The Southeast Asian region is one of the world's most attractive regions for the digital economy as this region is home to 640 million people, while the region is also characterized by rapid economic growth as well as rapidly rising smartphone and Internet penetration. Therefore, Southeast Asian ride-hailing market is forecast to reach a value of USD $20.1 billion by 2025.

Within Southeast Asia, Indonesia is the biggest market. In Indonesia Grab is the second-largest company in the ride-hailing industry behind local rival Go-Jek, which recently received big capital injections from Google and Tencent Holdings. However, the latest example of consolidation in the region is expected to turn Grab into a stronger rival. Go-Jek will not only have to face a bigger rival in Indonesia but it will also make it more difficult for Go-Jek to gain market share in the Southeast Asian region. Earlier, Go-Jek expressed its plans to expand into Southeast Asia.

In Southeast Asia Grab has evolved into the dominant ride-hailing service and is currently valued at USD $6 billion. The company also raised USD $4 billion from investors over the past couple of years. Grab offers services in more than 190 cities across Indonesia, Singapore, the Philippines, Malaysia, Thailand, Vietnam, Myanmar and Cambodia. It has more than 86 million mobile app downloads in the region.

Although the news came out today, there had already been plenty of speculation about a deal between Uber and Grab in recent weeks, especially after Japan's SoftBank Group made a multi-billion US dollar investment in San Francisco-based Uber earlier this year. The Softbank Group is also the biggest shareholder is Grab. Therefore, not only Grab but also the Softbank Group is regarded a winner in the Uber-Grab consolidation deal.

For Uber it is the second withdrawal from a fast-growing region in Asia. Earlier, in 2016, Uber sold its business in China to Didi, a major Chinese ride-sharing company. A weakness of Uber - at least in Indonesia - is that it only focused on ride-hailing, while Grab and Go-Jek added various other services that proved popular, including on demand food delivery services, package delivery, cleaning services and even massages. Moreover, contrary to Go-Jek and Grab, Uber did not obtain a license from Bank Indonesia to engage in electronic payments.

Number of App Users in Indonesia:

Age Group Go-Jek Grab Uber
18 - 24   2,740 2,687  429
25 - 34   3,699 3,259  998
35+   3,339 3,721  574
(in million)
    9.7   9.6  2.0

Source: Bisnis Indonesia

Updated: 15:15 pm - Monday (26.03.2018)