Indonesia’s Go-Jek raises $1.5bn as ride-hailing market heats up

Sources said BlackRock and Temasek are investing about $100 million each in Go-Jek’s latest fundraising. (Reuters)
Updated 26 February 2018

Indonesia’s Go-Jek raises $1.5bn as ride-hailing market heats up

SINGAPORE: Go-Jek has raised a higher than targeted $1.5 billion in a fundraising round from a dozen investors including BlackRock and Google, sources said, as the ride-hailing firm builds its war chest to fight deep-pocketed rivals.
Go-Jek had planned last year to raise $1.2 billion, and, with the 25 percent extra funds it has received, it is now valued at about $5 billion, according to the sources.
Reuters Breakingviews said last month Go-Jek was valued at roughly $4 billion compared to over $6 billion for Grab, Southeast Asia’s largest ride-hailing firm.
The additional funds and backing of well-known investors including Singapore’s Temasek Holdings and Chinese technology giant Tencent Holdings will help Go-Jek to better compete in Southeast Asia’s cut-throat market where incentives to drivers and passengers are used to build loyalty.
Singapore-based Grab was expected to have raised $2.5 billion last year and Uber Technologies has pledged to invest aggressively in Southeast Asia — home to 640 million people — even though the US firm expects to lose money in the fast growing market due to costly battles with rivals.
Both companies are expanding in Indonesia, Southeast Asia’s most populous country, where Go-Jek, a play on the local word for motorbike taxis, is transforming the local economy, economists say.
Go-Jek and Grab are also investing heavily in expanding their mobile payments platform.
“Go-Jek is far beyond a ride-hailing app, it’s a digital platform that dominates consumers’ daily lives, including transportation, food delivery, logistics, and payment, etc,” said Xiaofeng Wang, senior analyst at consultancy Forrester.
“That’s also the key value that its key investors like Google and Tencent see. They know well about the power of the digital ecosystem, and Go-Jek has built it in Indonesia, like Google in the US and WeChat in China,” Wang said.
Go-Jek told Reuters that some investments that came in this year were part of the funding round that kicked off last year but it declined to comment on the amount raised or the names of investors.
It said the funding was aimed at developing technology for micro, small and medium enterprises in Indonesia.
Go-Jek delivers everything from meals and groceries to cleaners, masseuses and hairdressers across Indonesia’s capital city Jakarta, all at the touch of a smartphone app — helping it become a crucial workaround in a city with some of the worst traffic in the world.
Sources said BlackRock and Temasek are investing about $100 million each in Go-Jek’s latest fundraising.
BlackRock declined to comment. A Temasek spokesman confirmed participation in the fundraising but declined to say how much it had invested.
This month, Indonesian conglomerate Astra International said it will invest $150 million in Go-Jek, while sources said Djarum Group’s PT Global Digital Niaga is putting in $100 million.
Go-Jek’s payment system, known as Go-Pay, has emerged as one of the most popular mobile payment platforms in Indonesia. Grab, which bought Indonesian payment service Kudo last year, also sees its future in mobile payments as much as in transport.
Go-Jek is expanding in other Indonesian cities and has said it plans to start operations in the Philippines this year, followed by other Southeast Asian countries.


US trade offensive takes out WTO as global arbiter

Updated 2 min 16 sec ago

US trade offensive takes out WTO as global arbiter

  • Two years after starting to block appointments, the US will finally paralyze the WTO’s Appellate Body
  • Two of three members of Appellate Body exit and leave it unable to issue rulings

BRUSSELS: US disruption of the global economic order reaches a major milestone on Tuesday as the World Trade Organization (WTO) loses its ability to intervene in trade wars, threatening the future of the Geneva-based body.
Two years after starting to block appointments, the United States will finally paralyze the WTO’s Appellate Body, which acts as the supreme court for international trade, as two of three members exit and leave it unable to issue rulings.
Major trade disputes, including the US conflict with China and metal tariffs imposed by US President Donald Trump, will not be resolved by the global trade arbiter.
Stephen Vaughn, who served as general counsel to the US Trade Representative during Trump’s first two years, said many disputes would be settled in future by negotiations.
Critics say this means a return to a post-war period of inconsistent settlements, problems the WTO’s creation in 1995 was designed to fix.
The EU ambassador to the WTO told counterparts in Geneva on Monday the Appellate Body’s paralysis risked creating a system of economic relations based on power rather than rules.
The crippling of dispute settlement comes as the WTO also struggles in its other major role of opening markets.
The WTO club of 164 has not produced any international accord since abandoning “Doha Round” negotiations in 2015.
Trade-restrictive measures among the G20 group of largest economies are at historic highs, compounded by Trump’s “America First” agenda and the trade war with China.
Phil Hogan, the European Union’s new trade commissioner, said on Friday the WTO was no longer fit for purpose and in dire need of reforms going beyond just fixing the appeals mechanism.
For developed countries, in particular, the WTO’s rules must change to take account of state-controlled enterprises.
In 2017, Japan brought together the United States and the European Union in a joint bid to set new global rules on state subsidies and forced technology transfers.
The US is also pushing to limit the ability of WTO members to grant themselves developing status, which for example gives them longer to implement WTO agreements.
Such “developing countries” include Singapore and Israel, but China is the clear focus.
US Commerce Secretary Wilbur Ross told Reuters last week the United States wanted to end concessions given to then struggling economies that were no longer appropriate.
“We’ve been spoiling countries for a very, very long time, so naturally they’re pushing back as we try to change things,” he said.
The trouble with WTO reform is that changes require consensus to pass. That includes Chinese backing.
Beijing has published its own reform proposals with a string of grievances against US actions. Reform should resolve crucial issues threatening the WTO’s existence, while preserving the interests of developing countries.
Many observers believe the WTO faces a pivotal moment in mid-2020 when its trade ministers gather in a drive to push through a multinational deal — on cutting fishing subsidies.
“It’s not the WTO that will save the fish. It’s the fish that are going to save the WTO,” said one ambassador.