“$5.8 billion.”
That’s the value that ride-hailing firm Grab claims it contributed to Southeast Asia’s economy between April 2018 and March 2019.
That’s a big number, even for the world of ride-hailing, and it is the biggest claim put forth by $14 billion-valued Grab in its inaugural ‘social impact’ report. The 27-page document—chock full of impressive-looking statistics—was released last month to quantify Grab’s mission to “create real, sustainable impact in each country in Southeast Asia, so that each generation can live better than the one before it.”
Lofty economic and social improvement ambitions aside, this may be the most challenging time ever for Grab.
The company’s social impact report detracts from more pressing concerns—it is yet to turn a profit and it remains unclear when it might do so. While it has forecast $2 billion in revenues for 2019, it has remained mum on its losses.
Circumstances outside its control have put the focus on unsustainable business models and billion-dollar valuations. Cab aggregator Uber’s struggle since its eagerly-anticipated IPO—which has included cost-cutting layoffs and a low share price—has raised doubts about the viability of the ride-hailing model. Already, there are reports that some investors in Didi Chuxing, China’s top ride-hailing company, are selling their shares at much lower prices.
More broadly, SoftBank—Grab’s main financier—is under pressure for big bets that have shown few signs of profitability, including co-working giant WeWork’s disastrous (and now abandoned) IPO effort and a collapse at dog walking startup Wag.
On the home front, Grab is increasingly squeezed by Gojek, its upstart rival that’s expanding in the region. Gojek—like Uber before it—has gone the subsidy route in its quest to incentivise drivers and customers in Indonesia, Vietnam (where it is GoViet) and Thailand (where it is Get). For Grab, which expected a break from the undercutting Uber dabbled in liberally, there has been no respite.
And even as Uber has exited, the company’s ghosts are still haunting Grab. In Malaysia, the country where it was conceived, it is subject to an anti-trust investigation regarding its acquisition of Uber’s Southeast Asia business. The transaction has already resulted in a $9.5 million fine after Singapore judged that buying a direct rival had lessened competition. Early reports suggest that Malaysia’s competition commission may hand down a larger fine of $20 million.
Since it acquired Uber’s local business 18 months ago, the company has been on a mission to paint itself as an integral part of the region. Not just a startup, no no. Grab is positioning itself as a key part of Southeast Asia—a business that can help the region grow. The social impact report is simply the most tangible part of this effort to endear the company to the region’s regulators and governments, but it shouldn’t distract from important questions around its long-term sustainability of SoftBank’s largest bet in Southeast Asia in terms of investment capital.
