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Philippine regulator rejects Go-Jek’s application for ride-hailing service

FILE PHOTO: A Go-Jek driver rides a motorcycle on a street in Jakarta, Indonesia, December 15, 2017. REUTERS/Beawiharta

By Neil Jerome Morales

MANILA (Reuters) – The Philippines‘ transport regulator has rejected an application from Indonesia’s Go-Jek to launch a ride-hailing service in the country due to foreign ownership issues, a government official said on Wednesday.

The move puts a wrench in Go-Jek’s plan to corner a bigger share of the Southeast Asian ride-hailing market, currently dominated by rival Singapore-based Grab.

The Land Transportation Franchising and Regulatory Board (LTFRB) denied the petition of Go-Jek’s subsidiary to become the newest ride-hailing service in the Philippines, the regulator’s chairman, Martin Delgra, told Reuters.

Velox Technology Philippines Inc, a unit of Go-Jek, “did not meet the citizenship requirement and the application was not verified in accordance with our rules”, Delgra said.

The Philippine constitution limits foreign ownership to 40 percent for certain industries.

“If they want to appeal. That is their option,” Delgra said, adding Grab remains the Philippines‘ largest ride-hailing firm.

Velox is fully owned by Go-Jek, according to the regulator, while Grab, through its local unit MyTaxi.PH Inc., complies with the foreign ownership limits.

A spokesman for Go-Jek, which counts Tencent Holdings Ltd <0700.HK> and JD.com Inc <JD.O> among its investors, said it continues “to engage positively with the LTFRB and other government agencies, as we seek to provide a much needed transport solution for the people of the Philippines“.

Started in 2011 in Jakarta, Go-Jek has evolved from a ride-hailing service to a one-stop app through which its customers can make online payments and order everything from food, groceries to massages.

Last year, Go-Jek said it would invest $500 million to enter Vietnam, Singapore, Thailand and the Philippines, after Uber Technologies Inc [UBER.UL] struck a deal to sell its Southeast Asian operations to Grab.

The Indonesian firm kicked off a trial launch in parts of Singapore in November and is raising billions of dollars and investing aggressively as more of Southeast Asia’s 640 million consumers use smartphones to shop, commute and make payments.

(Reporting by Neil Jerome Morales in MANILA; Additional Reporting by Fanny Potkin in JAKARTA; Editing by Christopher Cushing and Himani Sarkar)

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