Both Uber and GrabTaxi are on a strong expansion mode, with GrabTaxi seen to have the first-mover advantage in the region and a better regulatory standing because it made its name as an app that could be used to book licensed taxis

By Arno Maierbrugger

Gulf Times Correspondent
Bangkok

Globally active taxi booking service Uber, which – according to the Wall Street Journal – just recently got investment backing by the Qatar Investment Authority, and two US-based hedge funds in a $1.2bn funding round, is set to face a battle with one of its most potent rivals, GrabTaxi, in Southeast Asia.

GrabTaxi, a startup that launched mobile taxi booking services in 2012 in Malaysia, has since gained strong acceptance in Southeast Asia and expanded to Singapore, Thailand, the Philippines, Vietnam and Indonesia, adding a well-received service to the sudden burst of taxi booking apps throughout the region. It also grew to Uber’s archrival in the region, especially after it got funding from Singapore’s sovereign wealth fund Temasek Holdings earlier this year and, just recently, a massive $250mn injection from Japan’s telecom and Internet group Softbank.

Both companies are on strong expansion mode, with GrabTaxi seen to have the first-mover advantage in the region and a better regulatory standing because it made its name as an app that could be used to book licensed taxis as opposed to Uber’s ride-sharing business model which has caused a lot of legal troubles for the latter during the global Uber roll-out. For example, Uber has been declared illegal in Vietnam and Thailand and is under increased scrutiny in Malaysia, Indonesia and Singapore regarding its compliance with local transportation laws.

Meanwhile, GrabTaxi launched an Uber-like private car service GrabCar in Malaysia and has since entered the Philippines, Thailand and Singapore using registered limousine services. Uber has expanded the other way round and, after starting in Asia with its Uber Black private car service, this year launched its cheaper UberX service in a number of cities in Southeast Asia.

GrabTaxi CEO Anthony Tan said the advantage over Uber in the region was that the company is focusing on providing “safer and more convenient transportation” for the 600mn people who live in Southeast Asia and is utilising its regional knowledge about business customs and transport preferences. For example, to tap the huge potential in a 90mn-people country such as Vietnam, GrabTaxi is now also offering a motorbike taxi app. In October this year, it started a beta project called GrabBike in Vietnam, trying to connect the hundreds of thousands of motorbike taxi drivers with potential customers. There are also indications that GrabTaxi would expand to Japan and India.

While there are indeed a number of other regional competitors for GrabTaxi and Uber in Southeast Asia, most of them are lacking the solid financial backing of the two companies. Apart from Rocket Internet-funded EasyTaxi, which has the advantage of having been given approval to operate in China, other regional apps such as Taxi Hero, Tappxi and many more are too small to compete.

Who will become the winner in the taxi app battle in Southeast Asia is hard to say. Uber certainly has the financial strength to develop more services and expand aggressively in the region, but it is also bound by a large number of legal battles. However, after the $1.2bn funding, the company with its current market value of $40bn, plans to raise $600mn more funds during the first quarter of 2015 and is believed to reach a $100bn valuation when it will stage its expected IPO in the next one to three years – which could give GrabTaxi a real hard time.