Singapore-based ride-hailing firm Grab is set to invest “several hundred million dollars” in Vietnam where the company sees its next major growth market, just weeks after it unveiled a $2 billion plan in Indonesia.
The proposed investment is the latest example of a top-notch regional brand deepening its commitment to Vietnam, one of Asia’s fastest growing economies. It also shows the eagerness of Grab, which has raised billions of dollars from investors, to put its cash to work.
“We’re very excited about Vietnam. We see very similar characteristics to Indonesia,” Grab President Ming Maa told Reuters in an interview.
Grab and rival Indonesia-based Go-Jek are evolving from ride-hailing app operators to become one-stop shops for services as varied as payments, food delivery, logistics and hotel bookings in Southeast Asia.
Grab, with its app on more than 160 million mobile devices across eight countries, has said its Indonesia investment aims to build a next-generation transport network and transform how critical services such as healthcare are delivered.
Like Indonesia, many middle class and young consumers in Vietnam are using apps and websites to access services, Maa said.
“I would expect us to invest over several hundred million dollars into growing our Vietnam business,” he said without giving specific details on the investment.
Vietnam ranks third or fourth among Grab’s top markets, said Maa, who joined the company three years ago from its major investor, Japan’s Softbank Group Corp, and a previous decade-long stint at investment bank Goldman Sachs.
Grab partnered with Vietnamese fintech firm Moca in 2018 to launch a digital wallet. Grab formed a joint venture with Credit Saison, a Japanese credit card company, last year to offer loans and credit analysis to consumers and micro-entrepreneurs across Southeast Asia.
Grab was Vietnam’s most downloaded ride-sharing app from January to July, according to market data and analytics firm, App Annie. Aside from Go-Jek, Be is another ride-hailing competitor.
The wealthy city-state of Singapore is Grab’s second-biggest market, where it is building a $135 million headquarters. The company, which has over 4.5 million drivers in the region, aims to double its revenue to $2 billion this year.
Maa said its total gross merchandise volume (GMV) in food delivery, a segment where it is expanding aggressively, has surged 300% in the first half. GrabFood now accounts for 20% of the company’s total GMV.
In its mature ride-sharing business, the company is profitable in several of its markets, Maa said, adding that Grab has no specific plans for an IPO.
‘Tip of the iceberg’
By rolling out a range of daily services at varied price points, Maa was confident of Grab sustaining high growth rates. The company counts Toyota, Microsoft, China’s Didi Chuxing and Hyundai among its backers.
Grab, Southeast Asia’s biggest start-up with an estimated valuation of about $14 billion, is also betting on its payments business to fuel growth in financial services.
“We’re just at the tip of the iceberg for financial services,” said Maa, adding that developing the region’s largest payment mobile wallet gave Grab valuable data insight into customers and drivers on its network.
It wants to use those insights to create specific financial products including in insurance, credit and ultimately wealth management offerings.
Maa said Grab is interested in taking up a digital banking license in Singapore, where the central bank has announced plans to issue up to five online-only bank licenses and is expected to provide detailed guidelines in a few weeks.
“By using deflationary forces like digital banking, we are able to provide very similar sets of financial services at much lower cost than what traditional banks are able to provide,” said Maa, who earned a master’s degree from the Massachusetts Institute of Technology.
Grab’s interest in digital finance shows how non-banking firms in Asia are shaping up as potential rivals to traditional banks by leveraging their technology and user databases to offer banking services to retail customers and small businesses.
Southeast Asia’s internet economy is expected to exceed $240 billion by 2025, a joint study by Google and Temasek Holdings showed in November, a fifth more than previously estimated, as more consumers use their smartphones to go online.