JAKARTA: Homegrown tech giant GoTo is set to close its operations in Vietnam on Sept 16, according to a company announcement on Wednesday (Sept 4), as it seeks to close the gap to achieve profitability.
The company explained that Vietnam is a highly fragmented market, with multiple players in transport and food delivery.
These include regional players Grab, as well as Xanh SM, which is backed by the chairman of local conglomerate Vingroup.
The decision to exit the Vietnamese market will allow GoTo to focus on operations that can deliver “a significant market impact” in “a sustainable manner”.
It is also aligned with the company’s commitment to breaking even on adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) this year.
“[Our] Vietnam business accounted for less than 2 per cent of the gross transaction value [GTV] of on-demand services in Q2 2024.
Therefore, the decision will not have a detrimental impact on the company’s broader operations, overall business and financial performance,” the firm’s spokesperson RA Koesoemohadiani said in a statement.
According to the company’s financial report, international operations contributed 9.1 per cent of its net revenues in 2020, despite the pandemic.
However, the figure dropped significantly to just 2.7 percent last year.
After its exit from Vietnam and having left the Thai market in 2021, GoTo will only operate on-demand services in Singapore and its home base of Indonesia.
GoTo began expanding its business to neighbouring countries in South-East Asia in 2018, aiming to take advantage of global ride-hailing company Uber’s exit from the region as it refocused on other markets.
It executed the plan by entering Thailand, Vietnam and Singapore later that year.
To support the expansion, GoTo earmarked US$500 million in funding raised from prominent investors, including Astra International, Warburg Pincus, KKR, Meituan, Tencent, Google and Temasek.
However, after just three years in business, the company announced its exit from the Thai market after selling its operations to Malaysian budget carrier Air Asia Group, which was in the process of expanding its lifestyle super app.
In return, GoTo received a 4.76 per cent stake in the app. The decision was made just two months after its merger with local e-commerce giant Tokopedia and the company laid out a plan to go public on the Indonesian Stock Exchange (IDX).
GoTo previously also planned to expand into the Philippines and Malaysia, but those plans never materialised.
Its request to operate in the Philippines was rejected by Manila because of local regulations on corporate ownership.
In Malaysia, Putrajaya initially granted GoTo principal approval to offer motorcycle ride-hailing services, the firm’s main service, in 2019.
However, two years later, it reversed the decision by banning motorcycle ride-hailing because of concerns over the high number of road accident fatalities involving motorcyclists.
In Indonesia, two-wheelers accounted for 77 per cent of the country’s traffic accidents, according to National Transportation Safety Committee data from last year, but the government refrained from banning motorcycle ride-hailing services. - The Jakarta Post/ANN
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