Thursday 28 Mar 2024
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This article first appeared in Corporate, The Edge Malaysia Weekly, on September 5 - 11, 2016.

 

AS Uber Technologies Inc exits China, selling its operations there to local giant Didi Chuxing, observers of the ride-hailing app industry are saying that the San Francisco-based company will focus on the second best prize — Southeast Asia.

Uber’s general manager for Malaysia and Thailand Leon Foong confirms this. Having been profitable in Singapore and the Philippines, it sees Malaysia as the market to grab.

In an interview with The Edge last Thursday, Foong says the company’s Malaysian operation is growing in terms of profitability and has reached the point that it is time to invest in technology and new services.

“In terms of the overall growth, the profitability of the business, we have seen some positive signs that now is the time to invest in the market and ensure that our best technology resources are brought to Malaysia to help solve some of the problems of our cities,” he says.

He adds that these are “real problems, such as traffic, people wanting to make more money, people sometimes deciding not to drive but needing to get around without having to pay too much”. 

Malaysia is one of Uber’s biggest markets in Southeast Asia with operations in five cities, Foong says.

According to Uber’s website, the e-hailing service is available in Kuala Lumpur (which covers the entire Klang Valley and parts of Negeri Sembilan), Penang, Johor Baru, Ipoh and Kota Kinabalu.

Already, Malaysia is Uber’s biggest market in Southeast Asia in terms of the number of cities where the service is available. Foong says it plans to expand to more cities this year.

However, in the bigger scheme of things, analysts are saying that homegrown e-hailing apps are bigger than Uber in key Southeast Asian markets such as Malaysia, Singapore and Indonesia. GrabTaxi Pte Ltd (Grab) is said to command more than half of the region’s private car-hailing market.

Of course, this is disputed by Uber. It claims to have a bigger market share than Grab in the private car-hailing market in Southeast Asia. However, when pushed for a breakdown of these numbers, Foong declines to comment.

In Malaysia, Grab has better brand visibility. It started as MyTeksi, an app that allows users to book a taxi with a click on the app. This app later transformed to include private car-hailing service, GrabCar.

Since January, GrabCar and GrabTaxi services have been known simply as Grab. The company is said to be valued at US$1.5 billion and is negotiating another round of fundraising (Round E), which could value the business at US$2.3 billion.

That is just a fraction of Uber’s valuation of US$56 billion. However, just as in the case of China’s Didi Chuxing, Grab claims that it knows Southeast Asian markets better than outsiders. It has grown faster than Uber in Southeast Asia, with operations in 30 cities.

Uber’s Southeast Asian operations have been overshadowed by China and India. While it has thrown in the towel in China and decided to be an investor in Didi Chuxing, Uber is still competing in India against home-grown app, Ola.

Southeast Asia, a region of 600 million people, is a tantalising market for Uber. However, it might not want to pour into Southeast Asia the billions in investments it made in China and India.

Instead, Uber is focusing on providing better services and technology to give a better experience for both its driver-partners and riders. In Malaysia, according to Foong, Uber will launch UberPool, a service which allows several customers to share the same ride.

“We see a lot of people requesting rides at the same time and moving in the same direction. The beauty of our system is that we can see a high overlap of people moving in one direction.

“Our technology offers a product we call UberPool. We started matching people moving in the same direction. That’s when the traffic starts improving, that’s where during peak hours we reduce the number of cars on the road,” says Foong, who had a stint withYTL Communications Sdn Bhd and Perella Weinberg Partners before joining Uber.

He remains tight-lipped when asked how much Uber has invested in Southeast Asia, particularly Malaysia. While its war chest is big — US$15 billion by some estimates — its experiences in China and India may have taught it a lesson or two.

Nevertheless, the message is clear. Uber is here to stay in Southeast Asia. It is expanding to more cities and introducing new services. But is it willing to burn billions of dollars in Southeast Asia as it did in China and India?

“If we have more resources we want to expand into more cities, and that is part of the plan for this year. In Malaysia, a lot of people want an alternative. They might love their cars and enjoy driving, but at the same time they want choices. Everyone likes choices,” says Foong. 

 

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