Indonesia Considers Grab and GoTo Merger Amid Market Dominance and Regulatory Scrutiny

The Indonesian government is currently exploring the possibility of merging Grab and GoTo, two major ride-hailing and delivery companies in the country. According to Reuters, Indonesian government spokesperson Prasetyo Hadi stated that a decision will be made soon. "Ride-hailing drivers are economic heroes and drivers of economic growth," he emphasized. The government recognizes the strategic importance of the ride-hailing industry in creating jobs and its crucial role in the economy. GoTo's subsidiary, Gojek, alone boasts over 3.1 million drivers. Both Grab and GoTo have long dominated the Indonesian market. Data from Euromonitor International indicates that if the merger succeeds, their combined market share could exceed 91%. However, neither Grab nor GoTo has responded to Reuters' inquiries regarding this potential deal.

In recent months, there have been significant developments surrounding the proposed merger. Earlier this year, it was reported that Grab, which is listed on Nasdaq, planned to acquire its smaller competitor GoTo by the second quarter of this year. The company has already engaged consultants to handle the acquisition process. A source close to the matter revealed that the deal could value GoTo at approximately $7 billion (around SGD 9.1 billion).

According to GoTo's annual report last year, 73.9% of its shares are held by foreign investors, including major players like SoftBank Group and Alibaba Group Holding Limited through its subsidiary Taobao China Holding Limited. The remaining shares are held by Indonesian investors.

The potential merger has sparked concerns among drivers and users alike. Thousands of ride-hailing drivers have protested in recent months, voicing their opposition to the merger and expressing frustrations over low incomes. The government's stance on the matter is being closely watched, as it could significantly impact the future of Indonesia's ride-hailing industry.