Cambodia: Officials praise ride app merger despite anti-competition fears

• Apr 11, 2018

In the days following the announcement that ride-hailing giant Uber was selling its Southeast Asia assets to regional competitor Grab, regulators and government officials across the region took action to ensure the move wouldn’t hurt competition in the sector.

Regulators in the Philippines and Singapore, where Grab is based, launched anti-trust investigations, while Malaysian officials said they would follow suit. On Monday, it was reported that Vietnam’s Competition and Consumer Protection Department had ordered Grab to prove it wasn’t a monopoly in the country.

The reaction in Cambodia could not have been more different.

Peou Maly, an undersecretary of state at the Ministry of Public Works and Transport’s Transportation Department, said Cambodia would always welcome and support international firms in Cambodia.

“The more companies who come to Cambodia, the better the price and quality of service for the consumer,” he said, apparently ignoring the anti-competition concerns raised by neighbouring countries’ regulators.

His response mirrors that of his boss, Transport Minister Sun Chanthol, who met with officials from Grab about their Uber acquisition on Thursday.

During the meeting, Chanthol “expressed his hope that the merging of these two on-demand services will bring down the price for the benefit of Cambodian citizens”, and “encouraged them to work closely with a team from the ministry”, according to a post on the ministry’s Facebook page.

It wasn’t the first time Chanthol expressed his support for Grab. During the company’s country launch in December, the minister said he hoped they were able to have an initial public offering (IPO) before their “competitor”, a thinly veiled reference to US-based Uber.

Grab country head Wee Tang Yee was appreciative of the minister’s words yesterday, telling The Post that the ministry had been “very supportive” of the company since they began operations in the Kingdom.

One reason why regulators aren’t gearing up for investigations in Cambodia may be that the country lacks a competition law.

While international experts have been consulting on a draft competition law since at least 2005, and while it was a specific priority for all countries that joined the Asian Economic Community in 2015, over a decade of work has not yet resulted in any approved legislation.

As of now, the only regulation of anti-competitive behaviour is a single sentence from the Trademark Law, which says, “Any act of competition contrary to honest practices in industrial, commercial, service matters shall be considered as act of unfair competition.”

However, the law is later specified to refer primarily to deceptive marketing or misleading information, according to a 2015 article published by David Fruitman from the tax firm DFDL. “To my knowledge, there has been no judicial or regulatory application of this Article that provides guidance as to whether it would apply to more general competition concerns,” the article says.

Grab does face home-grown competition in Cambodia in the form of local ride-hailing apps such as PassApp, Exnet and UGo 711 Taxi.

Those apps once enjoyed a significant price advantage over the more expensive Grab, but that has largely evaporated in recent weeks as Grab has lowered prices. It has also launched new services, such as GrabBike and GrabTukTuk, which put it in more direct competition with local startups.

“Grab doesn’t have too many tuk-tuks or rickshaws on the streets yet . . . but maybe it will soon, and then we will worry,” said Hor Daluch, founder of Exnet, which was the first ride-hailing application in the country when it launched in 2016.

Daluch said he was interested in cooperating with the MPWT, who have never contacted him or his firm, but also said he was hesitant because of the government’s lack of clarity around licensing and regulatory rules.

“We have met with City Hall many times to discuss regulations, but still they say they are not sure how to regulate us,” he said. “What are the rules? We don’t know.”

The local entrepreneur said he was worried that if left unchecked, Grab’s new services and pricing would lead to a “monopoly”.

Khunneang Nang, who operates UGo 711 Taxi, also said he was worried about Grab, and that local apps would have to innovate to stay competitive.

Nang also called on the MPWT to collaborate with local startups in similar ways to how they cooperate with larger companies like Grab.

“If the ministry wants to do good, [it] will work more closely with local investors and local apps in the future,” he said.

Source: https://www.phnompenhpost.com/business/officials-praise-ride-app-merger-despite-anti-competition-fears