Ride sharing and beyond . . .
Japanese software giant Softbank Group has announced it will invest US$2 billion over the next five years in Indonesia through Grab, a Singapore-based ride-sharing firm. This investment is an effort by Softbank and Grab to become a ride-sharing leader in Indonesia, Southeast Asia’s largest market for such services and home to some of the most notorious traffic jams in the world. Beyond ride-sharing, Grab also intends to use this investment to build the next generation of Indonesia’s transportation network based around electric vehicles, and to develop geo-mapping and e-healthcare services.
Catching up with the neighbours . . .
This investment is a big victory for Indonesian President Joko ‘Jokowi’ Widodo, who vowed to boost inward Foreign Direct Investment into Indonesia as part of his re-election campaign earlier this year. Indonesia lags behind regional rivals in terms of attracting FDI. FDI made up less than 2% of Indonesia’s GDP in 2018, while Malaysia and Vietnam boasted rates of 3% and 6%, respectively.
Indonesia the next investment hot spot . . .
While Indonesia is currently the world’s 7th largest economy, PwC predicts it is well on its way to become the world’s fourth largest by 2050. As Jokowi looks to continue attracting FDI, its youthful and increasingly urbanized population makes Indonesia an attractive destination for investment. Canada has invested over US$1 billion in Indonesia since 2010, although that amount falls well below others such as Singapore and Japan. Japanese automaker Toyota alone recently announced investments in Indonesia of US$3.6 billion for hybrid vehicle production and export.
- Bloomberg: Toyota’s $2 billion pledge revs up Indonesia’s electric car push
- The Jakarta Post: Softbank invests another $2 billion in Grab, pledges more for EV projects
- PricewaterhouseCoopers: Softbank commits $2bn to Indonesia via Grab