But the deal’s promise remains unfulfilled.
An alliance with Gojek was Coins’ best chance of surviving intensifying competition following the entry of Chinese giants Tencent and Alibaba in the Philippines’ mobile payment space. Gojek’s payment service GoPay is dominant in Indonesia, and that was the blueprint. However, Coins is still unable to lean on Gojek fully. The budget allocated for the fintech startup last year was reduced from what Gojek originally intended, former and current Coins staff told The Ken. Gojek declined to comment on the matter.
Gojek still hasn’t launched in the Philippines, nearly two years after announcing its expansion plans outside Indonesia. Last year, Gojek made two attempts to apply for a license to operate in the Philippines, but was rejected both times for going beyond the 40% foreign ownership limit. The company now hopes it’ll be third-time lucky this year.
Beyond the Philippines, Gojek has launched in three Southeast Asian countries since ride-hailing giant Uber left the region in March 2018 by selling its local business to Singapore-based Grab. However, a sense of disjointedness has hung over Gojek’s expansion strategy in the region.
Organized chaos across Southeast Asia
A focus on providing quality services has helped Gojek become Indonesia’s largest ride-hailing company, but it has struggled to replicate that form elsewhere. While the company has a presence in five Southeast Asian countries, if we include Coins in the Philippines, 90% of its revenue comes from Indonesia, a ride-hailing executive told The Ken.
Gojek claimed its services have racked up $1.5 billion in transactions outside Indonesia to date. It did not provide revenue numbers, but the company spokesperson said Gojek wants to lessen its dependence on Indonesia and grow its other markets to 50% of transactions within the next five years.
However, with a limited number of services on offer in its non-Indonesian markets, such a goal seems ambitious at best, or at worst naive. For example, the company does not yet accept credit card payments in Vietnam or Thailand. That’s a feature Grab has offered since 2016.
Members of Gojek’s leadership have even questioned whether the company should withdraw from some cities outside Indonesia, a technology executive aware of the concerns told The Ken. Gojek denied this, saying, “We’re committed for the long-term in all the markets we operate in.”
Some see the Southeast Asia expansion itself as a boil-the-ocean strategy thought up by Nadiem Makarim, Gojek’s former CEO, who is now a government minister. (We wrote about Makarim’s exit from Gojek here.
The expansion strategy may appeal to investors, but it is impractical, even harmful, to the company in reality, as catching Grab is both ambitious and costly, the technology executive mentioned above added. Indeed, it has been speculated that Gojek’s regional expansion could be as much about distracting Grab away from Indonesia as it is about landing in new territories.
However, it is unclear whether Gojek has made a dent in Grab’s monopoly in the Southeast Asia region. And the Indonesian company’s home base is also under fierce attack from its rival.
Grab has pledged to pour vast sums into Indonesia. The Singaporean company’s marquee investor, SoftBank, has palled up with the Indonesian government, while committing $2 billion towards developing national infrastructure. There are even suggestions SoftBank will help fund a new capital city.
Gojek’s expansion in Southeast Asia has been messy.
After stepping into Vietnam in August 2018, the company said its local Go-Viet business completed 100 million bookings in its first year. However, despite the bold claims, Go-Viet appears to be in a near-constant state of flux. It is currently in its third leadership cycle following a turnover of executives, which hints at instability and lack of coherent strategy.
Former Go-Viet chief executive Christy Le, who was earlier Facebook’s Vietnam head, resigned in September 2019 after just five months with the company. Her predecessor, Nguyen Vu Duc, had barely fared better, lasting only six months in the role.
Grab retains a dominant 72.9% share of the ride volume in Vietnam, according to a recent report by ABI Research. Go-Viet is pegged at 10.3%—just fractions ahead of local players Be and FastGo.
There are also reasons to be concerned about the management of country teams. In Vietnam, the entire annual marketing budget for the first year was exhausted after just three months, the previously quoted person said, indicating a lack of oversight.