Following its region-wide expansion, Indonesia’s ride-hailing unicorn Go-Jek is reportedly forced to pause its expansion plans to Philippines, as reported by Rappler yesterday. In the Resolution No. 096 dated December 20, 2018, the country’s Land Transportation Franchising and Regulatory Board (LTFRB) denied Go-Jek’s entry due to a violation by the company’s local subsidiary, Velox Technology Philippines.
As a transport network company (TNC), the local subsidiary is said to violate the foreign ownership rule in public utility. This resulted in the rejection of the company’s application to start operations in the Philippines.
“This committee resolves to deny applicant Velox Technology Philippines Inc’s petition for accreditation as a transport network company due to its failure to file a verified application as prescribed in the item (II) first paragraph of Memorandum Circular No. 2015-015-A dated 23 October 2017 and for being a foreign-owned corporation in violation of Section 11 Article XII of the 1987 Philippine Constitution,” the dispositive portion of the resolution said.
Under the Constitution, franchise for public utility should be granted to Filipinos who own at least 60 per cent of its capital, while Velox is 99.99 per cent owned by its parent company, Singaporean Velox South-East Asia Holdings.
LTFRB’s pre-accreditation committee chairman Samuel Jardin confirmed to Rappler that Velox’s application was denied, signed by himself and panel members Carl Marbella, Nida Quibio, and Joel Bolano.
However, Jardin said that Velox can still appeal the decision.
“We continue to engage positively with the LTFRB and other government agencies, as we seek to provide a much needed transport solution for the people of the Philippines,” Go-Jek told Rappler.
Right now, Grab is still dominating the market for ride-hailing services in the Philippines.