Special Report:Making Malaysia Better:New realities for difficult times


  • Grab: Changing the way we travel

  • TheLorry: A cheaper, more reliable ride for your items
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This article first appeared in Special Report, The Edge Malaysia Weekly, on August 29 - September 4, 2016.

 

SINCE our independence from the British in 1957, the Malaysian economy has grown by leaps and bounds. It has also survived many downturns and crises. 

But as we prepare to celebrate Malaysia’s 59th year of independence, the country is at a crossroads of sorts — trying to become a high-income nation amid the strong headwinds. These are coming from an unfavourable global environment, leadership issues and ineffective policies. These forces have had a significant impact on our economic well-being and contribute towards a bleak outlook.

Most Malaysians are feeling the pinch, even those earning a decent salary, and as a result are scaling back on spending and looking for ways to generate a side income. As difficult as the times may be, this could be the silver lining that the country needs to pull through and prosper. 

The concept of bootstrapping, or lifting oneself up the economic ladder through elbow grease and ingenuity, is one way of ignoring all the externalities and focusing on doing what it takes to make for better lives. Meanwhile, bootstrapped businesses — which entrepreneurs start with little capital, either from personal finances or operating revenue — can provide the fuel to kick-start a moribund economy. But only if there are sufficient numbers and if they are driven by a vision of building a great business on the values of inclusion, diversity and merit — the critical pillars for long- term sustainability. 

The following pages are stories of companies and the people who are contributing to Malaysia’s economy in many ways. Some are bootstrapped businesses that are just starting out but show great promise, one is a multinational corporation that has been in Malaysia for more than 50 years and others are local companies that have successfully expanded their operations outside the country. 

We hope that the confidence shown by foreign companies in Malaysia and the guts and innovation of homegrown start-ups speak of the country’s great potential. After all, the nation already has success stories — AirAsia Bhd, JobStreet.com, Top Glove Corp Bhd — to name a few. And if we look closely, there are industries that benefit society at large.

This means there is a good chance of fuelling the country’s economic engine as it faces its own set of challenges. So, let’s start allowing our hopes, not our difficulties, to shape our future. 

Innovative technology-enabled services are rapidly changing the global transport service marketplace. Ride-hailing services, offered by companies such as Uber and Lyft, are the biggest entrant into this industry. 

On the home front, Grab and TheLorry have been steadily building their brands and market share. Their potential is undeniable and a number of foreign investors have pumped money into these start-ups. 

Although their popularity among customers is fuelling their rapid growth, the companies are driven to achieve broader goals, such as providing the last-mile service that complements public transit (Grab) and lowering the cost of transporting cargo (TheLorry). 

The services offered by Grab and TheLorry are aimed at addressing the biggest challenges faced by transport providers and their customers. These start-ups have managed to improve service levels and heighten the efficiency and effectiveness of this industry.

As the companies disrupt the industry, they see their role as complementary players, even value creators. After all, their services have created jobs, grown income, reduced costs and mitigated business risk in a span of just a few years. We look at their contributions to Malaysia and Malaysians. 

 

Building a more efficient transport sector 

GRAB
Changing the way we travel

Commuting should be safe and accessible to everyone. That is the goal that drives Grab, says Jaygan Fu, country manager for Grab Malaysia, one of the best known start-up success stories in Southeast Asia. 

Initially known as MyTeksi, Grab was launched in 2012. Then, the company only had one product — a taxi-booking service aimed at addressing the biggest pain points faced by taxi drivers and passengers. 

According to Fu, the design of the app was based on the results of an in-depth study on the taxi industry in Malaysia. Grab found that drivers were not earning much even though they spent hours on the road and passengers complained of having to bargain once they hailed a taxi. 

“We wanted to understand why taxi drivers were behaving in a particular way and found that they were not earning enough. And while income was low, their expenses were high as they had to maintain their vehicles,” he says. 

“We also found that there was often a mismatch between demand and supply. For example, many taxi drivers would drive around the Kuala Lumpur city centre and compete with each other for a handful of customers.

“Being a taxi driver is not a chosen career. Drivers are there because of circumstances and most of them hate their jobs. On the other hand, passengers, especially women, felt that they could not go around [in a taxi] safely. These challenges presented a tremendous opportunity and we had to do something about it.”

The taxi-booking app, now known as GrabTaxi, allows users to request a ride using their smartphones, track the progress of their drivers in real time, pay and rate the ride online. Meanwhile, drivers using this app get to see exactly where the passengers are located. By enabling supply to find demand, a taxi’s utilisation rate and the driver’s earnings per hour increased. 

“We wanted to improve the lives of our partners — the taxi drivers — and we found that with our app, less time is spent roaming around looking for passengers. Thus, they are spending less on fuel. This leads to a win-win situation as fares can be cheaper for our passengers,” says Fu. 

A study conducted last year found that taxi drivers using GrabTaxi earned about RM200 a day for eight hours of work. Before this service, they were earning about RM100 a day for 15 hours of work, says Fu. 

“Our fares are about 30% less than traditional fares. But we are driven to make transport truly accessible to everyone. 

“With that in mind, we recently launched a new feature — GrabHitch. It allows passengers going in the same direction to carpool and offset the cost of the ride.” 

Besides Grab Hitch and GrabTaxi, the company’s services include private cars (GrabCar) and motorcycles (GrabBike) as well as an on-demand courier service (GrabExpress). GrabBike and GrabExpress are currently not available in Malaysia. 

Homegrown Grab is also credited with creating an extra source of income for those who want to provide rides in their spare time. In fact, most of the drivers on the GrabCar platform are part-timers who use their own cars to provide this service.

“We see a trend of more women drivers using GrabCar. They are typically single mums who are free when their children are at school. GrabCar gives them an opportunity to earn an income as well as the flexibility to work when they wish,” says Fu. 

Looking at the big picture, the role played by ride-sharing companies such as Grab and Uber goes further than just increasing income and creating jobs. It addresses a more fundamental problem — the need to move around. According to Grab, Southeast Asia has a population of more than 620 million, which is more than the European Union and North America. The middle class population in this region is set to surpass 400 million in the next 10 years.

“Malaysia has the third highest car ownership globally. About 93% of households own at least a car and 54% of households have more than one car. This means there is a sizeable supply of road-worthy vehicles to meet the growing need for transport. Furthermore, the proliferation of ride-sharing services should translate into fewer cars on the road and, in turn, a reduction in traffic congestion and pollution,” says Fu. 

Billions in funding have been poured into the global ride-sharing industry and it is intensely competitive. Grab has moved quickly to have a head start on its biggest rival, global ride-hailing giant Uber. To date, Grab has signed with 350,000 drivers across 28 cities in six countries — the Philippines, Vietnam, Thailand, Malaysia, Singapore and Indonesia. 

Grab has also built a competitive advantage with its focus on hyperlocality and understanding and harnessing the power of local communities, networks and safety. “We will not enter a city if we do not understand its transport industry. We must understand the local situation and our service must add value,” says Fu. 

“There isn’t a cookie cutter approach to rolling out our apps. For example, we decided to offer GrabBikes in Jakarta when we found that the traffic congestion there meant it is easier for passengers to get around on a motorcycle.” 

Grab’s focus on safety means the company interviews every driver who uses its app. It also constantly innovates with new features such as built-in cameras and a safety button that connects the driver to the nearest police station. Drivers are also trained by the Red Cross to perform basic medical procedures. 

“We want our safety standards to be world class. So, we are always looking for ideas on how to improve the safety of our drivers and passengers,” says Fu. 

“I use Grab almost every day and question the drivers all the time. They don’t know that I work for Grab although they may wonder how I know so much about its app and service. All Grab employees use Grab vehicles and we constantly improve our app based on the feedback we receive.” 

Building a profitable and sustainable start-up is not easy and success does not follow a standard recipe. Grab’s lead in the region indicates that it knows a thing or two about what it takes to grow. 

“It was very challenging when we started. At the time, taxi drivers were not using smartphones and they were very sceptical about leveraging technology to improve their business,” says Fu. 

“We found that they would only talk to us over food, so all our conversations were held at mamak stalls. But we managed to overcome this challenge, although it can be hard to sign on new drivers.”

He attributes the rapid growth of Grab to its team of youthful employees. The company has a headcount of 200 employees in Malaysia, with an average age of 27. 

“Millennials work hard if they have a purpose that goes beyond money. They resonate with Grab’s objective of making transport accessible and safe. The management empowers them and we don’t penalise them for mistakes. This way seems to work as we find that they are willing to put in the time and effort to do more and to do better,” says Fu.

 

THELORRY
A cheaper, more reliable ride for your items 

Leveraging technology to create a new service that connects lorry owners and/or drivers with people that need to move cargo is the premise of The Lorry Online Sdn Bhd (TheLorry). 

Founders Nadhir Ashafiq and Goh Chee Hau, 28, say their company operates much like Grab or Uber except that they are moving items instead of people. The partners met while working at an air freight company and started TheLorry in September 2014. 

From just the two of them, the company now has 45 employees. It has completed several rounds of funding, with the latest capital injection from Singapore’s SPH Media Fund and Silicon Valley’s Elixir Capital 

“We did not have any experience or contacts in the lori sewa business when we started. I suppose it was a calculated risk being an outsider offering a technology and data-driven service in this low-tech industry,” says Nadhir. 

“But we saw a tremendous opportunity in addressing the weaknesses in the traditional lori sewa process, where marketing was done by hanging posters on pillars and trees or by word of mouth. We could also fix the problem faced by customers, who say they often end up paying more for the lorry than had been initially agreed upon.”

Goh says, “We just wanted to do it. The Malaysian start-up success stories, such as those of JobStreet.com, AirAsia and Grab, inspired us. When Nadhir invited me out for lunch to discuss this business idea, I wasn’t even thinking about being an entrepreneur. I was just focused on the possibilities of this service.” 

“We could see that putting the entire process — from requesting a lorry to describing the items to be moved and making payment — online would be beneficial to both parties. The question was whether lorry owners could see the potential and learn to use our app and service,” says Nadhir. 

“It was so difficult in the beginning. We went online to find lorry drivers and also made cold calls. We would talk to 50 lorry owners and only two would agree to use our app. There have been so many occasions where we would wait for hours for lorry owners who just didn’t bother to show up.” 

However, it was a different story with customers. Business picked up so quickly in the first three months of operations that Goh left his job to join Nadhir full-time at TheLorry. 

“Customers use our website to request for a lorry and we provide a quotation in under 30 seconds. They can also request for additional services such as boxes or manpower,” says Goh. 

“Our system sends out this request to lorry drivers via an app on their smartphone. Drivers can use the app to accept jobs. Essentially, what we are doing is matching demand with supply.”

The prices quoted on TheLorry’s website is fixed unless there is a change in the scope of work. “TheLorry is the first online platform for booking a lorry. Customers have found it easy to use, transparent and convenient,” says Goh, adding that the company will soon launch an app for customers with the same features as their website. 

Nadhir and Goh are proud that their service has managed to grow the income of their “partners” — the lorry drivers. “One of the lorry owners who started using our app at end-2014 has already expanded his fleet from one lorry to four lorries and a van. He makes a five-figure monthly income through the business he accepts on our app,” says Goh. 

TheLorry is more than a matching service between customers and lorry owners. It is also looking at ways of making cargo transport more accessible. 

A project that is being tested is delivery services for bulky items bought on Mudah.my, an online marketplace for customers to buy and sell a wide variety of products. TheLorry charges a delivery fee per item that is much lower than the cost of hiring an entire lorry. 

“I think we are the first online lorry hiring service in the world to provide delivery services for an online marketplace. While the items bought are not delivered immediately, we aim to deliver within 48 hours. The cost of transporting just one item is much lower than booking an entire lorry,” says Nadhir. 

The app for customers that will be rolled out soon includes a feature that allows customers to book half a lorry instead of the whole vehicle. This will make it cheaper for customers to transport items.

The data compiled from transactions completed on TheLorry’s server is being put to use to improve this industry. “We are able to identify areas with a mismatch in demand and supply. For example, a request for a lorry within the Klang Valley is usually matched with a lorry owner within 30 seconds. In contrast, we had a request for a lorry in Kuantan that took a few hours before a lorry owner finally accepted the job. So, we think there could be a shortage of lorries in Kuantan and are looking at ways to increase supply there,” says Gan. 

The company has also implemented a rating element where customers can rate the service provided by the lorry driver. Nadhir says the system encourages lorry owners or drivers to maintain a certain standard, as those with low ratings are not allowed to accept new requests for lorries. 

Much like other start-ups that are disrupting industries, TheLorry is constantly innovating and improving on its services. In July, they launched a service that allows customers to hire a 4x4 pick-up truck. The vehicle can be used to transport a number of small items or even a bulky one, and it is more affordable than a lorry. 

“Those who sign up with us are typically owners of 4x4 pick-up trucks who want to earn a side income. This is a radically different group from lorry owners who earn a living with their vehicles. We did not expect so much interest and our employees are not able to meet with all the 4x4 pick-up truck owners who are keen to participate,” says Nadhir. 

The duo have been studying the market and are well aware of the possibility of foreign entrants into the country. Being Malaysia, however, gives them a competitive advantage as they understand the local culture and speak local dialects. 

“We know that foreign players can come in and compete in this space. But we are already immersed in this industry and have established relationships and contacts. We also have plans to expand beyond Malaysia and have started exploring the Singapore market,” says Nadhir. 

“Hopefully, TheLorry will soon become a competitive regional player in the Asean Economic Community. Our vision is that with a few clicks of a button, a customer will be able to hire a vehicle to transport an item from Singapore to Thailand seamlessly and quickly.”