LTFRB again rejects Go-Jek entry into Philippine market

MANILA, Philippines (3rd UPDATE) – The Land Transportation Franchising and Regulatory Board (LTFRB) again denied the application of Indonesian ride-hailing giant Go-Jek to enter the Philippine market.

Go-Jek had filed an application to be a transport network company (TNC) through its subsidiary Velox Technology Philippines.

In a text message to Rappler on Monday, March 18, LTFRB Chairman Martin Delgra III confirmed that Velox's application was denied due to foreign ownership.

"[It] did not meet [the] citizenship requirement," Delgra told Rappler.

Back in January, the LTFRB's pre-accreditation committee rejected Velox's application for being 99.99% owned by its parent company Velox South-East Asia Holdings, which is Singaporean.

The LTFRB said the Department of Transportation recognizes transport network vehicle services (TNVS) under public transport, thus requiring firms to be at least 60% Filipino-owned.

Documents acquired by Rappler from the Securities and Exchange Commission showed that Filipino firm Pace Crimson Ventures Corporation (PCVC) is the registered majority shareholder of Velox, with a 60% stake in the firm.

But the LTFRB pre-accreditation committee said in its decision that only 20.4% out of 1.2 billion common shares were "actually sold" to PCVC, therefore concluding that Velox is "not-Filipino owned."

LOOK: LTFRB Board Resolution No. 16 rejecting Go-Jek’s local subsidiary Velox Technology Philippines’ application as TNC. Velox can still appeal their case directly to the DOTr. @rapplerdotcom pic.twitter.com/DIWlrOobf2 — Aika Rey (@reyaika) March 21, 2019

 

In its decision, the LTFRB further said that Velox "failed" to present Proof of Payment of Capital Gains Tax and Proof of Payment of Subscribed Shares allegedly subscribed by PCVC.

Velox can still appeal its case directly to the Department of Transportation.

PCVC is owned by Paulo Campos III. Campos is the chief executive officer of Zalora Philippines, where Ayala Corporation acquired a 49% stake in 2017.

Ayala Corporation and Go-Jek had acquisition talks, sources familiar with the matter said earlier.

In a statement sent to Rappler on Monday, Go-Jek said it is "disappointed" with the regulatory body's decision.

"Go-Jek is disappointed with the LTFRB's decision to deny our motion for reconsideration and our offer to address Filipino commuters' urgent need for more transportation options," the company said.

"Commuters in Singapore, Vietnam, and Thailand as well as Indonesia benefit from our technology every day, but due to this decision, it seems drivers and commuters in the Philippines will have to wait a bit longer. We will now explore our options," Go-Jek added.

The Indonesian ride-hailing giant maintained that competition is important to provide better services to commuters.

"The standard of [TNVS] can only be elevated if there is competition among TNC players. We want to provide real options to people who spend more hours on the road than necessary as well as to drivers, whose welfare is always improved by more competition in the sector," Go-Jek said.

Despite the rejection, Go-Jek said that it "hopes to arrive at a fruitful working relationship" with the LTFRB, to deliver ride-hailing services in the Philippines as soon as possible.

The LTFRB's latest decision means ride-hailing giant Grab Philippines remains at the forefront of the industry. Currently, it still dominates the market with 49,000 active drivers on its platform as of February 2019.

Almost a year has passed since Uber sold its Southeast Asia operations to Grab. Since then, the LTFRB has accredited 8 other firms – MiCab, Hirna, Hype, Owto, GoLagePickMeUpSnappy Cab, and Ryd Global.

But these other firms have yet to make a significant impact on the ride-hailing market, with the Philippine Competition Commission saying that the LTFRB should "look outside" for a viable option for commuters. (READ: Months after Uber left, where are the new ride-hailing firms?– Rappler.com

Aika Rey

Aika Rey covers the Philippine Senate for Rappler. Before writing about politicians, she covered budget, labor, and transportation issues.

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