Grab Case.pdf

SMU-16-0012

GRAB: DISCOVERING NEW FRONTIERS FOR GROWTH IN THE SOUTHEAST ASIAN SHARING ECONOMY It was May 2016 and Anthony Tan, the CEO of Grab (formerly GrabTaxi), an on-demand transportation-app company headquartered in Singapore, was locked in a high stakes struggle to win the hearts and minds of drivers, passengers and regulators alike in Southeast Asia. The company’s raison d'être was to create positive social impact through a sustainable business model that solved transportation problems across the region. In essence, doing good well. Launched in 2012, Grab began in Malaysia as a third-party e-hailing taxi dispatching mobile application (hence, the original name GrabTaxi). The company had been expanding at a remarkable speed. By 2015, the app had been downloaded more than 4.4 million times, averaging seven bookings per second. 1 A year later the app had over 13 million downloads, serving 30 cities across six countries.2 The app’s functionality too had expanded to include an array of locally suited transportation booking options beyond just taxi services, such as car-pooling, ridesharing, private vehicle hire and more. Valued at about US$1.5 billion, Grab was one of Asia’s most successful start-ups. 3 The company’s business model was aligned with its social mission to improve the safety and accessibility of transportation, along with improving the lives of its passengers and drivers. 4 End-users benefited through improved transportation options, where safety, certainty and speed were guiding principles of the company. However, long-term success was far from guaranteed. Technological and social change was always afoot. The sharing economy, of which Grab was a part, was hyper-local, social and mobile – and above all – extremely competitive. Uber, its main rival, was already present in 60 countries – and according to a 2015 TechInAsia publication, held a technological edge over Grab while also being backed by high profile investors like Google and Baidu.5 Nonetheless, Grab too was well funded and eager to close any technological gaps, or potential gaps, by attracting worldclass engineering talent. In January 2016, Grab announced that it would be opening a fully functional engineering office in Seattle – a global tech mecca in its own right – to strengthen its technological capabilities. 6 Moreover, the company’s local roots could prove to be a competitive advantage in navigating Southeast Asia’s many complicated and highly fragmented markets, which posed significant regulatory uncertainty in the on-demand transportation industry. Grab, “GrabCar invests 4 million USD to ensure safer rides for its car-booking service,” 25 May 2015, About GrabTaxi section, https://www.grab.com/ph/grabcar-invests-4-million-usd-to-ensure-safer-rides-for-its-car-booking-service/, accessed April 2016. 2 Elaine Huang, Is Grab still a start -up? Group VP marketing Cheryl Goh shares more, “ Deal Street Asia”, 12 April 2016, http://www.dealstreetasia.com/stories/is-grab-still-a-startup-group-vp-marketing-cheryl-goh-shares-more-36760/, accessed April 2016. 3 Yoolim Lee and Chua Kong Ho, Four-Year-Old Uber Rival GrabT axi Expects to Break Even in 2016, “ Bloomberg Technology”, 28 January 2016, http://www.bloomberg.com/news/articles/2016-01-28/four-year-old-uber-rival-grabtaxi-expects-to-break-even-in2016, accessed April 2016. 4 Grab, About Grab, company website, https://www.grab.com/sg/about/, accessed April 2016. 5 Nadine Freischlad, “Uber vs. GrabCar: who’s speeding ahead in Southeast Asia?” Tech In Asia, 17 October 2015, Accessed April 2016. 6 T he T imes of India, Uber rival GrabT axi to open tech centre in Seattle, “Reuters”, 14 January 2016, http://timesofindia.indiatimes.com/tech/tech-news/Uber-rival-GrabTaxi-to-open-tech-centre-in-Seattle/articleshow/50577812.cms, accessed April 2016. 1

This case was written by Professor Mei Lin and Christopher Dula at the Singapore Management University. The case was prepared to provide material for class discussion and use in student case competitions. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. Copyright © 2016, Singapore Management University

Version: 2016-04-27

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Grab: Discovering New Frontiers for Growth in the Southeast Asian Sharing Economy

At the same time, inclusive business models driven by mobile technology and network penetration represented new frontiers and opportunities at the bottom-of-the-pyramid. There was a large potential market for offering affordable services that could improve the lives of aspirational consumers in the emerging markets, including those of Southeast Asia. To seize this opportunity, Grab had to develop and leverage its technology to establish a competitive advantage, while also mitigating risk – an approach that would require innovative ideas and novel initiatives. Success would lie in providing a feasible solution that was measurable, scalable and synergetic within existing and new partnerships, business functions and competencies. In this environment, customer-stickiness mattered. To succeed, Grab would have to be perceived as an indispensable part of the broader ecosystem in which it operated.

The sharing economy The sharing economy, sometimes referred to as ‘collaborative consumption’, was defined as “the peer-to-peer-based activity of obtaining, giving, or sharing access to goods and services, coordinated through community-based online services” 7 , typically through a smartphone mobile application. In this manner, individuals could gift, barter or rent excess or unused capacity of their goods and services to other individuals or groups (refer to Exhibit 1 for a profile of the sharing economy). Basically, all firms operating in the sharing economy worked by efficiently matching individual providers of goods and services with consumers who would otherwise be strangers. Although the term ‘sharing-economy’ had been around since the early 2000s – it was not until the aftermath of the Great Recession in 2007-08 that the term gained widespread popularity. In 2011, Time Magazine declared it one of ten ideas that would change the world. 8 This was not an overstatement. In 2013, PwC estimated the sharing economy to be worth around US$15 billion, and projected that it would increase to US$335 billion by 2025. It encompassed five key sectors: peer-to-peer lending and crowdfunding, online staffing, peer-to-peer accommodation, car sharing, and music and video streaming (refer to Exhibit 2 for growth projections of the sharing economy, and by sector).9 However, this was not to suggest that only five sectors constituted the sharing economy; its true scope and potential were undefined. Companies like Airbnb and Uber – amongst the most globally recognised operators in this space – connected people and organisations willing to rent their assets or provide temporary services to consumers, such as lodging and transportation. Revenues for these kinds of companies were typically generated through a percentage fee of sorts. It was important to note that the actual provider of the good or service being consumed was not an employee of the company. For this reason, Airbnb was not a hotel operator and Uber was not a taxi company. They were instead facilitators of collaborative consumption, alternative services operating in traditional industries.

7

Juho Humari, Mimmi Sjoklint and Antti Ukkonen, The Sharing Economy: Why People Participate in Collaborative Consumption, “ Journal of the Association for Information Science and Technology”, July 2015, https://www.researchgate.net/publication/255698095_The_Sharing_Economy_Why_People_Participate_in_Collaborative_Consum ption, accessed March 2016. 8 Bryan Walsh, 10 ideas that will change the world, “ Time Magazine”, 17 March 2011, http://content.time.com/time/specials/packages/article/0,28804,2059521_2059717_2059710,00.html, accessed March 2016. 9 PwC, “T he Sharing Economy – Sizing the Revenue Opportunity”, http://www.pwc.co.uk/issues/megatrends/collisions/sharingeconomy/the-sharing-economy-sizing-the-revenue-opportunity.html, accessed March 2016.

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These were just a couple of well-known examples. The reality was that this model could include emerging and hitherto unknown constructs of value (refer to Exhibit 3 for new concepts of value in the sharing economy). However, because ‘sharing’ was facilitated through a company intermediary that automatically conducted the matching (rather than an open market like eBay or craigslist where buyers hunted down and bid on services and wares), the term ‘access economy’ was perhaps more appropriate.10 One thing was certain: the sharing economy was more than a trend; it was a new way of doing business that could transform the economy and the nature of employment. According to Tx Zhou, a managing partner at Karlin Ventures, an early stage venture capital fund, Employment will become increasingly uncoupled as more opportunities for flexible part -time work become available… In the immediate future, we’ll see increased marketplace efficiency and consolidation. Just as multichannel networks were built on top of YouTube, new tools and services will spring up to support the sharing economy… The sharing economy’s next layer will be a hub-and-spoke model of services. This model will only be possible once these marketplaces have APIs [application program interface 11 ] to integrate with each other.12

Disruption is a function Establishing trust – or at least the perception of trust – was essential for the sharing economy model to work. Indeed, this went back to the very nature of the firm and its existence. Firms existed in order to reduce transaction costs in a trust-less environment, essentially as an intermediary. Companies in the sharing economy also coordinated economic transactions, albeit differently. In the sharing economy, companies aimed to solve the supply and demand problem by building a platform that efficiently matched under-utilised, yet distributed, capacity to demand. Successful platforms also included mechanisms to ensure payment and delivery of services along with verification of identity and reputation ranking in order to better establish trust between unknown parties. All of this was accomplished by harnessing the underlying technologies behind the Internet, information processing, smartphones and high-speed mobile connectivity, as well as data analysis and social media. These companies thus made it possible for anyone with a smartphone to become an ad-hoc taxi driver, bed-and-breakfast owner, or equipment rental agency whenever they had spare time, unproductive resources and inclination.13 The efficiency of such a digital platform also made operating costs for both ‘sharers’ and facilitators incredibly low and highly scalable. This had the potential to be catastrophically disruptive to incumbent, more traditional business models that had to manage real estate, inventory and other assets. However, consumer switching costs and brand loyalty tended to be lower for companies peddling on-demand access. All it took for a consumer or producer to change platforms/providers was an instantaneous app download from one’s phone. Convenience and reliability were some of the Giana M. Eckhardt and Fleura Bardhi, The Sharing Economy isn’t about sharing at all, “ Harvard Business Review”, 28 January 2015, https://hbr.org/2015/01/the-sharing-economy-isnt-about-sharing-at-all, accessed March 2016. 11 API (application program interface) was a set of routines, protocols, and tools for building software applications that specified how software components should interact, and was used when programming graphical user interface (GUI) components, http://www.webopedia.com/TERM/A/API.html, accessed March 2016. 12 T X Zhuo, “ Airbnb and Uber Are Just the Beginning. What's Next for the Sharing Economy”, http://www.entrepreneur.com/article/244192, accessed March 2016. 13 T he Rise of the Sharing Economy, “The Economist”, 9 March 2013, http://www.economist.com/news/leaders/21573104internet-everything-hire-rise-sharing-economy, accessed March 2016. 10

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main drivers of demand. Moreover, margins were razor thin – hence the hyper-competitive nature of the ‘access’ economy. Network effects and volume were thus critical to success. These characteristics presented both concerns and opportunities for players in this space; for instance, transportation network companies, like Uber and Grab, competed against each other as well as against other ride-sharing apps out there. Many taxi companies too offered their own booking applications. Both passengers and drivers could easily use multiple apps at once and switch between them at their choosing – it was a free market after all.

The genesis of Grab Tan, along with co-founder Tan Hooi Ling (no relation), established MyTeksi in Kuala Lumpur, the capital city of Malaysia, in 2011 (outside of Malaysia the service would be branded as GrabTaxi). The two had met at Harvard Business School (HBS), when they were studying for their Masters of Business Administration (MBA) degree. The idea of what ultimately became Grab had earned them the runners-up position at HBS’ 2011 Business Plan Contest, as well as finalists in HBS’ Minimum Viable Product Funding award. 14 At that time in Malaysia’s taxi industry, there were serious issues surrounding safety, noncompliance with rates, intimidation tactics and poor service. In a 2015 TechInAsia talk, Tan said, We started GrabTaxi because the taxi system in Malaysia was a mess. Drivers weren’t making enough money and hated their jobs. Women couldn’t go around safely. We needed to do something about it.15

Hooi Ling Tan added, We had no intention of launching our own business when we were in school. Both of us had commitments: Him [Tan] to his family business, myself to McKinsey [which had sponsored her studies at HBS]… Because we realised the power of the idea and the ability to potentially make it happen, we decided to re-craft our lives post-school around it.16

Grab’s beginnings were quite modest. Tan’s early days were spent going door-to-door asking the biggest taxi fleet companies to try his product. Commenting on these sales calls, Tan said, The first one would say no, and tell me to go back to the family business, as it is much easier. ‘Don’t sell this stupid app. Nobody will use it. Taxi drivers will steal your phone – they’re terrible people.’17

It was the fifth taxi company that Tan approached – which operated a small fleet of 30 taxis – that first gave him an opportunity to try out the app. 18

Colin T ung, “Call me a plumber, not COO: GrabT axi Co-founder Hooi Ling Tan”, 7 December 2015, https://e27.co/callplumber-not-coo-grabtaxi-co-founder-hooi-ling-tan-20151207/, accessed April 2016. 15 Nadine Freischlad, T hree years, $340M funding, millions of users: GrabT axi’s Anthony T an reflects on the journey, “Tech In Asia”, 8 May 2015, https://www.techinasia.com/3-years-4-funding-rounds-grabtaxis-anthony-tan-reflects-journey, accessed March 2016. 16 Colin T ung, “Call me a plumber, not COO: GrabT axi Co-founder Hooi Ling Tan”, 7 December 2015, https://e27.co/callplumber-not-coo-grabtaxi-co-founder-hooi-ling-tan-20151207/, accessed April 2016. 17 T erence Lee, GrabT axi is one of Southeast Asia’s hottest startups. Here’s how it’s kicking ass, “Tech In Asia”, 21 October 2014, https://www.techinasia.com/grabtaxi-southeast-asias-hottest-startups-kicking-ass, accessed April 2016. 18 Ibid. 14

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On June 5, 2012, the company launched its on-demand taxi hailing smartphone application in Kuala Lumpur. In August 2013, Grab expanded into Manila. 19 In May 2014, Grab launched ‘GrabCar’ in Malaysia and Singapore, which was a real-time ‘ridesharing’ service for private vehicle owners and passengers. 20 Tan explained, What has ensured MyTeksi’s success regionally has been the ability to adapt and evolve to meet our [users’] needs - that’s why we are introducing GrabCar. We see an opportunity to fill a gap in the industry without taking away business from our core user base of taxis. GrabCar will give our passengers that upmarket, personalised experience, while at the same time, ensuring safe and reliable rides… GrabCar is essentially a complementary service provided by MyTeksi. We found that there are times throughout the day when it is almost impossible for our customers to get taxis. Unfortunately, in this region, there is a ceiling on the number of taxi permits issued. GrabCar provides more cars on the road when people really need them, especially during peak hours. The inclusion of GrabCar as part of the MyTeksi service offers our customers access to a wider network of taxis, as well as limousine fleets.21

Similar to GrabCar, ‘GrabBike’ was launched in November 2014 in cities such as Ho Chi Minh and Jakarta, where motorbikes and scooters were the predominant form of transportation. In these locations, drivers wore Grab’s signature green branded helmets, while also having one on hand for passengers.22 In a little less than four years, GrabTaxi scaled up and expanded into 30 cities across six countries in Southeast Asia. 23 This was a challenging, yet potentially lucrative, region to do business in. By 2015, more than 630 million people resided in Southeast Asia, which was loosely integrated into a regional trade bloc: the Association of Southeast Asian Nations (ASEAN). 24 Collectively, ASEAN was the seventh largest economy in the world at US$2.5 trillion, growing at an average of 5% per annum. 25 In addition, the region had an aspiring middle-class, rising levels of affluence, increased urbanisation, and a healthy and fast growing mobile apps sector (refer to Exhibit 4 for regional megatrends and key indicators). But achieving scale in ASEAN was more challenging than in many other markets around the world. The region was highly fragmented, home to disparate styles of government and economic systems as well as incredibly diverse populations, both geographically and demographically. The app had to reflect this. Cheryl Goh, group vice president for marketing, explained some of the challenges the Singapore-based company faced while expanding its network across the region, Our challenges are related to the diversity of the Southeast Asian market. These include language issues, lack of infrastructure and cultural differences… In Indonesia alone, there are hundreds of languages and dialects. The way the company recruits drivers and attracts Nadine Freischlad, T hree years, $340M funding, millions of users: GrabT axi’s Anthony T an reflects on the journey, “Tech In Asia”, 8 May 2015, https://www.techinasia.com/3-years-4-funding-rounds-grabtaxis-anthony-tan-reflects-journey, accessed March 2016. 20 Jon Russell, Uber rival GrabT axi launches a limo service for Southeast Asia, starting in Malaysia, “TNW”, http://thenextweb.com/asia/2014/05/16/uber-rival-grabtaxi-launches-limo-service-southeast-asia-initially-malaysia/#gref, accessed April 2016. 21 Jacky, “GrabT axi launches new limo service GrabCar, wants to be the Uber of Asia”, 19 May 2014, https://sg.news.yahoo.com/grabtaxi-launches-limo-grabcar-wants-023053523.html, accessed April 2016. 22 Daniel T ay, GrabTaxi’s motorcycle service rides into its third city, offers free rides in Jakarta, “Tech In Asia”, 20 May 2015, https://www.techinasia.com/grabtaxi-grabbike-motorcycle-service-jakarta, accessed April 2016. 23 Grab, “About Grab”, https://www.grab.com/sg/about/, accessed April 2016. 24 CIMB. ASEAN Insight, ASEAN’s Bright Future, “The Economist”, http://aseaninsight.economist.com/2015/07/20/aseansbright-future/, accessed March 2016. 25 Ibid. 19

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passengers also differs in each of the company’s six markets because of the unique cultures, which has made region-wide marketing campaigns a rarity. The solution has been to use local marketing teams to build deep connections with communiti es.26

By the end of 2015, Grab had raised US$680 million in disclosed funding from ten investors; 27 and its estimated value was thought to be US$1.5 billion.28 In early 2016, the tech unicorn was rebranded as ‘Grab’, hosting any even wider array of service offerings. By then, the app had been downloaded more than 13 million times, and there were over 250,000 drivers in the Grab network.29

A social enterprise Improving the safety and accessibility of transportation, along with improving the lives of its passengers and drivers, was core to Grab’s mission. 30 The company aimed to make travelling easier and safer for passengers and sought to increase the incomes of taxi drivers.31 For example, the Grab app helped connect taxi drivers with passengers more easily, quickly and efficiently than if drivers simply searched for fares or responded to company dispatches - thus increasing earnings. According to Tan, empirical evidence at Grab suggested that taxi drivers who actively used the Grab app could see their incomes increase anywhere between 30% and 300%.32 Grab was engaged in numerous initiatives designed to create a positive social impact. In 2015, the company launched GrabSchool, a programme that aimed to develop life skills and foster a spirit of entrepreneurship among the children of Grab’s drivers. 33 By September 2015, this initiative had been rolled-out in Malaysia, the Philippines and Singapore, and was expected to be launched in Indonesia, Thailand and Vietnam by end-2015.34 In March 2016, Grab announced that it would provide a first-of-its-kind free personal accident insurance that would cover all GrabCar and GrabBike passengers in the region, from the first dollar.35 It also implemented several local initiatives across the region, and reported, In Malaysia, Grab is installing CCTV cameras in the cars of 100 women drivers to ensure on-the-job safety, especially in the event of disputes. In the Philippines, Indonesia and Thailand, Grab operates mandatory safety riding courses for all GrabBike rider s. Siddharth Philip, GrabTaxi Says It Faces Challenges Expanding in Asia, “Bloomberg”, 19 August 2016, http://www.bloomberg.com/news/articles/2015-08-19/grabtaxi-raises-over-350-million-from-china-investment-didi, accessed April 2016. 27 CrunchBase, Grab (formerly GrabTaxi) overview, https://www.crunchbase.com/organization/grabtaxi#/entity accessed March 2016. 28 Newley Purnell and Rick Carew, Singapore’s GrabTaxi Rides High With Over $200 Million Investment, “The Wall Street Journal”, 1 July 2015, http://www.wsj.com/articles/singapores-grabtaxi-raises-over-200-million-1435729147, accessed March 2016. 29 Elaine Huang, Is Grab still a start -up? Group VP marketing Cheryl Goh shares more, “ Deal Street Asia”, 12 April 2016, http://www.dealstreetasia.com/stories/is-grab-still-a-startup-group-vp-marketing-cheryl-goh-shares-more-36760/, accessed April 2016. 30 Judith Balea, Grab gifts governments data to make traffic jams less awful, “ Tech In Asia”, April 5, 2016, https://www.techinasia.com/grab-big-data-traffic, accessed April 2016. 31 Kaylene Hong, GrabTaxi is growing a taxi-booking service in Southeast Asia using a unique model, “ Thenextweb”, 2016, http://thenextweb.com/asia/2014/04/08/grabtaxi-is-growing-a-taxi-booking-service-in-southeast-asia-using-a-unique-model/#gref, accessed April 2016. 32 Ibid. 33 Grab, “ GrabT axi launches GrabSchool to teach drivers’ children entrepreneurship and life skills”, December 1, 2015, https://www.grab.com/th/en/2015/12/01/english-grabtaxi-launches-grabschool-to-teach-drivers-children-entrepreneurship-and-lifeskills/, accessed April 2016. 34 Ibid. 35 Grab, “ Grab Provides Free Personal Accident Insurance for Passengers and Drivers”, March 15, 2016, https://www.grab.com/th/en/2016/03/15/english-grab-provides-free-personal-accident-insurance-for-passengers-and-drivers/, accessed April 2016. 26

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Furthermore, all GrabBike riders are 100 percent licensed and equipped with helmets and protective jackets. Such local initiatives complement Grab’s existing regional initiatives such as ensuring stringent criminal and background screenings and safety t raining for drivers, vehicle inspections and in-app safety features such as ‘Share My Ride’.36

At a higher level, Grab also collaborated and worked closely with governments on macro-issues within their various jurisdictions to improve transportation related issues, such as congestion, which many Southeast Asian cities were notorious for. 37 In early 2015, Grab announced a data sharing partnership with The World Bank’s ‘Open-Traffic’ project to provide real-time data streaming that reported service volume, location tracking and historic journey times. This had promising potential to help governments, who could plug into the platform in order to better model traffic, examine historical data, understand congestion patterns and plan infrastructure accordingly, as well as improve emergency response and disaster preparedness.38 In a public statement, Tan said, …this partnership will drive GrabTaxi closer towards our social mission to significantly improve the lives of our drivers and passengers – and ultimately change the way 620 million people move in Southeast Asia. Together with the World Bank and local governments, we look forward to improving road safety and traffic congestion in the cities we operate. 39

On April 5, 2015, The Grab-World Bank-Department of Transportation and Communications OpenTraffic Philippines pilot was launched in Manila. 40

Strategic partnerships The Japanese telecom company, SoftBank, was Grab’s largest investor with US$250 million in venture funding. SoftBank also had stakes in other transport network companies, such as Lyft in the United States, Didi Kuadi in China and Ola in India – all of which (including Grab) counted Uber as their key competitor in their respective markets. 41 Together these companies formed a strategic partnership to rival Uber’s global footprint, while remaining independent companies focused on their own regions. 42 For example, while each company would handle mapping, routing and payments through a secure API in their own markets, customers would be able to access the entire partnership network using their local app, providing a seamless, more global experience beginning in the first quarter of 2016.43 Bhavish Aggarwal, the co-founder and CEO of Ola, commented,

36

Ibid. Judith Balea, Grab gifts governments data to make traffic jams less awful, “ Tech In Asia”, April 5, 2016, https://www.techinasia.com/grab-big-data-traffic, accessed April 2016. 38 T he World Bank, How an Open Traffic Platform is Helping Asian Cities Mitigate Congestion, Pollution, October 19, 2015, http://www.worldbank.org/en/news/feature/2015/10/19/how-an-open-traffic-platform-is-helping-asian-cities-mitigate-congestionpollution, accessed April 2016. 39 Miguel R. Camus, GrabT axi ties up with World Bank, “ Philippine Daily Inquirer”, 8 April 2015, http://business.inquirer.net/189832/grabtaxi-ties-up-with-world-bank, accessed March 2016. 40 Chris Schnabel, Grab, World Bank launch big data project to ease PH traffic, “Rappler”, April 5, 2016, http://www.rappler.com/business/industries/208-infrastructure/128327-open-traffic-initiative-grab-worldbank, accessed April 2016. 41 Jon Russel, SoftBank Invests $250M In GrabTaxi, Uber’s Archrival In Southeast Asia, “ T echCrunch”, 3 December 2014, http://techcrunch.com/2014/12/03/softbank-invests-250m-in-grabtaxi-ubers-archrival-insoutheast-asia/, accessed March 2016. 42 Ingrid Lunden, Lyft, Didi, Ola and GrabT axi Partner in Global Tech, Service Alliance to Rival Uber, “TechCrunch”, 3 December 2015, http://techcrunch.com/2015/12/03/lyft-didi-ola-and-grabtaxi-partner-in-global-tech-service-alliance-to-rival-uber/, accessed April 2016. 43 Ibid. 37

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We are excited to partner with Lyft, Didi Kuaidi and GrabTaxi, allowing seamless mobility access across hundreds of cities globally for our combined user base that runs into hundreds of millions… This will also allow all four companies to learn from each other’s local innovations and successes that can help us in our shared mission to build better mobility solutions in our respective markets.44

Grab was also open to partnerships for app development on its platform. On December 9, 2015, Grab signed an MOU with the Singapore-based telecom conglomerate, SingTel Group, to use SingTel’s mobile wallet services to pay for rides on the Grab app. 45 This option would be made available by mid-2016 through an open-platform integration with major regional telecoms associated with SingTel through joint ventures, such as AIS (Thailand), Globe Telecom (the Philippines) and Telkomsel (Indonesia). This partnership would thus expand Grab’s payment options beyond cash and credit into digital currency, which was becoming more and more popular as a means of payment for the un-banked and under-banked across the world. Tan said, People in Southeast Asia are hyper-connected on mobile, and it’s our goal to provide another payment option for passengers via a channel they are familiar with. GrabTaxi passengers will soon have the option to streamline their payments, including transport expenses, to one mobile wallet, and reduce reliance on carrying cash.46

This agreement had strong synergetic potential. For example, Singtel had a combined customer base of 500 million people through its own operations and that of its associate companies. 47 Moreover, it was a majority owned company of Temasek Holdings, a Singapore governmentowned investment firm, which also had investments in Grab through its other wholly owned subsidiary, Vertex Venture Holdings.

Head-to-head with Uber Although Uber and Grab were not the only mobile booking apps for on-demand transportation in Southeast Asia – they were both by far the largest and had the most widespread coverage. Competition between these two forces was fast and furious – and by all accounts, neck and neck.

Technology According to Richard Harshman, head of ASEAN Amazon Web Services (AWS), Grab ran on Amazon’s cloud infrastructure platform. 48 Cloud services such as this allowed an organisation to quickly and cost effectively scale according to the exponentially growing demand, while at the same time being able to monitor and access data flows and storage. Mobile applications were built using a variety of toolkits based on open source programming languages that supported either iOS or Android devices. An important consideration when developing an application was challenges related to the quality and accessibility of web services, the speed and reliability of deployment, error handling and integration with different APIs and distributed systems. These apps often required a connection to a mobile network, access to 44

Ibid. Rupali Karekar, Singtel's mobile wallet services will come to GrabTaxi app by 2016, “ Straits Times”, December 9, 2015, http://www.straitstimes.com/business/singtels-mobile-wallet-services-will-come-to-grabtaxi-app-by-2016, accessed April 2016. 46 Colin T ung, GrabT axi and Singtel Partner to offer payments by mobile wallet, “E27”, 09 December 2015, https://e27.co/grabtaxi-singtel-partner-offer-payments-mobile-wallet-20151209/, accessed March 2016. 47 Singtel Annual Report 2015, http://info.singtel.com/annualreport/2015/performance/management-discussion-analysis.php, accessed March 2016. 48 Bill Boyle, “Amazon Web Services in Southeast Asia, DatacenterDynamics”, 24 November 2014, http://www.datacenterdynamics.com/servers-storage/amazon-web-services-in-southeast-asia/92076.fullarticle, accessed April 2016. 45

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numerous sensors, user data and other applications installed on a user’s phone to function. App companies potentially gained access to extraordinary quantities of user-specific data once a user installed an application – and managing such torrents of data was a massive challenge in and of itself. At the very least, taxi-booking and ride-sharing apps relied on mapping and geo-location features that were built into smartphones and integrated with other mapping software. Integration with Google Maps, for instance, could provide route-to-route direction services. An Internet connection and payment integration features were also important components of the app. Drivers and passengers for both Uber and Grab app users were algorithmically matched; however both companies were justifiably guarded as to how exactly this worked, given the proprietary nature of the code involved and mechanisms used. At a 2015 Strata+Hadoop World conference in Singapore, Kevin Lee, the vice president of data and growth at Grab, said during his keynote, If we could build a predictive model of the probability that any given driver would bid or respond to any particular job, and if we combine that with real time information such as distance bearing speed, we could direct jobs to a much smaller pool of drivers who are most likely to be available without having to do any hard behavioral change, such as them having to indicate their status. Given that it has to run at massive scale, engineering performance in production [would be] extremely critical for us to get right as well.49

Pricing Although Uber did not disclose the number of its drivers in Southeast Asia, as of October 2015, rumours emerged that it was in the ‘hundreds of thousands’. 50 In terms of payment, Uber and Grab started with different, albeit converging approaches. For example, Grab was the first of the two to offer cash payment options in Southeast Asia, with Uber eventually following suit. When Uber entered the market with only a debit and credit card payment mechanism, Grab followed with GrabPay as a cashless payment option also based on debit and credit cards. 51 Grab and Uber also deployed different pricing models. Uber used a base fare + time + distance model, with fares increasing in step with demand i.e., variable surge pricing. This helped manage demand and supply by both attracting new drivers with price surges, and dissuading some passengers with the hire fares. Grab used base fare + fixed pricing by distance, where fares increased by a regular fixed amount during peak hours.52 Grab managed demand surges through a ‘Flash’ feature on the app, which allowed a user to simultaneously request taxis and private vehicle hires (which could have different fare structures) in order to get a ride faster.53 Both companies offered various referral discounts: promotional codes and coupons via push notifications.

O’Reilly, “How GrabT axi uses machine learning to predict taxi availability | Kevin Lee,” 2 December 2015, https://www.youtube.com/watch?v=XGyEVWTpJ20&index=3&list=PL055Epbe6d5Zipu8Fx2gw-NcAdtJjt8dq, accessed April 2016. 50 Nadine Freischlad, Uber versus GrabCar: who’s speeding ahead in Southeast Asia?, “Tech In Asia”, 17 October 2015, https://www.techinasia.com/uber-vs-grabcar-who-is-leading-in-southeast-asia-infographic, accessed April 2016. 51 Ibid. 52 Ibid. 53 GrabT axi introduces “Flash” feature that pools taxi and private hire vehicle drivers, “ Grab News”, 30 November 2015, https://www.grab.com/sg/press/page/3/, accessed April 2016. 49

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Product Both Grab and Uber offered nearly identical booking services. The difference lay in the availability of services in different cities, and the timing in which they began offering their services in these cities (refer to Exhibit 5 for a comparison of Grab and Uber).

Internal challenges Grab had experienced explosive growth, and had scaled up from a small start-up team to around 500 employees in about three years.54 It would no doubt be encountering many of the challenges associated with start-ups during their high-growth phase, such as increasing competitive pressures to innovate and stay abreast of technology. In addition, access to world-class engineering talent was limited in Southeast Asia. Tan elaborated, Here, there are just not that many engineers. The schools are just not built that way to pump out great computer science engineers. We set up Grabathons, like hackathons, and we all need to do our part to make sure the whole engineering, data science ecosy stem gets built to such a size where start-ups can just tap it and be enabled to fly. 55

Grab was also in the process of setting up an engineering office in Seattle to take advantage of America’s hotbed of innovation and engineering talent in the West Coast tech industry, home to hundreds of well-known companies such as Google, Apple, Amazon and disruptive upstarts like DropBox, Uber and Airbnb. In January 2016, Tan announced, We are excited to announce our new engineering center in Seattle, which will help attract top talent in the U.S. and expand our global talent reach. As we continue to build an on demand ecosystem in Southeast Asia, it is important to look all over the world for innovative ideas and people that will help us continue to succeed in that mission. 56

Raman Narayanan, a former ‘distinguished engineer’ from Microsoft, joined Grab to lead the recruitment effort and serve as a technical advisor. 57 Narayanan said, I looked at the technology that goes into making GrabTaxi operate smoothly and there are a bunch of really tough computer science problems to be solved when doing this at scale… As an engineer, it was a very exciting and challenging opportunity.58

Nadine Freischlad, T hree years, $340M funding, millions of users: GrabT axi’s Anthony T an reflects on the journey, “Tech In Asia”, 8 May 2015, https://www.techinasia.com/3-years-4-funding-rounds-grabtaxis-anthony-tan-reflects-journey, accessed March 2016. 55 Sunway Group and Grab founders honoured at Channel NewsAsia Luminary Awards, “Channel News Asia”, March 31, 2016, http://www.channelnewsasia.com/news/singapore/sunway-group-and-grab/2650464.html, accessed April 2016. 56 Grab, “GrabT axi to Open Engineering Center in Seattle,” January 2016, https://www.grab.com/sg/grabtaxi-to-open-engineeringcenter-in-seattle/, accessed April 2016. 57 Ibid. 58 T aylor Soper, GrabT axi opens first U.S. office in Seattle, hires former Microsoft Distinguished Engineer, “ GeekWire”, 13 January 2016, http://www.geekwire.com/2016/grabtaxi-opens-first-u-s-office-seattle-hires-former-microsoft-distinguishedengineer/, accessed April 2016. 54

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Regulatory uncertainty There was concern that ‘access’ companies, like the Airbnbs and Ubers of the world, could become monopolistic, with value-extraction and private/sensitive information becoming concentrated in the hands of a few depending on, and proportional to, the extent of their network effects. 59 Exploitation was another concern, as “what began as a peer-to-peer idealistic and egalitarian movement has, in some eyes, become a commodifier of other people’s resources.” 60 There was a real fear that these sharing platforms could change the nature of employment in such a way that most people would become freelancers in a ‘gig’ economy competing on cost in a race towards the bottom, without the benefits and security of traditional employment. Policies that governed the sharing economy had yet to catch up, and any regulation that did exist was still nascent and varied wildly between countries, and even within countries at the municipal level. As such, these platform-based companies were often exempt from numerous tax codes, licensing regimes, safety compliance and labour laws because they were facilitators for individuals to provide peer-to-peer services to each other, and were not the actual providers. Because of such issues, or potential issues, companies operating in the sharing economy were attracting the attention of regulators, who in turn were facing mounting political pressure from incumbent businesses, labour and high profile public-relations disasters. Some transportation network companies had developed a controversial image largely as a result of confrontational tactics deployed against both regulators and incumbent taxi companies. 61 Public safety was a serious concern, with numerous reported rape and assault cases. 62 Concerns arising from safety and regulatory disputes had even resulted in certain ‘ride-sharing’ services being banned in some countries. 63 However, it was not all doom and gloom. The technologies underlying the sharing economy also held the promise of equitable sharing of information, power and profits through more networked individuals and organisations. Collaborative platforms could improve access to goods and services for those who could not normally afford them by reducing operating costs, increasing consumption efficiency, reducing environmental impact and building stronger communities. 64 Given the sharing economy’s interwoven fabric of pros and cons, the question was not whether it would become regulated, but how. This would have profound implications for business models operating in this space. Transportation network companies faced significant regulatory uncertainty in countries around the world, including many countries in Southeast Asia. In December 2014, Teerapong Rodpraser, head of Thailand’s Department of Land Transport, ordered Uber to cease operations – claiming that the company lacked proper licensing and discriminated against those who lacked access to credit cards. Uber continued to operate, but Koen Frenken, Toon Meelen, Martijn Arets and Pieter van de Glind, Smarter Regulation for the Sharing Economy, “The Guardian”, 20 May 2015, https://www.theguardian.com/science/political-science/2015/may/20/smarter-regulation-for-the-sharingeconomy, accessed March 2016. 60 T he Real Sharing Economy, “The Future Agenda”, http://www.futureagenda.org/insight/the-real-sharing-economy, accessed March 2016. 61 Regulators’ rep slams Uber for confrontational style, “San Francisco Business T imes”, 25 September 2013, http://www.bizjournals.com/sanfrancisco/blog/2013/09/regulators-rep-slams-ubers.html, accessed April 2016. Uber confirms 175 sexual assault claims against drivers amid accusations of thousands, “RT”, 9 March 2016, https://www.rt.com/news/334940-uber-confirms-sexual-assaults/, accessed April 2016. 63 Here’s everywhere Uber is banned around the world, “Business Insider”, 8 April 2015 http://www.businessinsider.com/hereseverywhere-uber-is-banned-around-the-world-2015-4?IR=T&r=US&IR=T, accessed April 2016. 64 T he Real Sharing Economy, “The Future Agenda”, http://www.futureagenda.org/insight/the-real-sharing-economy, accessed March 2016. 59

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regulations were put in place to fine unlicensed operators of personal vehicles for commercial use up to 2,000 Baht (US$5765 ) if caught by police.66 The Philippines and Singapore were the first countries in the region to proactively develop regulations concerning ride-sharing companies. According to a GrabTaxi spokesperson, GrabTaxi has always been working with regulators to help create a fair and even playing field in the local transport industry. Because we’re always engaging with the regulators and maintaining an open communication channel, we are already mostly compliant with all the new regulations set forth by the regulator and will definitely be compliant by the stipulated deadline.67

In July 2015, Grab became the first transportation network company of its kind to be accredited by the Land Transportation Franchising & Regulatory Board in the Philippines – thus making its operations recognised and legal. 68 Uber followed shortly thereafter, with both companies achieving legal status in both the Philippines and in Singapore. Despite Uber entering Southeast Asia before Grab, Tan believed that Grab had a head start in the region, stating, “We continue to build that head start, not only with the consumers, not only with the drivers, but also with the government.” 69 In Malaysia and Indonesia, the legal status of such companies was hotly contested. 70 For instance, in March 2016, Indonesia’s Transportation Ministry requested the Communications and Information Ministry to block Uber and Grab apps in response to petitions from drivers of public transport companies,71 with similar issues arising in Vietnam as well72 . The Transportation Ministry had previously requested that motorcycle taxi-hailing apps – like GrabBike and GOJEK, a Jakarta-based service – be blocked as well. However, widespread public outcry voiced resistance to such regulations, claiming that such apps improved the broader experience of transportation for the public. 73 In a March 2016 press release, Uber stated, “We are committed to partnering with the Government to ensure the full benefits of ridesharing – for riders and drivers – are available, and

65

US$1 = 35.158 T HB, XE Currency Converter, http://www.xe.com/currencyconverter/convert/?From=USD&To=THB, accessed April 2016 66 Khettiya Jittapong and Manunphattr Dhanananphorn, Uber ordered to cease operations in T hailand, under scrutiny in Vietnam, “ Reuters”, 9 December 2014, http://www.reuters.com/article/us-thailand-uber-idUSKBN0JN0PZ20141209, accessed April 2016. 67 T erry Xu, GrabT axi: New regulatory policy will not affect its operation, “The Online Citizen”, 21 May 2015, http://www.theonlinecitizen.com/2015/05/grabtaxi-new-regulatory-policy-will-not-affect-operations/, accessed April 2016. 68 Judith Balea, GrabCar gets government license to roll in the Philippines, “Tech In Asia”, https://www.techinasia.com/grabcar-transportation-network-company-accreditation-philippines, accessed April 2016. 69 Christine T an, GrabT axi CEO says local knowledge is key for ride-hailing apps taking on Uber, “CNBC”, 14 January 2016, http://www.cnbc.com/2016/01/14/grabtaxi-ceo-anthony-tan-says-local-knowledge-is-key-for-ride-hailing-apps-taking-onuber.html, accessed April 2016. 70 Nadine Freischlad, Uber vs GrabCar: who’s speeding ahead in Southeast Asia?, “Tech In Asia”, https://www.techinasia.com/uber-vs-grabcar-who-is-leading-in-southeast-asia-infographic, accessed April 2016. 71 Arientha Primanita, Transportation ministry requests Uber, Grab T axi ban, “The Jakarta Post”, 21 March 2016, http://www.thejakartapost.com/news/2016/03/14/transportation-ministry-requests-uber-grab-taxi-ban.html, accessed April 2016. 72 Nguyen T hi Bich Ngoc, Vietnam cab lobby urges state to deactivate ride-hailing apps Uber, GrabT axi, “ Deal Street Asia”, 26 October 2015, http://www.dealstreetasia.com/stories/uber-grabtaxi-face-threat-of-deactivation-in-vietnam-16952/, accessed April 2016. 73 Ibid.

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we remain committed to Indonesia.” 74 That same month Grab and Uber became ‘cooperative legal entities as transport companies under the provisions on public transport’. 75 On dealing with the regulatory environment, Travis Kalanick, the co-founder and CEO of Uber, said in 2013, The regulatory systems in place disincentivise innovation. It's intense to fight the red tape… [on offering advice] Stand by your principles and be comfortable with confrontation. So few people are, so when the people with the red tape come, it becomes a negotiation… my politics are: I'm a trustbuster. Very focused. And yeah, I'm pro-efficiency. I want the most economic activity at the lowest price possible. It's good for everybody.76

Regardless of any real or perceived tactics deployed by either Grab or Uber to influence regulations, both companies engaged directly with governments. But no matter how closely these companies engaged government, as anyone familiar with Southeast Asia would know, the political mood in the region could change quickly and abruptly.

Cautious optimism for a region on the rise By 2016, Southeast Asia faced socio-economic risk associated with financial globalisation , environmental degradation, climate change, rising levels of informal employment, increasing dependency ratios, and an unequal division of labour between genders across the region. 77 Nonetheless, Southeast Asia was also experiencing steady growth and a rapidly growing middle class characterised by high levels of aspiration and technological adoption. The number of middle-class households was expected to rise from 40 million in 2010 to 80 million in 2017. 78 However, this growth had unfortunately affected society disproportionally, with more vulnerable groups being left behind. 79 The population was young. 36% of the population of ASEAN was below the age of 20 in 2015. 80 Singapore was the outlier, which was experiencing a rapidly ageing population coupled with one of the lowest birth rates in the world. But regardless of age, there was thus considerable need for quality education and demand for skills training, which at the same time was culturally valued. As these aspiring populations became more affluent, vehicle ownership surged, putting tremendous stress on transportation infrastructure – which, in any case, was well over-capacity in most urban agglomerations. With perhaps the exception of Singapore, rapid mass-public transportation was under-provided in most cities throughout the region, which had thus become famous for traffic jams. Collecting and analysing transportation data was important for managing

74

Uber committed to working with Indonesian Government to ensure full compliance with regulations and continued safe, reliable transport, “Uber Newsroom”, 19 March 2016, https://newsroom.uber.com/indonesia/id/uber-committed-to-working-withindonesian-government-to-ensure-full-compliance-with-regulations-and-continued-safe-reliable-transport/, accessed April 2016. 75 End of standoff? GrabCar, Uber register as legal cooperatives allowing them to operate in Indonesia, “Deal Street Asia”, 16 March 2016, http://www.dealstreetasia.com/stories/grabcar-34329/, accessed April 2016. 76 Andy Kessler, T ravis Kalanick: T he Transportation Trustbuster, “The Wall Street Journal”, 25 January 2013, http://www.wsj.com/articles/SB10001424127887324235104578244231122376480 , accessed April 2016. 77 David D. Arnold, T he Critical Issues Affecting Asia, “The Asia Foundation”, 22 January 2014, http://asiafoundation.org/inasia/2014/01/22/the-critical-issues-affecting-asia/, accessed April 2016. 78 Nadine Freischlad, Uber vs GrabCar: who’s speeding ahead in Southeast Asia?, “Tech In Asia”, https://www.techinasia.com/uber-vs-grabcar-who-is-leading-in-southeast-asia-infographic, accessed April 2016. 79 Changyong Rhee, Inequality Threatens Asia’s Growth Miracle, “ Financial T imes”, 7 May 2012, http://www.ft.com/intl/cms/s/0/fba71e2c-9607-11e1-9d9d-00144feab49a.html#axzz47HApSuOr, accessed April 2016. 80 Ibid.

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traffic conditions. Accommodating rapid urbanisation was hence a major challenge in regards to all manner of infrastructure. There was a wide disparity between income levels and economic systems practices in ASEAN countries, as well as in the style and quality of government. Persistent issues pertaining to the rule of law, governance and corruption in most jurisdictions were common within the region. This posed serious issues for implementing social protection programmes, providing quality healthcare systems, reducing inequality and eliminating poverty. That said, new frontiers awaited those who could seize opportunities at the bottom-of-the-pyramid by doing good well.

Resilience and riches Grab’s social mission to improve the lives of customers, drivers and the wider community was a broad mandate. But simply funding any feel good initiative was not good business. Grab needed to leverage its capabilities, core product and expertise towards a triple-bottom line – and in doing so, work towards solving real-world problems that were aligned with the company’s mission. At the same time, Grab needed to stay ahead of technological, regulatory and social trends, and accelerating change. This was even more complicated due to the degree of fragmentation across Southeast Asia’s many markets. The on-demand transportation industry, and the sharing economy in general, were extremely competitive. New entrants and future champions could emerge from anywhere. Grab would have to continuously innovate and avoid becoming encumbered by its own size, while overcoming the internal challenges associated with high-growth start-ups. For Grab to become truly sustainable and succeed in the long run, the company would need to secure an indispensable place in the larger ecosystem in which it operated; an essential node in the new economy.

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EXHIBIT 1: PROFILE OF THE SHARING ECONOMY

C2C On-Demand Economy

The Sharing Economy

Second-Hand Economy

Goods

Access Product-Service Economy Note: Definition of C2C is ‘consumer to consumer’

S ource: The Guardian, https://www.theguardian.com/science/political-science/2015/may/20/smarterregulation-for-the-sharing-economy, accessed March 2016.

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EXHIBIT 2: GROWTH PROJECTIONS FOR THE SHARING ECONOMY

Global sharing economy and traditional rental sector projected revenue growth $400 $335 $335

In US$ Billions

$350

Sharing economy sector 

$300 $240

$250

   

$200

$150 $100 $50

P2P lending and crowd-funding Online staffing P2P accommodation Car sharing Music and video streaming

$15

Traditional rental sector

$0 2013 Sharing Economy Sector

2025 Traditional Renting Sector

    

Equipment rental B&B and hostels Book rental Car rental DVD rental

Sharing economy projected growth by sector 70% 60%

63%

50%

P2P lending and crowd-funding

40%

Online staffing

30%

20%

P2P Accommodation

37% 31%

Car Sharing

23% 17%

10%

Music and video streaming

0%

Revenue CAGR, 2013-2025 S ource: PwC, The S haring Economy – S izing the Revenue, http://www.pwc.co.uk/issues/megatrends/collisions/sharingeconomy/the-sharing-economy-sizing-the-revenueopportunity.html, accessed March 2016

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EXHIBIT 3: NEW CONCEPTS OF VALUE IN THE SHARING ECONOMY

Social Influence Open Source Software Microfinance

Storage of Value

Creation of Value

Micro-patronage Human Capital Investment Digital Currencies P2P Lending

Content Creation

Open Innovation

Complimentary Currencies

Group Buying Marketplaces

Wikis

Co-working

Exchange Platforms Skill Sharing

Crowd-sourced Labour

Knowledge Sharing

Resource Sharing

Co-Production

Barter Networks

Gift Networks

Rental Networks

Access to Value

S ource: Emergence Collective, The Future of Money Project, New Lenses of Wealth, http://www.emergence.cc/2010/12/new-lenses-of-wealth/, accessed March 2016.

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EXHIBIT 4: SOUTHEAST ASIA - KEY ISSUES, TRENDS AND INDICATORS

Top 10 Largest Urban Areas in Southeast Asia, 2015 Rank 1 2 3 4 5 6 7 8 9 10

City Mega Manila Greater Jakarta Greater Bangkok Ho Chi Minh City Kuala Lumpur Singapore Yangon Bandung Surabaya Hanoi

Population 35,607,000 (2010 est.) 28,000,000 (2010 est.) 20,000,000 (2010 est.) 7,785,000 5,835,000 5,674,472 4,400,000 3,555,000 2,885,000 2,355,000

S ources: Philippine Information Agency, The World Bank, CIA World Factbook

Demographic Indicators by country, 2015 estimates Country Brunei

Population 429,646

Ethnic Groups Malay (65.7%) Chinese (10.3%) Other (24%)

Languages Malay (official) English Chinese dialects

Religions Muslim (78.8%) Christian (8.7%) Other (24%)

Cambodia

15,708,756

Khmer (90%) Vietnamese (5%) Chinese (1%) Other (4%)

Khmer (official)

Buddhist (96.3%) Muslim (1.9%) Christian (0.4%) Other (0.8%)

Indonesia

255,993,674

Javanese (40.1%) Other (59.9%)

Bahasa Indonesia, a modified form of Malay (official) English Dutch 700+ languages

Muslim (87.2%) Christian (9.9%) Hindu (1.7%) Other 1.3%

Laos

6,911,544

Lao (54.6%) Khmou (10.9%) Hmong (8%) Other (27%)

Lao (official) French English Other

Buddhist (66.8%) Christian (1.5%) Other (31.7%)

Malaysia

30,513,848

Malay (50.1%) Chinese (22.6%) Indian (6.7%) Other 20.7%

Malay (official) English Chinese dialects Thai Other

Muslim (61.3%) Buddhist (19.8%) Christian (9.2%0 Hindu (6.3%) Other (3.5%)

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Myanmar

56,320,206

Burman (68%) Shan (9%) Karen (7%) Other (16%)

Burmese (official) Each ethnic group has its own language

Buddhist (89%) Christian (4%) Muslim (4%) Other (3%)

Philippines

100,998,376

Tagalog (28.1%) Cebuano (13.1%) Ilocano (9%) Other (49.8%)

Filipino, Tagalog based (official) English (official)

Christian (92.5%) Muslim (5%) Other (2.5%)

Singapore

5,674,472

Chinese (74.2%) Malay (13.3%) Indian (9.2%) Other (3.3%)

Mandarin (official) English (official) Malay (official) Tamil (official)

Buddhist (33.9%) Christian (18.1%) None (16.4%) Muslim (14.3%) Taoist (11.3%) Hindu (5.2%) Other (0.7%)

Thailand

67,976,405

Thai (95.9%) Other (4.1%)

Thai (official) Several other, English widely spoken among elite

Buddhist (93.6%) Muslim (4.6%) Christian (1.2%) Other (0.3%)

Vietnam

94,348,835

Viet (85.7%) Other (14.3%)

Vietnamese (official)

None (80.8%) Buddhist (9.3%) Christian (7.2%) Other (9.7%)

S ource: CIA World Factbook, https://www.cia.gov/library/publications/the-world-factbook/, accessed April 2016.

Demographic Indicators by country (continued), 2015 estimates Country

Median age

Life Expectancy

Population growth rates & fertility rate

School life expectancy

Brunei

29.6 years

74.64 (male) 79.41 (female)

1.62% annual population growth 1.8 born per woman

14 years (male) 15 years (female)

Cambodia

24.5 years

61.69 (male) 66.7 (female)

1.58% annual population growth 2.6 born per woman

12 years (male) 10 years (female)

Indonesia

29.6 years

69.85 (male) 75.17 (female)

0.92% annual population growth 2.15 born per woman

13 years (male) 13 years (female)

Laos

22.3 years

61.88 (male) 65.95 (female)

1.55% annual population growth 2.82 born per woman

11 years (male) 11 years (female)

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Malaysia

27.9 years

71.97 (male) 77.93 (female)

1.44% annual population growth 2.55 born per woman

13 years (male) 13 years (female)

Myanmar

28.3 years

- 63.89 (male) - 68.82 (female)

1.01% population growth 2.16 born per woman

9 years (sex unspecified)

Philippines

23.2 years

65.47 (male) 72.62 (female)

1.61% annual growth 3.09 born per woman

11 years (male) 11 years (female)

Singapore

34 years

82.06 (male) 87.5 (female)

1.89% annual growth rate 0.81 born per woman

Unavailable

Thailand

36.7 years

71.24 (male)77.78 (female)

0.34% annual population growth 1.51 born per woman

13 years (male) 13 years (female)

Vietnam

29.6 years

70.69 (male) 75.9 (female)

0.97% annual population growth 1.83 born per woman

Unavailable

S ource: CIA World Factbook, https://www.cia.gov/library/publications/the-world-factbook/, accessed April 2016.

Economic Indicators by country, 2015 Country

GDP per capita (annual)

Labour Force and % unemployment

Dependency ratios, % pop.

Urbanisation % pop. and % annual change

Brunei

US$79,700

205,800 2.7% unemployment

38% Youth (31.9%) Elderly (6.1%)

77.2% of total pop. 1.79% decrease (2010-2015)

Cambodia

US$3,500

7.974 million 0.3% unemployment

55.6% Youth (49.2%) Elderly (6.4%)

20.7% of total pop. 2.65% (2010-2015)

Indonesia

US$11,300

122.4 million 5.5% unemployment

49% Youth (41.2%) Elderly (7.7%)

53.7% of total pop. 2.69% (2010-2015)

Laos

US$5,400

3.532 million 1.4% unemployment

62.8% Youth 56.6% Elderly 6.2%

38.6% of total pop. 4.93% (2010-2015)

Malaysia

US$26,000

14.3 million 2.7% unemployment

43.6% Youth 35.2% Elderly 8.4%

74.7% of total pop. 2.66% (2010-2015)

Myanmar

US$5,200

36.18 million 5% unemployment

49.1% Youth 41.1% Elderly 8%

34.1% of total pop. 2.49% (2010-2015)

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Philippines

US$7,500

41.75 million 6.5% unemployment

57.6% Youth 50.3% Elderly 7.2%

44.4% of total pop. 1.32% (2010-2015)

Singapore

US$85,700

3.588 million 2% unemployment

100% of total pop.

Thailand

US$16,100

39.12 million 1% unemployment

Vietnam

US$6,100

54.93 million 3% unemployment

37.4% Youth 21.4% Elderly 16.1% 39.2% Youth 24.7% Elderly 14.6% 42.5% Youth 32.9% Elderly 9.6%

50.4% of total pop. 2.97% (2010-2015) 33.6% of total pop. 2.95% (2010-2015)

Note: the rate of urbanisation increased for all countries except Brunei S ource: CIA World Factbook, https://www.cia.gov/library/publications/the-world-factbook/, accessed April 2016.

Transportation Safety Indicators, 2010 estimates Country

Road Traffic Deaths Total Death rate (per 100,000)

4wheeled

Death by Vehicle type 2-wheel/ Cyclists Pedestrian 3-wheel

Others

Brunei Cambodia

…

…

…

…

2,431

17

11.8

66.6

… 4

… 12

… 5.7

Indonesia

42,434

18

6.1

35.7

1.7

21.1

35.4

Laos

1,266

20

14.6

74.4

1.3

6.3

3.4

Malaysia

7,085

25

26.0

58.7

2.8

9.1

3.4

Myanmar

7,177

15

26.2

22.9

8.6

26.5

15.9

Philippines

8,499

9

…

…

…

…

…

Singapore

259

5

8.8

46.1

8.3

28.5

8.3

Thailand

26,312

38

13.3

73.5

3.0

7.8

2.5

Vietnam

21,651

25

…

…

…

…

…

S ource: Asian Development Bank, http://www.adb.org/sites/default/files/publication/175162/ki2015-rttransport-communications.pdf, accessed April 2016.

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Grab: Discovering New Frontiers for Growth in the Southeast Asian Sharing Economy

Digital Landscape Southeast Asia Internet use by population, social media and mobile access Country Brunei

% Population Internet users 81%

% Population monthly active social media users 69%

% Users logging on social media with a mobile device 64%

Cambodia

32%

22%

19%

Indonesia

34%

31%

26%

Laos

14%

14%

12%

Malaysia

67%

59%

52%

Myanmar

9%

14%

11%

Philippines

46%

47%

39%

Singapore

84%

67%

61%

Thailand

54%

58%

52%

Vietnam

50%

40%

32%

Note: Global average is 44% versus S outheast Asia average of 40% S ource: Tech in Asia, https://www.techinasia.com/talk/digital-southeast-asia-q4-2015, accessed April 2016.

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Smartphone Penetration, 2014-2019 Smartphone users in millions Country

2014

2015

2016

2017

2018

2019

Indonesia

44.7

55.4

65.2

74.9

83.5

99.0

Malaysia

8.9

10.1

11.0

11.8

12.7

13.7

Philippines

21.8

26.2

29.9

33.3

36.5

39.2

Singapore

3.8

4.0

4.2

4.3

4.4

4.6

Thailand

15.4

17.9

20.0

21.9

23.4

24.8

Vietnam

16.6

20.7

24.6

28.6

32

35.2

Smartphone users by % of total population Country

2014

2015

2016

2017

2018

2019

Indonesia

32.6%

37.1%

40.4%

43.2%

45.4%

47.6%

Malaysia

42.6%

46.6%

49.2%

51.3%

54.3%

57.3%

Philippines

32%

36.6%

40.0%

43.1%

46.1%

48.4%

Singapore

83.1%

85.2%

86.3%

87.2%

88.0%

88.9%

Thailand

34.9%

39.2%

42.8%

45.8%

48.1%

50.0%

Vietnam

30.4%

36.2%

41.5%

46.8%

50.9%

54.6%

Note: Use of smartphone indicates high-speed connectivity via 2G, 3G and 4G technologies as ownership is often subsidised through broadband subscription. Although Wi -Fi is an option, populations across S outheast Asia are demanding greater mobile broadband coverage. Adoption and coverage coincides with urbanisation and urban areas. S ource: eMarketer, http://www.emarketer.com/Article/Asia-Pacific-Boasts-More-Than-1-BillionS martphone-Users/1012984, accessed April 2016.

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Mobile Payments and Banking Select results from Deloitte Global Mobile Consumer Survey Have you ever used your phone to check bank balances? (Responding with yes) Indonesia

56%

Philippines

30%

Singapore

52%

Thailand

36%

Mobile Payments and Banking (continued) Have you ever used your phone to make online purchases? (Responding with yes) Indonesia

30%

Philippines

21%

Singapore

38%

Thailand

22%

Willingness to use mobile-based in-store payment solutions Indonesia

76%

Philippines

59%

Singapore

57%

Thailand

57%

S ource: Deloitte, http://www2.deloitte.com/content/dam/Deloitte/sg/Documents/technology-mediatelecommunications/sg-tmt-global-mobile-consumer-survey-noexp.pdf, accessed April 2016.

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EXHIBIT 5: COMPARISON OF UBER AND GRAB, AS OF MAY 2016

Uber

Grab

Founded: San Francisco, California, USA

Founded: Malaysia

Valuation: US$50 Billion

Valuation: US$1.5 Billion

Total Funding: US$8.21 Billion

US$ 680 Million

Latest Funding Round: September 2015

Latest Funding Round: August 2015

Co-Founder CEO: Travis Kalanick

Co-Founder CEO: Anthony Tan

- Born 1976

- Born 1981

- Education Computer Science (drop out), University of California

- Education: Master of Business Administration, Harvard Business School

Description of Service Offerings:

Description of Service Offerings:

uberTaxi: app-based function on-demand ehailing for taxis

GrabTaxi: app-based function on-demand ehailing for taxis

uberX: GrabCar: app-based function for ondemand private vehicle hire, 6-seater

GrabCar: app-based function for on-demand private vehicle hire, 6-seater (includes

uberMOTO: app-based function for ondemand motorcycle taxi service

GrabCar+ app-based function for premium vehicles and 13 seater vans)

uberXL: app-based function for on-demand private vehicle hire for large vehicles like vans

GrabBike: app-based function for ondemand motorcycle taxi service

uberBLACK/EXEC: app-based function for on-demand premium private vehicle hire EXECLARGE: app-based function for ondemand private vehicle hire for premium large vehicles

GrabHitch: app-based function for ride/sharing-carpooling GrabExpress: app-based function for ondemand courier services

SUV: app-based function for on-demand SUV private vehicle hire UberHOP: app-based function for ride/sharing-carpooling

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Availability of Service Offerings:

Availability of Service Offerings:

Indonesia (UberX)

Indonesia (GrabTaxi, GrabCar, GrabBike, GrabExpress)

- Bali - Bandung - Jakarta (also offers UberBLACK) - Surabaya

- Bali - Bandung - Jakarta - Padang - Surabaya

Malaysia (uberX)

Malaysia (GrabTaxi, GrabCar)

- Ipoh - Johor Baru (also offers uberXL) - Kuala Lumpur (also offers uberBLACK, uberXL) - Penang (also offers uberXL)

- Johor Baru - Kota Kinabalu - Kuala Lumpur - Kuching - Malacca

Philippines (uberX)

Philippines (GrabTaxi, GrabCar, GrabBike, GrabExpress)

- Cebu - Manila (also offers uberBLACK and uberHOP)

Singapore (uberX, uberXL, uberEXEC, EXECLARGE, uberTaxi) Thailand (uberX, uberBLACK, uberMOTO) - Bangkok

- Negeri Sembilan - Penang - Putrajaya - Selangor

- Bacolod - Baguio - Cagayan de Oro - Cebu - Davao City

- Iloilo - Manila

Singapore (GrabTaxi, GrabCar, GrabHitch) Thailand (GrabTaxi, GrabCar, GrabBike, GrabExpress)

Vietnam (uberX, uberBLACK, SUV)

- Bangkok - Chiang Mai - Chiang Rai - Phuket - Pattaya

- Hanoi - Ho Chi Minh City

Vietnam (GrabTaxi, GrabCar, GrabBike, GrabExpress) - Danang - Hanoi - Ho Chi Minh City

Payment:

Payment:

Credit/Debit Card or Cash (Bandung, Johor Baru, Manila and Singapore only)

Credit/ Debit Card (Malaysia, Manila, Indonesia and Singapore only) or Cash

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Pricing:

Pricing:

Base Fare + Time & Distance (fares increased in step with demand increase i.e. variable surge pricing)

Base Fare + Fixed Pricing (fares increased by regular fixed amount during peak hours)

S ources: Uber, https://www.uber.com/, accessed April 2016, Grab, http://www.grab.com/sg/, accessed April 2016; Nadine Freischlad, “Uber vs GrabCar: who’s speeding ahead in S outheast Asia?” (Infographic) 17 Tech in Asia, October 2015, www.techinasia.com, accessed April 2016; Michael Tegos, “Uber launches cash payments in S ingapore” Tech in Asia, 6 April 2016, www.techinasia.com, accessed April 2016; Terence Lee, “Uber tests cash payments in Malaysia,” Tech in Asia 12 March 2016, www.techinasia.com, accessed April 2016; S teven Millward, “Uber begins taking cash payments in Indonesia,” Tech in Asia, 5 November 2015, www.techinasia.com, accessed April 2016; Judith Balea, “Manila Uber riders may now pay with cash,” Tech in Asia, 3 November 2015, www.techinasia.com, accessed April 2016.

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