[JAKARTA] Singapore’s Grab and Indonesia’s tech behemoth GoTo have denied reports of merger talks, but the speculation alone has reignited deeper anxieties over consolidation in Indonesia’s digital economy, where concerns about foreign influence, job security and the potential reach of the state abound.
Both tech giants issued statements on Monday (Jun 9) denying any ongoing talks. GoTo, in a stock exchange filing, stated that it “cannot comment on market speculation.”
Beyond the denials, the episode has put the spotlight on some structural risks such as market concentration and regulatory uncertainty.
Another flash point is the extent of government involvement in shaping the future of the tech industry. Chiefly, the role of Indonesia’s newly established sovereign wealth fund, Danantara, adds another layer of complexity.
Bloomberg reported that Danantara – a multibillion-dollar fund launched by President Prabowo Subianto to spur investment, particularly in the digital economy – is eyeing a minority stake in the rumored merged entity.
However, Jakarta Globe reported that Danantara’s managing director of investment, Stefanus Ade Hadiwidjaja, said the fund has not initiated any formal review or assessment of a potential investment in GoTo. “There are currently no discussions on this matter,” he said.
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While the parties involved have dismissed the report, it has sparked debate over the government’s growing involvement in strategic digital assets through state-backed investments. None of this is new.
In the past, Indonesia’s state-owned venture capital arms – MDI Ventures, Mandiri Capital, Telkomsel Mitra Inovasi, BRI Ventures and BNI Ventures – have played an active role in the startup ecosystem, collectively pouring capital into hundreds of digital companies.
But not all bets have paid off. Several ventures, including agritech startup TaniHub, have collapsed or run into serious trouble, prompting renewed scrutiny over the effectiveness, oversight and long-term strategy of public funding in the tech sector.
The big worry is that state involvement through entities such as Danantara could blur the lines between regulator and operator and raise the risk of the government interfering in issues related to competition oversight. This could potentially undermine fair market practices.
Oktavianus Audi, vice-president and head of marketing, strategy and planning at Kiwoom Sekuritas, said Danantara’s potential entry is viewed as a strategic move to maintain partial domestic influence in an increasingly foreign-dominated tech sector.
“There are concerns that post-merger efficiency drives and market dominance could lead to layoffs and reduced partner (drivers) welfare, such as higher commission fees. These effects could ripple through the MSME (micro, small and medium enterprises) ecosystem, ultimately dampening household consumption,” he told The Business Times.
Syarkawi Rauf, former head of Indonesia’s antitrust commission, noted that if Danantara was indeed eyeing a stake in GoTo, it would likely reflect a directive from Prabowo himself – underscoring a broader populist strategy to assert national interest in Indonesia’s digital economy.
Employment fallout
The rumored merger comes amid growing concerns over job security in Indonesia’s tech sector. Mass layoffs tied to mergers and acquisitions have raised red flags within Indonesia’s tech industry over the past few years, prompting concern from both labour groups and government officials.
Indonesia’s e-commerce giant Tokopedia emerged as a focal point of growing concerns following its acquisition by TikTok.
Following last year’s mass layoffs, media reports indicated that Tokopedia employees could face another round of phased layoffs if TikTok moves forward with fully integrating its systems by July. The potential job losses have intensified scrutiny over foreign-led consolidations in the digital sector and their impact on local employment.
Vice-minister of manpower Immanuel Ebenezer urged companies to ensure that workforce restructuring does not violate national labour protections.
A Grab Indonesia spokesperson recently noted that although Grab is legally registered as a foreign investment company, its operations in Indonesia are entirely led by local talent.
The spokesperson also stressed the company’s continued commitment to empower small businesses and create broader opportunities for Indonesians.
Complex trade-off
Merger talks between Grab and GoTo have surfaced intermittently over the years, but gained renewed momentum following a Reuters report suggesting a potential deal could be sealed as early as Q2. The report indicated GoTo could be valued at around US$7 billion.
Analysts said any such merger would present a delicate balancing act for the Indonesian government, which must protect national interests while preserving a competitive, investor-friendly market environment.
GoTo, born from the merger of Indonesia’s early unicorns Gojek and Tokopedia, has become a leading symbol of the country’s digital transformation.
With more than two million driver partners and a projected gross transaction value of 268.2 trillion rupiah (S$22 billion) last year, equivalent to roughly 1.2 per cent of Indonesia’s gross domestic product, the company’s influence on the national economy continues to grow significantly.
Based on Kiwoom Sekuritas, a Grab-GoTo merger could result in the combined entity controlling about 85 per cent of South-east Asia’s ride-hailing market and up to 90 per cent in key markets such as Indonesia and Singapore.
For GoTo, Kiwoom noted, the deal could unlock significant operational and marketing synergies. Despite posting a net loss of 926 billion rupiah in Q4 last year, these efficiencies could boost performance and potentially lead the company to its first-ever net profit.
However Audi from Kiwoom warned that if Danantara was involved, decision-making – especially regarding long-term business strategy – could slow as state investors push for alignment with national priorities.
Monopoly concern
Even in the absence of a confirmed deal, the mere prospect of a Grab-GoTo tie-up has sparked concerns over monopolistic practices, with analysts warning it could lead to market dominance in South-east Asia’s ride-hailing and delivery sectors.
Indonesia’s antitrust agency in May said it will closely monitor the deal to prevent unfair competition.
Analysts expected the enlarged entity to have significant influence over pricing, driver commissions and service reach – variables that affect not only consumers and drivers but also MSMEs that rely on delivery and digital services.
Izzudin Al Farras, head of the centre for digital economy and SMEs at the Institute for Development of Economics and Finance, argued that if Danantara seeks a minority stake in the merged entity, its influence over strategic decisions would likely be limited.
“Major decisions will still be driven by majority shareholders like Grab,” he said. “This raises questions about the value of Danantara’s participation and may even spark unease among local startups also competing for funding.”
Farras said Danantara’s involvement not only lacks developmental merit, but may undermine fair competition. He said the merged entity’s market share would likely edge out smaller ride-hailing platforms, further concentrating power.
“The state should be enabling a competitive, level-playing field – not investing in a potential monopoly,” he said. “We should be strengthening the weak and scaling up local startups.”
Role of sovereign investment
Growing concerns are emerging about the prudence of channeling public funds into ventures that have historically struggled to deliver returns.
State-owned telecommunications giant Telkom booked a 308 billion rupiah loss in the first quarter of this year from its investment in GoTo. The company first entered GoTo in 2023, acquiring 29,708 convertible shares valued at US$150 million, or roughly 2.1 trillion rupiah.
This expanding role raises questions about balancing strategic national interests with financial discipline.
Martyn Terpilowski, tech investor and chief executive of Bhumi Varta Technology, pointed out that both GoTo and Grab have historically struggled to achieve profitability and have yet to demonstrate strong investment returns, raising questions about the rationale behind Danantara’s potential investment in their merger.
“Several state-owned firms have already burned a lot of money in the startup scene, including during the pre-initial public offering phase, so it’s interesting to understand the rationale here,” he said.
