Go-Jek’s expansion in Southeast Asia is about to hit the brakes as Philippine transport regulator Land Transportation Franchising and Regulatory Board (LTFRB) has denied the company’s planned entry into the Philippine market due to alleged violation of foreign ownership rules, according to local reports.

According to a resolution cited by Philippines news site Rappler, the LTFRB said it has denied Go-Jek’s application, made through its local subsidiary Velox Technology Philippines, to launch a ride-hailing service in the country because Velox failed to meet requirements on foreign ownership.

Philippine laws do not allow any foreign entities or investors to take more than 40% stake in local companies or businesses. Velox’s article of incorporation is reportedly 99.99% owned by its parent company Velox South-East Asia Holdings, which is Singaporean. Grab, on the other hand, complies with the foreign ownership limits through its local unit MyTaxi.PH Inc.

“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 seen by local media said.

Samuel Jardin, chairman of the LTFRB pre-accreditation committee told Rappler that Velox can still appeal the decision, which was signed by him, and panel members Carl Marbella, Nida Quibio, and Joel Bolano.

In response to our request for comment, a Go-Jek spokesperson said the company would keep engaging with the local government agencies.

Go-Jek executives first requested a meeting with the LTFRB in April last year to reportedly discuss its plan to expand into the Philippines. The Indonesian ride-hailing major’s move came after the transport regulator approved the accreditation of homegrown ride-hailing companies Hype Transport Systems Inc, HirNa Mobility Solutions Inc and Golag Inc to spur competition following Uber’s exit.

In September, however, the LTFRB put on hold Go-Jek’s application due to an existing moratorium on accrediting transport network company. The moratorium came out before Go-Jek filed their application for accreditation. LTFRB Memorandum Circular (MC) 2018-016, which was signed by the board on Aug. 9, barred the government from accepting new applications for TNCs that intend to operate transport network vehicle service (TNVS) units.

Last year, Go-Jek said it would invest US$500 million to enter Vietnam, Singapore, Thailand, and the Philippines, following the Grab-Uber merger.

Editor: Ben Jiang