LTFRB Denies Go-Jek Application to Operate in the Philippines

The Land Transportation Franchising and Regulatory Board (LTFRB) has denied the application of Indonesian ride-hailing company Go-Jek to operate in the country citing foreign ownership issues with its local partner firm last month.

On December 20, the LTFRB issued Resolution 96, which bared its disapproval over the application of Velox Technology Philippines Inc., the corporate vehicle for Go-Jek’s operations in the country.

“Resolution was issued by the accreditation committee denying Velox Technology Phil Inc. application for TNC (transport network company) accreditation on grounds that it did not meet the citizenship requirement and the application was not verified in accordance with our rules,” LTFRB Chairman Martin Delgra said in a message sent to the press.

According to the LTFRB, Velox Technology Philippines Inc. is registered to Singapore-based Velox South-East Asia Holdings, a company of Go-Jek. Under the constitution, a company serving as a public utility should be 60-percent owned by a Filipino.

The Indonesian company, valued at $1 billion, has been vocal about its plans to set up shop in the country since last year, as it hopes to grow its reach in the region. For now, it operates in 50 cities in Indonesia and did soft launch operations in Singapore in November 2018. The startup also counts Google and Tencent of China as major investors.

With this track record and financial capabilities, Go-Jek has the potential to become another ride-hailing giant in the country and effectively compete against Grab Philippines, which has dominated the industry ever since it took over Uber’s operations in Southeast Asia last year.

But with the LTFRB’s recent decision, that future remains unlikely. To be sure, there are seven other players in the industry, namely, Hype Transport Systems Inc., GoLag Inc., iPara Technologies and Solutions Inc., Hirna Mobility Solutions Inc., Micab Systems Corp and E-Pick Me Up Inc.— but none has the financial and technical muscle to compete effectively with Grab.

Delgra said Go-Jek can always appeal the decision. But with the slow pace of bureaucracy, the chances of a new ride-hailing platform that would help ease the burden of commuters in the country will probably come later rather than soner.