GoTo-Grab Rumor; Merger Shouldn't be Allowed, Economist Says

TEMPO.CO, Jakarta - Indonesia's ride-hailing giants PT GoTo Gojek Tokopedia Tbk. (GOTO) and Grab Holdings Ltd. (GRAB) are rumored to be exploring the possibility of merging. Nailul Huda, economist and director of digital economy at the Center of Economic and Law Studies (Celios), said that this should not be allowed to happen.

"With such a huge market share, more than 80 percent could be controlled by Gojek-Grab in Indonesia, and so a merger will just produce a single dominant player," Nailul told Tempo on Monday, February 12.

Gojek and Grab should not be allowed to merge, she said, because eventually consumers will be the ones who suffer losses. "They can become price setters, and the consumers will have no power over it," he said.

Nailul said that the current market in ride-hailing is under a duopoly dominated by Gojek and Grab. Other companies such as Maxim, Indriver and Uber can enter, but may not necessarily be able to compete.

"Gojek and Grab's main strength is their strategy of burning huge amounts of money, like by continuously giving promos and others," he said.

Nailul said the rumor reemerged again several years ago before Gojek merged with Tokopedia. In terms of cash flow, GoTo should have no problems as it just received an investment from TikTok. "However, it is also possible that they will merge to strengthen their market shares, especially in Southeast Asia," she said.

GoTo head of corporate communications Sinta Setyaningsih denied the rumor and said that so far there had been no discussions regarding a merger.

"We cannot respond to rumors circulating in the market. Currently there is no discussion regarding this matter," she told Tempo on Saturday, February 10.

Grab has not responded to Tempo's request for comments.

As of February 7, GoTo's market cap stood at Rp100.92 trillion. Meanwhile, Grab has a market capitalization of US$13.42 billion or around Rp209.50 trillion as of February 9. If the two companies merge, the combined market cap is estimated to reach Rp310.42 trillion.

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