Japanese firms are involved in a clash of titans that is expected to intensify this year between two successful ride-hailing startups in Southeast Asia.

Fierce competition is looming between Indonesia’s Gojek and Singapore-based Grab, which is backed by companies including SoftBank Group Corp., Toyota Motor Corp. and Yamaha Motor Co.

Gojek is backed by Singapore’s largest local bank (DBS Bank), technology giant Google, Chinese internet services giant Tencent, Singapore sovereign wealth fund Temasek and Chinese online food giant Meituan-Dianping.

Potential may be high, but a rocky road awaits for the ride-hailing sector due to anger from taxi firms — which see their business model under threat — and likely moves by regional authorities meant to ensure a level playing field.

Despite its relatively small population, Singapore has emerged as a key market for ride-hailing firms due to its position as a key business hub and the unique condition of its transport sector. The sky-high price of car ownership has boosted demand for ride-hailing services and electric car rentals.

For decades, the wealthy city-state has pursued a policy of curbing the number of private cars to prevent the traffic snarls that have paralyzed many other Southeast Asian cities. That has made car prices in Singapore among the highest in the world and inadvertently turned car ownership into a status symbol.

In recent years, Singapore has gone even further, with measures including encouraging the use of rented bicycles, allowing electronic scooters on pedestrian paths, promoting car-sharing and conducting trials ahead of the possible introduction of driverless vehicles.

Gojek recently entered the Singapore market with an eye on expanding to the rest of Southeast Asia. On Tuesday, the company announced that from Wednesday it would be extending its ride-hailing services to the whole island following a limited rollout last year.

Gojek’s foray into Singapore will challenge the dominance that Grab briefly enjoyed there after it acquired the Southeast Asian business of U.S.-based Uber in March last year.

Cash-rich Japanese companies have been scrambling to invest in such firms amid the rising popularity of on-demand, smartphone-based chauffeured car services.

In June 2017, SoftBank and Chinese ride-hailing giant Didi Chuxing decided to invest up to $2 billion in Grab. A year later, Grab announced that it had struck a deal for a $1 billion investment from Toyota. That investment was the largest ever by an automaker in the global ride-hailing sector.

Recently, Yamaha agreed to invest $150 million in Grab and form a strategic partnership to collaborate on a motorcycle ride-hailing service in Southeast Asia with a focus on Indonesia.

Last month, Toyota and Grab further announced that the Japanese auto giant will provide “total care service” for 1,500 Grab-owned vehicles in Singapore, with plans to extend the service to other nations in the region.

Grab, headed by Anthony Tan, the scion of a rich Malaysian family, has expanded to cover Singapore, Malaysia, Indonesia, Thailand, Vietnam, Cambodia, the Philippines and Myanmar.

The region’s ride-hailing market is booming. According to a report by Singapore state investment firm Temasek and Google that was released in November, 35 million Southeast Asians use ride-hailing services every month, with 8 million rides taken every day across 500 cities. The report projected that the market for ride-hailing services in the region will hit $30 billion in 2025 from an estimated $7.7 billion last year.

The trend reflects Southeast Asia’s booming internet economy, which is expected to hit $240 billion by 2025, the report said.

The two companies not only provide chauffeured car services but also a host of other e-commerce services. Gojek, which launched its app in January 2015 to provide motorbike delivery and ride-sharing services in Indonesia, also provides payment services, food delivery, logistics and other on-demand services. Grab has also extended its scope to food and package delivery, mobile payments and financial services.

In Singapore, aside from cars being out of reach for most people, the popularity of ride-hailing services is also partly due to dissatisfaction with the quality of service provided by the city’s taxis and frustration with overcrowded commuter trains.

However, ride-hailing services have become so popular that they are threatening the livelihoods of taxi drivers, who have risen in protest in some countries in the region, including Indonesia and Malaysia.

Grab was reportedly ordered by a Vietnamese court to pay compensation of $206,000 to a local taxi firm that sued claiming unfair business practices.

According to data from Singapore’s Land Transport Authority, the number of taxis in Singapore shrank from around 28,000 in 2015 to under 21,000 last year. On the other hand, the number of chauffeured private hire cars plying its roads has risen to 45,000.

The Land Transport Authority said by email that it is “currently reviewing the regulatory framework” for the sector to ensure that taxi and ride-hailing markets “remain open and competitive.”

It said the new regulatory framework will also prohibit driver exclusivity arrangements, a move meant to ensure that drivers are free to choose which operators to drive for, reduce entry barriers for new operators and facilitate more options for commuters.

Grab’s aggressive local expansion has ruffled some feathers, with its acquisition of Uber’s Southeast Asian business prompting the government to intervene to level the playing field for potential competitors, while Singapore’s competition watchdog fined the two companies a total of 13 million Singaporean dollars over their merger.

Despite that backlash, ride-hailing services have provided a lucrative source of livelihood for thousands of people in the region. But hurdles remain. Singapore has charted a plan to create a high-tech public transport sector by complementing its dense commuter train and bus systems with autonomous vehicles, which could remove the need for human drivers altogether.

Authorities see this as a necessity rather than luxury, as a government white paper projects that the city-state’s population will rise to 6.5 million by 2030, up from 5.6 million today. But the introduction of autonomous cars will not come immediately, as they are still being tested and a legal framework for their use must be developed.

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