The Jakarta Post
Ride-hailing giant Grab announced on Tuesday that it led a US$100 million series B funding round for homegrown e-wallet LinkAja, making Grab a minority shareholder aside from launching its regional research and development (R&D) center in Indonesia.
Grab Indonesia managing director Neneng Goenadi said in a statement that Grab had decided to fund LinkAja because the e-wallet had a hyperlocal knowledge base and nationwide distribution network reaching Indonesia’s tier two and three cities.
“This investment and strategic collaboration with LinkAja have proven our commitment to accelerating financial inclusion in Indonesia,” she added.
The announcement came after news circulated of Grab planning to merge Lippo-backed OVO with DANA last year to gain dominance over Gojek’s payment solution as GoPay had the largest number of users. However, a recent survey by Ipsos shows that ShopeePay has the highest user penetration rate followed by OVO, GoPay, DANA and LinkAja.
Other than Grab, telco company Telkomsel and venture capitalists BRI Ventura Investama and Mandiri Capital Indonesia also invested in LinkAja's latest funding round.
“COVID-19 does not interfere with our investment plan in Indonesia whatsoever,” Neneng said during an online press conference for the launch of Grab Tech Center, the company’s R&D hub in the region, on Tuesday.
She went on to say that the tech center would focus on researching, designing and testing tools and technology for small and medium enterprises (SMEs) in Indonesia and beyond as well as developing solutions for Grab’s own businesses, namely Grab Kiosks, Grab Food and Grab Merchants.
“We focus on SMEs because many business-to-business tech solutions in the market are designed for larger enterprises, and SMEs may not have the budget, time or knowledge to use these products,” she said, adding that digitizing SMEs could boost their resilience and help prevent more job losses amid the pandemic.
The launch of the tech center is aimed at digitalizing 5 million SMEs as they onboard Grab’s ecosystem by 2025, joining around 6 million SMEs already on the platform, said Grab Indonesia president Ridzki Kramadibrata.
During May to September, Grab reported that over 70,000 merchants in Indonesia joined its ecosystem through its merchant self-onboarding tool.
“We want to help expand the potential of Indonesian tech and look forward to bringing ‘Made in Indonesia’ products to all of Southeast Asia,” Ridzki said, adding that the tech center was part of Grab and Japan-based Softbank's commitment in investing $2 billion in Indonesia’s digital development, which started last year.
According to a study by Mandiri Institute, SMEs that have an online presence are more resilient as they are more likely to continue producing and selling goods as well as have a longer runway to survive the economic slowdown.
The country’s small businesses account for more than 60 percent of gross domestic product (GDP) and employ a majority of the labor force. The study suggests that digitalized SMEs can even help Indonesia reduce 1.5 percent of the economic burden on GDP amid the COVID-19 pandemic.