Grab’s Investment in LinkAja is a Positive Signal for Local Fintech
Grab’s investment in LinkAja at the end of last year was considered to be a positive signal for startups, especially in the field of financial technology (financial technology/fintech). Economic Observer from the Indonesia Strategic and Economic Action Institution, Ronny P. Sasmita, said Grab‘s decision deserves appreciation.
This is because in addition to proving their role as one of the pioneers of digital technology that plays a role in increasing national financial literacy and inclusion, they also pay attention to local fintech players through investment.
“Grab’s corporate action will be a signal for other investors, both domestic and foreign, to be more confident in expanding into Indonesia’s increasingly digital and fintech ecosystem,” said Ronny in his statement, Tuesday (26/1/2021).
In terms of future business considerations, Ronny added, Grab’s move was very rational because Grab would have a prospective captive market opportunity that is already within LinkAja’s reach.
LinkAja itself is in the BUMN ecosystem, which means that the implementation of good corporate governance is a must. LinkAja currently has more than 58 million registered users, with more than 80 percent of its users coming from tier 2 and 3 cities in Indonesia.
“Grab will play a major role in encouraging digitalization, literacy, and financial inclusion in SOEs to government. This is a potential that other fintech investors do not have,” said Ronny. To note, in November 2010, Telkomsel and BRI Ventura, Mandiri Capital Indonesia, led by Grab, invested new capital of USD 100 million or around IDR 14 trillion into LinkAja.
Synergy and Collaboration
The strategic investment from Grab will include various synergies and potential collaboration for the two parties. It is hoped that the collaboration and synergy between the company will accelerate and at the same time increase the financial inclusion of the Indonesian people.
“We chose to invest in LinkAja because with this collaboration, we can accelerate our goal of accelerating financial inclusion in this country,” said Managing Director of Grab Indonesia, Neneng Goenadi. On the other hand, the decision to raise funds for this digital wallet service cannot be separated from a number of advantages the company has.
One of them is that this service is supported by a strong shareholder base which is the ranks of the leading BUMN in Indonesia. This digital wallet service is known as an innovative product with a strong brand that is rapidly developing into an iconic local fintech platform in Indonesia.
During the economic challenges in the pandemic, LinkAja was able to increase the Gross Transaction Value (GTV) and the number of transactions in the third quarter of 2020 by three times, compared to the same period in the previous year.
“We are sure that this strategic partnership supported by investment and the strength of Grab’s technology will strengthen services in providing effective solutions to provide access to finance and the economy for the Indonesian people,” said LinkAja’s President Director, Haryati Lawidjaja.
Indonesia’s Financial Literacy Potential
Ronny explained, data from the Financial Services Authority (OJK) recorded that Indonesia’s financial literacy index in 2019 had reached 38.03 percent, an increase compared to the results of the same survey in 2016, which was 29.7 percent. Indonesia also recorded an increase in the financial inclusion index from 67.8 percent in 2016 to 76.19 percent in 2020.
“This is a big potential that must be seen by investors,” said Ronny. In addition, continued Ronny, Grab Indonesia’s decision will also give confidence to Indonesia itself to continue to improve itself and develop a digital ecosystem and national financial technology so that it can continue to compete with neighboring countries.
“Because to this day, Indonesia is still behind several other ASEAN countries in terms of the financial inclusion index. However, Indonesia is still behind Singapore which has reached 98 percent in financial inclusion, Malaysia 85 percent, and Thailand 82 percent,” said Ronny.