Indonesia Pushes Grab-GoTo Merger Amid Driver Control Concerns
Indonesia is reportedly advancing plans to merge regional ride-hailing giants Grab and GoTo in a government-led initiative that analysts suggest prioritizes political stability over market dynamics, according to a report by The Straits Times. The move allegedly comes as President Prabowo Subianto seeks greater oversight of approximately seven million ride-hailing drivers who have emerged as a significant political force in the archipelago.
The Indonesian government is simultaneously developing regulations that would reportedly extend employment benefits including health insurance to active drivers, according to The Straits Times. This framework would effectively establish them as permanent employees while marginalizing less active participants in the workforce. Transport Ministry officials indicated the measures respond to growing concerns about the political influence of ojol riders, following their prominent role in August mass demonstrations against parliamentary salary increases.
The August protests escalated into widespread civil unrest after a 21-year-old motorcycle rider died following a collision with a police vehicle during demonstrations in Jakarta. The violence spread across 32 of Indonesia’s 38 provinces, resulting in 10 fatalities and over 5,000 arrests. This marked the deadliest period of social instability in Indonesia in more than twenty years.
State Secretary Prasetyo Hadi confirmed discussions regarding the merger on November 7, stating that talks form part of broader efforts to regulate online motorcycle taxi services. The government reportedly plans to involve sovereign wealth fund Danantara in the proposed consolidation, with multiple ministries participating in negotiations. Grab and GoTo have allegedly engaged in intermittent merger discussions for several years.
A combined entity would reportedly control over 91 percent of the Indonesian ride-hailing market according to Euromonitor International data. GoTo’s Gojek division alone operates with more than 3.1 million riders. Grab maintains a market capitalization of 23.66 billion dollars on the Nasdaq exchange, while GoTo holds a valuation of 67.74 trillion rupiah on the Indonesia Stock Exchange.
Economists have questioned the government’s intervention in private sector transactions. Jakarta-based Centre of Economic and Law Studies economist Nailul Huda emphasized that mergers represent normal corporate actions that typically proceed without government endorsement. He suggested the intervention aims to preempt objections from Indonesia’s anti-monopoly commission regarding market concentration.
Financial analyst Henry Pranoto argued that GoTo serves as informal social infrastructure for recently unemployed workers seeking temporary income while searching for stable positions, The Straits Times reported. He maintained this function justifies government support for the platform despite competition concerns.
Deputy head of presidential communications Noudhy Valdryno rejected claims that the government seeks to reduce driver numbers. He stated the administration prioritizes maintaining a healthy ride-hailing sector that supports economic growth while ensuring fair treatment and welfare provisions for platform workers. Both companies acknowledged the government’s regulatory efforts while declining detailed comment on merger specifics.
