Grab’s green and white logo is everywhere across Vietnam’s big cities, a market of 96m people in which the ride-hailing company was a pioneer and now dominates after buying control of Uber’s regional operations last year.
The Singapore-based company is the largest ride-hailing group in south-east Asia, operating in eight regional countries and 336 cities after chasing Uber out last year in a deal that replicated the US group’s withdrawal from China.
But Grab is facing a growing challenge to its supremacy in one of its fastest-growing markets in south-east Asia from local competitors — some of which also have regional ambitions.
Regional arch-rival Go-Jek, which launched a motorbike taxi service in Vietnam last year, is planning to expand into taxis.
FastGo, a Vietnamese ride-hailing start-up, said it had registered about 60,000 drivers in Vietnam, luring them with the offer of a flat fee rather than the percentage-based commissions Grab charges them. The company said it planned to be in six other south-east Asian countries by year-end, starting with Singapore.
“When Uber exited south-east Asia, we saw a good opportunity,” said Nguyen Huu Tat, FastGo’s co-founder and chief executive officer. “Our target is to become a top three ride-hailing company in south-east Asia.”
Be Group, another Vietnamese ride-hailing app, launched in December and aims to have more than 100,000 drivers signed up by the end of this year.
Vietnam authorities, meanwhile, are considering regulations that would pull Grab’s 175,000 drivers and bikers, along with those of the country’s other new “ehailing” companies, under the same regulatory umbrella as taxicabs.
At stake for Grab and its competitors is not just a market for apps-driven transport, but the race to be the dominant “super-app” for goods and services, where consumers will go first to order transport and food, arrange deliveries and make mobile payments
In a joint report last year Temasek, Singapore’s state-owned investment company, and Google estimated the size of Vietnam’s online economy, including ride-hailing, at $9bn, and predicted it would grow to $33bn by 2025.
Estimated value of Vietnam’s online economy by 2025, according to Google and Temasek
Grab itself is pushing deeper into services, last year partnering with Vietnamese digital payments company Moca.
“We have a very deep pool of long-term strategic investors who are willing to bank on our everyday super-app strategy,” said Jerry Lim, Vietnam country director for Grab, which is raising $6.5bn this year to fund its expansion.
Indonesia’s Go-Jek, Grab’s biggest competitor, is raising its own funds, in a round of undisclosed size led by its investors including Google, JD.com and Tencent.
The growing competition comes as Vietnam’s government looks at tightening regulations on ride-hailing companies. A current draft of proposed new rules would require vehicles to install taxi-style “light boxes” on their vehicle roofs — useless for ride-hailing services and costly to implement — and send authorities post-trip details after every ride.
Grab’s Mr Lim said the ride-hailing industry was “deeply concerned” by the proposed changes: “We very much hope that the government will not implement the protectionist policies that are being advocated by the taxi industry.”
Having built an export-driven economy with foreign-owned enterprises as its backbone, Vietnam has over the past year adopted regulations in sectors such as pharmaceuticals and carmaking meant to strengthen the position of local companies.
By John Reed, Financial Times Follow John Reed on Twitter: @JohnReedwrites