LDN - Business

Gojek CEO quits to join Indonesian cabinet, replacements named

[October 21, 2019] By Fanny Potkin

JAKARTA (Reuters) - Gojek CEO and co-founder Nadiem Makarim said on Monday he had resigned to join Indonesia's new cabinet, and the ride-hailing and payments company said two senior executives would jointly take over running operations of the $10 billion firm.

President Andre Soelistyo and the other co-founder Kevin Aluwi would be the joint CEOs, Gojek said. It noted in a statement it had "planned for this possibility and there would no disruption to our business."

Makarim, 35 and a graduate of Brown University and Harvard Business School, told reporters at the presidential palace in Jakarta it was a "a big honor to be able to join the cabinet." He said his specific role would be announced by President Joko Widodo later in the week.

Some economic analysts said they were surprised by Makarim's departure, which comes in the heat of Gojek's battle with Singapore-based rival Grab. Its biggest shareholder Softbank said in July it will invest $2 billion in Indonesia through Grab, taking on Gojek in its home market.

Having evolved from a ride-hailing service founded in 2010 to a one-stop app via which users can make online payments and order food and services such as massages, Gojek is now targeting a larger slice of the Southeast Asian market, where Grab currently dominates ride-sharing.

Outside Indonesia, where it recently launched a "Netflix" style video-streaming service, Gojek has also expanded to Singapore, Vietnam, Thailand, and the Philippines. An expansion to Malaysia is planned.

"We will make an announcement on what this news means for Gojek within the next few days," the company said, referring to Makarim, who has been the face of the tech startup.

The Indonesian company, valued at $10 billion, raised over $1 billion earlier this year from backers including Alphabet's Google <GOOGL.O> and Chinese tech giants Tencent <0700.HK> and JD <JD.O>.

Google, which has invested $500 million in Gojek, declined to comment on Makarim's departure, while Tencent and JD did not immediately respond to requests for comment.

A senior executive at a private equity investor in Gojek said it was a positive move.

"Nadiem has been the face of the company but for all practical purposes, the people behind the operations and financing have been Kevin and Andre," the executive said, declining to be identified further. "Investors have been kept informed of the potential changes and net, net, I think this is a positive move for GoJek."

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Commuters pass by a Gojek advertisement in Singapore March 4, 2019. Picture taken March 4, 2019. REUTERS/Edgar Su/File Photo

Makarim said he and Widodo had spoken about "directions to develop Indonesia in the future" including in "human capital, bureaucratic reform, and investment."

FOCUS ON TECH

Indonesia media have linked Makarim, from a prominent Jakarta family, to a possible cabinet post in a new digital economy ministry or in education. Makarim's grandfather was an figure in the country's freedom movement and a member of parliament.

The announcement was welcomed by investors and analysts as a signal Widodo would focus on developing Indonesia's booming technology sector.

The Indonesian leader has repeatedly pledged to invest in bridging the acute skills shortage faced by the country's startups. While Indonesia's Internet economy is forecast to grow to over $100 billion by 2025, it produces only 278 engineers per million people a year, according to consultancy A.T. Kearney.

"Gojek is one of the most valuable unicorns in the region but much can be done at the national level as tech entrepreneurs continue to face challenges in terms of regulations, infrastructure and lack of IT talent in the region," said Winston Cheng, a former international president of Chinese e-commerce giant and Gojek backer JD.com <JD.O>, who was a Gojek board member until 2018.

"Having an industry leader such as Nadiem in a tech and education related government role would bridge the gap between public policy and industry to accelerate the development of the tech industry in the region," he added.

Gojek is one of Indonesia's five unicorns - companies that have reached $1 billion in valuation without tapping the stock markets.

The others are travel site Traveloka, market places Bukalapak and Tokopedia, and Grab-backed fintech firm OVO, which competes with Gojek's own payments platform Gopay for the top spot in Indonesia's multi-billion dollar online payments market.

(Reporting by Fanny Potkin in Jakarta and Yingzhi Yang in Beijing, additional reporting by Anshuman Daga in Singapore, Josh Hortwiz in Shanghai and Pei Li in Beijing; Editing by Tom Hogue, Raju Gopalakrishnan)

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