A partnership with Bukalapak may provide Grab with a boost when it debuts on the Nasdaq. The company is going public through a $40 billion merger with Altimeter Growth, a special-purpose acquisition company, but there have been signs that the shine is fading from the deal amid a general cooling in the SPAC boom.

Shares in Altimeter are trading some 29% lower compared to April 13, when it announced the Grab deal.

The deal can also provide Bukalapak with a leg up, as it is set to start trading on the Indonesia Stock Exchange (IDX) on Aug. 6. Partnering with one of the region's biggest technology companies may buoy investor sentiment, allowing Bukalapak to set its IPO price at the top end of its target price range of 750 rupiah to 850 rupiah.

If priced at the upper end, Bukalapak would fetch 21.9 trillion rupiah, marking the IDX's biggest-ever IPO. The previous record was 12.2 trillion rupiah, raised by major coal miner Adaro Energy in 2008.

Additional reporting by Erwida Maulia and Ismi Damayanti.

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