Grabbing the Market
Managing Director of Grab Indonesia Ridzki Kramadibrata talks about challenges and opportunities in the ride-hailing industry
By Ellisa Kosadi and Karmila Bain
Sunday, October 28, 2018
Pioneered by Uber in the US in 2009, the ride-hailing industry is now an inseparable part of metropolitan life in most of the developed and developing world. Local companies in many countries have even created their own ride-hailing applications with added local twists. While the introduction of this cross-cutting industry came with a series of challenges, the presence of ride-hailing apps, along with the utilization of data technology, have definitely pushed the boundaries of the digital world. Oh, and urban movement has never been easier.
AmCham Indonesia met with Ridzki Kramadibrata, Managing Director of Grab Indonesia, to talk about Grab and its venture into the Indonesian market. The Malaysian-born, Singapore-bred app has expanded to other Southeast Asian countries including Indonesia, Myanmar, Vietnam, Thailand, Cambodia and the Philippines. It first entered the Indonesian market in 2012 as GrabTaxi, before rebranding itself as Grab in 2016.
Prior to joining Grab in early 2016, Ridzki was chief operating officer of AirAsia Indonesia and regional director for the AirAsia Group. He talked about what first attracted him to Grab, the company’s recent business ventures and his overall experience of the Indonesian ride-hailing industry.
AmCham Indonesia: What made you decide to join Grab?
Ridzki Kramadibrata: I have been watching Grab’s potential since my AirAsia days, and had good experiences with GrabTaxi during my tenure in Kuala Lumpur. I believe there are many things we can do within this industry to contribute to Indonesia’s growth, not only to allow easier access, but also to bring opportunities for many people to become self-entrepreneurs as drivers.
When I first joined Grab Indonesia two and a half years ago, Go-Jek dominated the two-wheeler and Uber the four-wheeler ride-hailing services. One is an Indonesian home grown startup, while the other is a globally known brand from the US. Between these two extremes, Grab was able to place itself in the middle as a Southeast Asian-grown company with a presence throughout the region, thus offering the best of both worlds in terms of localization and service consistency for customers. This is what I believe is Grab’s biggest advantage, as well as what drew me to the company in the first place.
According to your own experiences, what are the similarities and differences between managing Grab and AirAsia?
In terms of similarities, both companies have very open cultures. In fact, my years in AirAsia helped me to adjust to how companies are run these days. Both companies have also embraced the co-working culture. AirAsia was also the first within the airline industry to embrace online technology for bookings, application bookings, automated and digital check-ins, etc.
On the other hand, Grab operates in a much faster-paced environment, where things need to be done immediately. Grab is also much more technology-packed, as technology is the company’s main asset and, thus, we put most of our attention on it. We hire the best talent and invest in R&D [research and development] centers around the world, with the main ones in Singapore, Seattle, Beijing, Jakarta, Vietnam and Bangalore. Grab also places a much stronger emphasis on addressing local issues. We have this term, ‘hyperlocal,’ meaning that we have to be extremely local. Part of the reason why I was chosen for this position is because of my ability to understand the daily problems of Indonesians without needing translation to give substantial input, connect with locals and jump directly to areas where we have our services.
What about the operational and service challenges of Grab Indonesia and Grab’s headquarters in Singapore?
In terms of company culture, it’s very similar. Both have very mobile internal operations with heavy use of office technology, such as virtual meetings. We’re also quite relaxed in terms of company hierarchy, where everyone is always able to call one another, including Anthony [Tan, co-founder and Group CEO] and myself. We leaders are here to serve – how we can help to make the organization better. We’re the ones who are always asked what’s needed, not the other way around.
The differences are mostly in terms of service operations. Singapore is one country-one city, while Indonesia is one country-hundreds of cities, so the market is much more dynamic. We need to address how consumers can get the best service at an affordable price. The need to engage with locals, whether they’re our partners, customers or local governments, is also more critical. Autonomy in Indonesia has been moving, so even though there are guidelines from the central government, we still need to engage with local regulators as well.
Transportation infrastructure is definitely another major difference between the two markets. Singapore’s infrastructure is very mature. The MRT network is very extensive and allows you to get as close as possible to your final destination. It is very different to Indonesia, where public transportation is not very well developed yet. Regardless, Grab views these challenges as opportunities to do more and contribute to society with our services. For example, Jakarta’s MRT, which should be ready early next year, will start by serving only one corridor. Grab can continue to help fill the gaps in the supply of public transportation to other places.
Tell us about Grab’s venture into e-money?
Financial inclusivity in Indonesia is relatively low. In terms of credit card penetration, it is only 10 to 20 percent, while in terms of bank account ownership, it is around 30 percent. Dependency on cash is still very high, although we already know there are lots of problems with cash, such as cost of distribution, distortion [no change, etc] and unclear transaction records. E-money offers a solution due to its ease of distribution, minimal distortion [no more ‘no change’ problems] and, most importantly, clean records for accounting purposes.
I had a very touching experience related to providing clean transaction records for our partner drivers and merchants. We partnered with BTN, Mandiri [in Jakarta] and BRI Syariah [in the rest of Java] to allow our partner drivers and merchants to obtain home or business loans by presenting their transaction records to the banks. Many of our partners used to be hard laborers, or owners of small mom-and-pop shops with no prospects of owning a house or expanding, but this opportunity has opened up possibilities for them. This is not part of our job, but I feel so touched and blessed to realize that it is our system that allowed them to do that.
Regarding our partnership with Lippo, particularly on [digital wallet service] OVO, this is a strategic step for both of us. As one of our largest investors, this partnership is beneficial for Lippo as ride-hailing is one of the best, most used cases of e-payment due to its high daily frequency of use. For Grab, the partnership is beneficial due to OVO’s widespread presence throughout Indonesia. OVO is present in 212 cities, compared to Grab at 137 cities. During our GrabPay days, customers could only use our e-wallet application to pay for rides. Now with OVO customers can also shop, which convinces them to top-up and use the e-wallet application more.
What are the opportunities and challenges from Grab’s recent acquisition of Uber in Southeast Asia?
There are no particular challenges with the transition process. More than 75 percent of Uber drivers have transitioned to our platform. The rest either chose not to join, or were Grab drivers with bad records, which of course we didn’t want to reaccept. What’s very important for us is Uber’s footprint with UberEats in Southeast Asia. The platform has become our doorway to launch GrabFood in the region. There are also benefits of having more drivers, allowing us to provide more seamless services for our customers, improving our service consistency and reliability throughout the region.
What about Grab’s experience with regulations and regulatory bodies in Indonesia?
We are very engaged on the government side. I have been open to the government and I am easily contactable by the ministries. Of course, there has been confusion regarding the industry due to its relative newness. However, I want to emphasize that from the president to ministers, Indonesia has been very supportive of the ride-hailing industry. We are one of the few countries that have produced regulations for the industry. For instance, our experience with the vehicle check [KEUR] regulation has been very positive.
The regulation itself is lacking in some ways – KEUR facilities are very limited, not very accessible and lack capacity. We made some suggestions to deregulate and open up the process to the private sector to make it more accessible, and the government’s response has been positive, although the implementation is still in progress due to many considerations. On the technology side, we don’t have significant issues either. We have been implementing data protection/privacy at the highest standard, even before the regulation existed. We also have invested a lot in data security, so even before the regulation became an issue, we had already addressed that internally.
Overall, there is definitely room for improvement, but we understand that everything is still in transition and will take some time to adjust. We are very appreciative of the government’s efforts in supporting the industry.
We are also very supportive of government regulations that we believe are for the greater good, such as the odd-even policy. As proof of our support, we immediately adjusted our application’s algorithms to accommodate the implementation of this policy by allocating cars based on the odd/even plate numbers. In the beginning, the algorithm allowed the app to assign cars based on pickup and drop-off locations. However, due to passenger input, we have now improved the app so that it assigns cars based on route.
What are Grab’s plans for the future?
Grab is shifting to expand our app’s capability from just a ride-hailing application to an everyday app. We recently changed our app’s interface so when you open Grab, the home screen will adjust according to your location and the time of the day. In addition to existing services such as ride-hailing, food and OVO, the app will now also show daily content.
For food, it will show you the nearest restaurants and their ratings, or if you like shopping, the app will also show you the nearest shopping centers and take you to the ride order page if you’re interested to go. The app will also show you information on your day-to-day needs and interests, such as the nearest mosque and praying times for Muslim users, Asian Games scores for sports enthusiasts, recommendations for movies to watch, etc. The point is, we want to expand our users’ experience with our app from just a ride-hailing app to an app they can depend on while travelling around Southeast Asia.
Regarding our geographical scope, we don’t really have plans to expand outside Southeast Asia yet. We already have some presence in the US, in the form of an R&D center in Seattle, as well as ties with Uber US due to our acquisition of Uber’s operations in Southeast Asia. However, in terms of services, we are still focusing on Southeast Asia, as we believe the region to be the market, and it is our market. It’s where we grow and there are still a lot of things we need to address in the region.