MANILA: The Philippines' transport regulator has rejected the application of Indonesia's Go-Jek to launch a ride-hailing service in the country due to foreign ownership issues, a government official said on Wednesday (Jan 9).
The move puts a wrench in Go-Jek's plan to corner a bigger share of the Southeast Asian ride-hailing market, currently dominated by rival Singapore-based Grab.
The Land Transportation Franchising and Regulatory Board (LTFRB) denied the petition of Go-Jek's subsidiary to become the newest ride-hailing service in the Southeast Asian nation, the regulator's chairman, Martin Delgra, told Reuters.
Velox Technology Philippines, a unit of Go-Jek, "did not meet the citizenship requirement and the application was not verified in accordance with our rules," Delgra said.
The Philippine constitution limits foreign ownership to 40 per cent for certain industries.
"If they want to appeal. That is their option," Delgra said, adding that Grab remains the Philippines' largest ride-hailing firm.
Velox is fully owned by Go-Jek, according to the regulator, while Grab, through its local unit MyTaxi.PH, complies with the foreign ownership limits.
A spokesman for Go-Jek, which counts Tencent Holdings and JD.com among its investors, said it continues "to engage positively with the LTFRB and other government agencies, as we seek to provide a much needed transport solution for the people of the Philippines".
Since March 2017, several Philippine ride-hailing firms have started operations in the capital Manila and in major provinces but have had limited success in wresting domestic market share away from Grab, which stands at over 90 per cent.
"Homegrown firms are not making a dent on early-player Grab, because the cars they can enrol now have to go thru the LTFRB's filtering hurdles," said Rene Santiago, transportation expert and president of Bellwether Advisory in Manila.
Go-Jek could potentially team up with Filipino investors, the regulator's head of communications January Sabale said.
"Go-Jek can get a local partner that will own at least 60 per cent of the ride-hailing entity to comply with the law."
Started in 2011 in Jakarta, Go-Jek has evolved from a ride-hailing service to a one-stop app through which its customers can make online payments and order everything from food, groceries to massages.
Last year, Go-Jek said it would invest US$500 million to enter Vietnam, Singapore, Thailand and the Philippines, after Uber Technologies Inc struck a deal to sell its Southeast Asian operations to Grab.
The Indonesian firm kicked off a trial launch in parts of Singapore in November and is raising billions of dollars and investing aggressively as more of Southeast Asia's 640 million consumers use smartphones to shop, commute and make payments.