Southeast Asian ride-hailing firm Grab on Monday said it will invest $2 billion into Indonesia over five years using capital from Japan’s SoftBank Group Corp, marking its biggest commitment in the region’s most populous market.
The investment will go toward creating a next-generation transportation network and transforming how critical services, like healthcare, are delivered, Grab said in a statement.
The push is likely to intensify rivalry with Indonesia’s Go-Jek. The two tech startups compete in several Southeast Asia markets, but Indonesia is widely seen as holding most promise due to its youthful, internet-savvy population of 260 million.
Singapore-headquartered Grab and Go-Jek have evolved from ride-hailing app operators to becoming one-stop shops for services as varied as making payments and food delivery.
On Monday, Grab said it will invest with SoftBank to create a transport network for Indonesia based on electric vehicles and develop geo-mapping technology.
Grab will also set up a second headquarters in Indonesia, and launch within the next three months e-healthcare services to improve access to doctors and medical services.
“SoftBank will invest the $2 billion into the country through Grab, to drive the digitization of crucial services and infrastructure," Grab said. The Southeast Asian firm has raised nearly $3 billion so far from SoftBank and its Vision Fund.
The announcement came after a meeting at the presidential palace in Jakarta between Indonesia’s President Joko Widodo, SoftBank’s chief executive Masayoshi Son, Grab CEO Anthony Tan and Grab Indonesia President Ridzki Kramadibrata.
The group discussed Indonesia’s ambition of becoming Southeast Asia’s largest digital economy over the next few years by focusing on investment opportunities in the technology sector and developing home-grown technology talent, Grab said.
Son also said SoftBank would further invest in Indonesia’s biggest online marketplace Tokopedia, and explore areas including renewable energy and electric vehicles in Southeast Asia’s biggest economy.
“We will study the opportunities. We are interested in electronic vehicles, batteries and the charging systems," he told reporters.
Son’s Jakarta visit underscores the growing importance of the Indonesian market for the technology industry. The country’s internet economy is the region’s largest and fastest-growing at $27 billion last year and a forecast $100 billion by 2025, showed a report from Alphabet Inc’s Google and Singapore state investor Temasek Holdings (Pte) Ltd.
Earlier on Monday, Son said SoftBank was investing $2 billion in Grab. A SoftBank spokeswoman later clarified Son was referring to capital already invested in Grab, and that he expressed willingness to invest further in the firm.
In its statement, Grab said it has invested over $1 billion in Indonesia since 2017. The firm has been on a fundraising drive since buying last year the southeast Asian operations of U.S. ride-hailing peer Uber Technologies Inc.
“Competition in ride-hailing will become tougher," said economist Bhima Yudhistira at the Institute for Development of Economics and Finance. The size of the funding meant Grab could give discounts even if it risked losses in the short term, he said.