Grab: From business-school project to game-changer in Southeast Asia

Ride-hailing app brings financial security to drivers and new technology to region

SINGAPORE — In Malaysia, taxi drivers not using meters were once a common sight. And women, fearful of possible assaults, avoided riding alone in taxis.

Seeking to transform the taxi industry in their home country, Anthony Tan and Tan Hooi Ling founded the ride-hailing app Grab in 2012. In the eight years since then, Grab has grown into a leading provider of social infrastructure in roughly 340 cities across eight countries in Southeast Asia.

The two began developing a plan to start a business when they were students at Harvard Business School. Their idea for a ride-hailing app, for which they found inspiration from a lecture on balancing the pursuit of corporate profits with social contributions, came in second in an on-campus competition. After graduation, they returned to Malaysia and started out by teaching taxi drivers how to use the app.

Since the company’s early days, they had an eye on the Southeast Asia market. The company expanded into the Philippines, Singapore and Thailand in 2013, and it ventured into Vietnam and Indonesia in 2014.

In 2018, Grab acquired the Southeast Asian unit of Uber Technologies, a major U.S. competitor, solidifying its status as the largest ride-hailing company in Southeast Asia. The app has now reached 185 million downloads — a figure equivalent to slightly less than 30% of the population of the Association of Southeast Asian Nations member countries of about 650 million.

Grab’s app has now evolved beyond just ride-hailing and allows users to meet many daily needs with their smartphones, including food delivery, food ordering, payment and purchase of insurance policies, among other services. The app gave rise to “leapfrogging,” a phenomenon in which cutting-edge technologies and services prevail quickly in emerging economies, such as those in Southeast Asia, making people’s lives much more convenient and efficient.

It is not just the daily lives of its many customers that Grab has changed. Of the millions of drivers in Grab’s fleet across eight countries, 21% are young people who have never had a permanent job before. And 1.7 million opened their first bank accounts through the experience of working for Grab.

And many restaurants, by participating in the network of Grab’s meal-delivery services, have won new customers and seen their revenues grow significantly.

The number of these sole proprietors, whom Grab refers to as “micro-entreprenerus,” has surpassed nine million. Tan Hooi Ling has stressed that because of Grab’s platform, the quality of drivers’ and restaurant owners’ lives have improved.

In Southeast Asia’s major cities, heavy traffic congestion is a problem, along with frequent road accidents. By analyzing driving recorders and using artificial intelligence, Grab is able to identify areas and situations where collisions are more likely. Drivers also are encouraged to take classes, among other things, with the aim of reducing accidents.

The company is also pushing ahead on talks with Southeast Asian governments to set in place ride-hailing services as new social infrastructure. For instance, it would urge countries to introduce insurance and medical programs for drivers so that they can work with a sense of security. After governments launch such programs, Grab would provide its own additional benefits program.

By 2025, Grab plans to help five million small restaurants and other enterprises in the region to acquire digital technology. By working jointly with educational institutions in the region, Grab also intends to teach 20,000 students state-of-the art technology.

Sole proprietors who fail to keep up with progress in information technology could be driven out of business, according to Anthony Tan. “Through technology, I want to enable all Southeast Asians to have equal and unfettered access to economic opportunities that will allow their families to thrive,” he said.

The global outbreak of the new coronavirus has placed startups like Grab in an unprecedented predicament. As governments have scrambled to impose restrictions on gathering and going out in an effort to curb the spread of infections, the use of the ride-hailing service has decreased considerably.

In response, Grab has lowered the fees that it collects from drivers in order to support those suffering from falling incomes. It also is shifting drivers into food-delivery services, which is in growing demand and part of its effort to fulfill its mission as a life-infrastructure provider.

Anthony Tan and Tan Hooi Ling have built Grab into a company valued at more than $10 billion in just eight years. The coronavirus crisis is again testing the true competence of the two as business managers as well as the social significance of Grab.

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