SINGAPORE (Reuters) - Indian ride-hailing firm Jugnoo plans to enter the Singapore market next month, its chief executive said on Wednesday, joining other companies eyeing the city state as Uber Technologies [UBER.UL] prepares to leave.
Uber’s app will continue to operate in Singapore until May 7, although the U.S. company has shut down in the rest of Southeast Asia after selling its regional operations to local competitor Grab.
Jugnoo and other ride-hailing companies are looking to fill the gap left by Uber, which analysts say may help ease regulatory concerns about the sale to Grab.
The Competition and Consumer Commission of Singapore (CCCS) outlined this month a set of measures to ensure an open market while the watchdog examined their merger.
Jugnoo, which uses auto-rickshaws in India, will offer a private car-based service in Singapore with an app that will allow riders to choose from drivers’ competing bids on fares.
Drivers will not have to pay commission to Jugnoo for the first six months, the company has said.
After that, Jugnoo will take a 10 percent commission, which it hopes will lure drivers when compared to Grab’s commission of up to 20 percent.
Customers will pay a convenience charge, or a small booking fee, after the first six months of the service.
“We are hoping that even if we are able to get a 10 percent market share in a year, we will be a profitable company (in Singapore),” Samar Singla, Jugnoo’s chief executive, told Reuters on Wednesday.
Last month, Singapore-based Ryde Technologies said it would launch an app offering a private-hire car service and charge drivers a commission rate of 10 percent.
The barriers to entry in the ride-hailing sector are relatively low in Southeast Asia, but new entrants will need to scale up quickly to compete with Grab, which is backed by Japan’s SoftBank
The Singapore market is complicated by the high cost of car ownership on the island, where the government tightly controls the number of vehicles on the road.
“In addition to the usual methods of competing in ride-hailing, which is using incentives and subsidies to build up your network, in the Singapore market that means they will most likely have to incur quite a bit of cost providing the fleet,” said Walter Theseira, a senior economics lecturer at the Singapore University of Social Sciences.
New competition is emerging in other Southeast Asian markets.
Indonesian ride-hailing and online payment company Go-Jek is looking to expand into the Philippines, Manila’s transport regulator said last week.
Go-Jek also plans to enter Singapore soon, the Straits Times newspaper reported this month.
“If an entrant comes in and quickly acquires substantial market share, we could very well see the (CCCS) investigation dropped,” Theseira said.
Reporting by Aradhana Aravindan; editing by Darren Schuettler