GO-JEK rides into Singapore, but über incentives may be behind us

GO-JEK rides into Singapore, but über incentives may be behind us

By: 
Jeffrey Tan
06/11/18, 09:01 pm

SINGAPORE (Nov 5): After months of anticipation, Indonesian ride-hailing platform GO-JEK has launched a pre-registration portal for people interested in becoming its driver-partners. Over the coming weeks, interested drivers who provide their contact details will receive notifications from GO-JEK with information on how to apply to join its Singapore platform when the company launches its services here.

GO-JEK had signalled its intention to come to Singapore in May, not long after Uber announced it was selling to Grab and exiting Southeast Asia. At the time, GO-JEK said it was working on expanding into the Philippines, Vietnam, Thailand and Singapore.

According to GO-JEK, there has been a “huge amount” of driver interest here. “At GO-JEK, we understand that driver-partners are crucial to successful operations, which is why we’re looking forward to building strong, engaging relationships with the driver community,” a spokesperson says in an Oct 29 statement.

One excited ride-hailing driver is Nasir bin Kassim. He tells The Edge Singapore that he will sign up with GO-JEK and continue being a Grab driver at the same time to enjoy the best of both worlds. He expects GO-JEK to introduce incentives to recruit drivers, while Grab will do the same to retain theirs. In fact, he says, Grab had already introduced new incentives last month to prevent a crossover. So, “there will be more sugar and money to entice drivers” like him.

Not all ride-hailing drivers seem to be excited about the prospects at GO-JEK, though. Bian, a Grab driver, says he wants to “wait and see” what GO-JEK will offer before signing up on the latter’s platform. This is because he expects competition to lower ride prices, thereby reducing take-home income. This means drivers will have to spend more time on the road just to earn the same amount — excluding incentives. “It’s not sustainable,” he says. Meanwhile, Tan — another Grab driver — says he has yet to register with GO-JEK, as he is unsure whether “the new player is any better or worse”.

These ride-hailing drivers may be right about not getting too excited over GO-JEK’s arrival. Though GO-JEK is “well financed” to provide financial subsidies and incentives to drivers, this will not be sustainable in the long term, says Walter Theseira, associate professor of economics at the Singapore University of Social Sciences.

Theseira thinks Grab will not try to “outspend” GO-JEK in subsidies and incentives, as the former is well aware of the latter’s financial muscle. Instead, he expects Grab to make a “measured” response and pursue a strategy that accommodates GO-JEK’s presence.

He adds that drivers should not expect pricing levels to be similar to that during the Grab-Uber era, because prices at the time were abnormally below cost. “And that was unsustainable. We may see a return to that for a time, but we should not make the mistake of thinking that that was a competitive situation that the market will settle at. Nobody can make money at those prices,” he tells The Edge Singapore by phone.

DBS Group Research analyst Andy Sim agrees. “We have seen a round of competition and the outcome has not been particularly smooth for the players,” he writes in an Oct 30 note.

That said, financial incentives are not the only consideration, drivers say. “It is also about the way the company treats us. I’ve heard of drivers getting suspended for very petty cases,” says Tan, who expects Grab to lose a considerable number of drivers because he thinks Grab does not “take care” of them.

Tan shares his own unpleasant experience with Grab. His account was frozen after he failed to respond to numerous calls from the company, which had wanted to seek clarification regarding a customer payment dispute. Tan says he was on the road, thus he could not pick up the calls. His account was restored only after he turned up at Grab’s office to plead his case. “There must be a better way to deal with this,” he says.

GO-JEK’s entry into Singapore may start a new battle for both customers and drivers, but the drivers are unlikely to be won over solely through financial means. — With additional reporting by Trinity Chua

This story appears in The Edge Singapore (Issue 855, week of Nov 5) which is on sale now. Subscribe here

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