Ride-Hailing Service Grab Teams Up With Indonesian Conglomerate Lippo Group

By Staff Writer

Mar 21, 2016 07:44 AM EDT

Singapore-based ride-hailing service Grab has secured a partnership with one of Indonesia's largest conglomerate the Lippo Group. The size and other financial details of the deal were not disclosed by both companies.

Grab's services include taxi rides, private car rides, motorcycle rides, as well as deliveries. Under the new deal, Grab will provide its service to transport and deliver products from Lippo's e-commerce company MatahariMall. According to TechCrunch, Lippo Group's investment into the e-commerce is the largest e-commerce investment in Indonesia so far valued at $500 million. The e-commerce is targeting sales of $1 billion within two or three years of its launch. 

Grab also told TechCrunch the value of the new strategic partnership with Lippo Group. "Lippo Group and Grab are both homegrown Southeast Asian companies. Technology can be a key driver of economic growth, and we are both invested in opening the digital economy to all Indonesians. For Grab, this means using technology to help commuters navigate traffic congestion, and give drivers' more sustainable livelihoods," said Grab co-founder and CEO Anthony Tan in a release.

Lippo Group director John Riady also underlined the partnership's value for both company. He said in a statement, "Our combined knowledge of the Indonesian market will help us build the most effective online-to-offline experience - to ensure that online shoppers anywhere in Indonesia can receive or collect their purchases easily."

The partnership will help establish Grab's profile in Indonesia, where ride-hailing services are currently facing challenges. The country is trying to regulate ride-hailing services as the drivers are facing criticism and sometimes anarchism from traditional taxi drivers. The Wall Street Journal reported that last week 2,000 taxi, bus, and public-minivan drivers took the streets against Grab and Uber. For now, Grab and other ride-hailing apps are temporarily banned in Indonesia until their legal status is decided. 

In addition to those challenges, the ride-hailing app markets in Indonesia is now heating up with competition with Uber and local startup GoJek, among others. According to reports cited by Bloomberg, Grab's private car-hailing service grew 30 percent in Indonesia February. In a statement, the company claims to hold 50 percent of the country's motorcycle taxi market in March.

The partnership deal between Singapore-based ride service app Grab and Indonesian conglomerate Lippo Group is considered strategic to help establish Grab's status in Indonesia. For now, the country is a challenging market for ride-hailing services as their legal status are still being formed. Under the new partnership deal, Grab will provide its service to deliver products from Lippo Group's e-commerce MatahariMall. 

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