Grab's $3.5B Boost to Indonesia's Digital Economy

Benefits of
Digital
Economy
How Grab Contributes to
Indonesian Economy
Benefits of Digital Economy
How Grab Contributes to Indonesian Economy
Executive Summary
GRAB TECHNOLOGY CONTRIBUTES BIG
TO THE INDONESIAN ECONOMY
• CSIS and Tenggara Strategics’ survey analyzed Grab’s role in increasing the informal sector’s potential
and found that its partners contributed around IDR 48.9 trillion (US$3.5 billion) to the Indonesian
economy in 2018.
• CSIS and Tenggara Strategics’ study on consumer surplus by analyzing Grab big data showed that
Grab contributed IDR 46.14 trillion (US$3.29 billion) to the economy in the form of consumer surplus
in the Jabodetabek area alone.
• Grab’s technology offers efficiencies that benefit both Grab partners and consumers by providing
opportunities for Grab partners to earn a higher income while saving Grab customers’ transportation
expenses.
The digital economy continues to influence our way of life, but it has also triggered the question of how
to measure its contribution to the national economy, especially for the welfare of the people. The bigger
question is: How can technological innovations benefit society?
The Centre for Strategic and International Studies (CSIS) and Tenggara Strategics attempted to answer
the question by conducting two studies that placed Grab Indonesia as a case study: first, to measure
Grab technological benefits from income increases of its partners and second, to measure the benefits
from its consumers’ side in the form of consumer surplus.
Measuring the technological benefits obtained by partners and the producers’ side, CSIS and Tenggara
Strategics conducted a survey on GrabBike, GrabCar, GrabFood partners and Kudo agents in five cities,
namely Jakarta, Bandung in West Java, Surabaya in East Java, Medan in North Sumatra and Makassar
in South Sulawesi. The survey found that Grab contributed IDR 48.9 trillion (US$3.29 billion) to
the Indonesian economy in 2018 through the income of GrabBike and GrabCar drivers, GrabFood
partners and Kudo agents, most of whom work in the informal sector.
According to the survey’s findings, the majority of GrabBike, GrabCar, GrabFood and Kudo partners
enjoyed income increases after joining Grab. The boost in average income came from an increase in
productivity from Grab’s platform technology, which pairs partners — suppliers of products and services
— with consumers more effectively and efficiently. Grab has improved income opportunities for those
who would normally operate in the informal sector, by increasing their productivity and efficiency, thus
bettering their economic livelihood.
Tenggara Strategics & Centre for Strategic and International Studies 1

Grab also offers an attractive job opportunity for those in the informal sector, the survey discovered,
encouraging the unemployed to unlock their economic potential. In addition, Grab provides equal
opportunities regardless of age. An improved quality of life for Grab’s partners is realized through equal
opportunity in accessing technology and its benefits.
The CSIS and Tenggara Strategics survey was conducted through face-to-face interviews with 3,418
respondents in the five cities. The study used a systematic random sampling method and call-back on
80 percent of the respondents for quality control. This research has a margin of error below 3.5 percent
with a 95 percent confidence level.
After measuring the increase in welfare from the side of producers or partners, CSIS and Tenggara
Strategics measured the increase in people’s welfare from the consumer side in the form of consumer
surplus felt by consumers of GrabBike and GrabCar in the Jakarta-Bogor-Depok-Tangerang-Bekasi
(Jabodetabek) region.
Research related to the impact of technology on consumer welfare is still rare. Therefore, this research is
important to evaluate the impact of technology on the economy in a more comprehensive perspective.
This is the first digital economic study in Southeast Asia to utilize big data to calculate consumer surplus.
This research estimated that Grab technology contributed around IDR 46.14 trillion in consumer
surplus for the Jabodetabek region in 2018. The consumer surplus obtained by GrabBike consumers
was IDR 5.73 trillion, while GrabCar contributed IDR 40.41 trillion. How does this affect consumers?
Grab services allow customers to save the money they prepared to travel from point A to point B. The
money they save, which was previously allocated for transportation, can now be used to buy other
items. That is, customers can use the surplus enjoyed to buy goods or services that can improve their
quality of life.
The findings of this consumer surplus research are consistent with the results of a CSIS-Tenggara
Strategics survey conducted in November and December 2018 on Grab customers. By interviewing 500
customers in Jakarta, Bandung, Surabaya, Makassar and Medan through systematic random sampling,
the survey found that although 72 percent of consumers have two-wheeled private vehicles and 28
percent have four-wheeled private vehicles, they prefer to use GrabBike and GrabCar services for
several reasons, including affordability, safety and convenience.
Economy-wise, Grab creates a large contribution of around IDR 95 trillion to the country’s economy that
otherwise would not exist. This is a major achievement for a technological innovation.

Methodology
METHODOLOGY OF GRAB PARTNERS SURVEY

To measure Grab’s contribution to the Indonesian workforce in the informal sector, CSIS and Tenggara
Strategics conducted a survey across five major cities: Jakarta, Bandung, Surabaya, Makassar and
Medan. The survey was conducted through face-to-face interviews with Grab partners in four business
units, namely GrabBike, GrabCar, GrabFood and Kudo. Target samples for each business unit were
1,000 partners per unit, equally distributed across the five cities (200 partners for each business unit
from each city). The average response rate was 85.45 percent, with the highest response rate being
from GrabFood partners at 91.2 percent. The respective response rates from partners in each business
unit were 89.8 percent for GrabBike partners, 81.2 percent for GrabCar partners and 79.6 percent for
Kudo partners.
With a 95 percent confidence level, the survey’s margin of error for each business unit ranged between
3.24 percent and 3.47 percent. The survey on GrabFood partners had the lowest margin of error at 3.24
percent because of its high response rate. The survey on Kudo had the highest margin of error due to
its relatively low response rate compared to other business units (See Table 1).
In selecting the samples, the research used the systematic random sampling method. First, Grab’s
partners database was used to create a list of potential respondents for each business unit. Partners who
had been inactive for the past three months were excluded from the list. Next, potential respondents
were grouped according to age bracket. Then, respondents were selected from each age bracket using
systematic randomization. The selected list of respondents represents the actual age distribution of the
filtered population. Before conducting face-to-face interviews, the research team, with assistance from
Grab, contacted the respondents by phone to obtain their legal consent.
Ta le es ondent Distri ution and Confidence e el of Sur ey
Business Unit Target Samples Interviewed Margin of Error Confidence e el
GrabBike 1,000 samples 898 +/- 3.27% 95%
GrabCar 1,000 samples 812 +/- 3.44% 95%
GrabFood 1,000 samples 912 +/- 3.24% 95%
Kudo 1,000 samples 796 +/- 3.47% 95%

After the interviews, 80 percent of the respondents were contacted again to verify the content of the
survey. Twenty percent of the call backs was conducted by a local team from each city, while 60 percent
was done by the main team from Jakarta. The whole process of the survey, from sampling process to
quality control conducted by local and main teams, was conducted between November and December
2018.
METHODOLOGY OF CONSUMER SURPLUS STUDY

The study measuring the value of Grab’s technology to the economy by estimating consumer surplus
was done by CSIS-Tenggara Strategics using GrabBike and GrabCar customer sessions in Greater
Jakarta in the 9 weeks from May 7 to May 27, 2018 and from July 2 to August 12, 2018. The data excludes
sessions that might have been affected by external shocks such as Ramadhan and Grab’s acquisition
of Uber. These external factors change the pattern of supply and demand for GrabBike and GrabCar
services, therefore its exclusion leads to more stable data that is comparable for analysis. The final
datasets consist of 215,544,230 GrabBike observations and 642,145,661 GrabCar observations.
Graphic 1. Grab Customer Session
GrabBike and GrabCar customer sessions refers to the page shown on the Grab application when
customers place an order for a particular trip. This page shows the price customers are offered for the
trip. Grab’s algorithm takes into account the supply-and-demand conditions for GrabBike and GrabCar
in real time to calculate the prevailing price by using a multiplication factor called surge. When demand
is higher than supply, surge is included in the price calculation, pushing up the price. The more scarce
supply is relative to demand, the bigger the surge would be and the higher the price. Customers decide
if they are willing to take the generated price shown on the session by placing an order or ignore the
session if they are not willing to pay the price.
The rich data consisting of over 800 million observations that Grab provides allow us to identify how
sensitive customers are to changes in price. By regressing session bookings on surge, we get parameters
that help us to calculate price elasticity of demand for GrabBike and GrabCar. Since we are observing
demand for GrabBike and GrabCar, we need to isolate the supply-driven shock that also pushes up
price the way increased demand does. Therefore, we control the observations based on 255 Grab-
defined locations around Greater Jakarta as well as time based on date, hour and minute. By comparing
sessions based on the same location and time characteristics as fixed effects, we can observe the effect
of price changes on demand for GrabBike and GrabCar while holding other things constant.

Graphic 2. Estimating Elasticity
Graphic 3. Elasticity and Consumer Surplus
The coefficient of elasticity calculated from the regression model helps us to identify the demand function
for GrabBike and GrabCar in calculating the consumer surplus. By identifying the demand function, we
get an idea of the maximum price customers are willing to pay on each price surge level. This study
calculates a different coefficient of elasticity for each surge level. For the set of sessions booked at surge
1.0 (normal price), the average price of the sessions is multiplied by the number of bookings that would
have continued to occur at surge 1.1 as calculated from the associated price elasticity. Repeating the
same calculation moving from 1.1 to 1.2 up until the maximum surge level and summing it all up gives
us the consumer surplus for sessions at surge 1.0. This calculation process is then repeated for the set
of sessions on the rest of the surge levels up until the maximum surge level. The sum of the consumer
surplus from the set of sessions on each level of surge gives us the total consumer surplus.

Introduction
IMPROVING INDONESIA’S INFORMAL SECTOR

State of informal sector
The Indonesian economy is characterized by economic dualism. On the one hand, the country
has a functioning modern market economy, dominated by large corporations with a high level of
productivity. On the other hand, it has a huge traditional economy that has a low level of productivity
and operates informally through a network of self-employed people and family businesses that rely on
the contributions of unpaid family members.
According to Statistics Indonesia’s (BPS) 2018 National Labor Force Survey (Sakernas), the informal
sector employs 70.5 million out of 131 million workers. Of the total informal workforce, 23.6 million
are self-employed; 19.5 million are entrepreneurs assisted by temporary or unpaid contributing family
members; and 27.4 million are workers. Out of the 27.4 million informal workers, 15 million are unpaid
contributing family members and the remainder are paid casual workers.
Graphic 4. Share and Composition of Indonesia’s Informal Sector in 2018
Source: 2018 National Labor Force Survey (Sakernas), Statistics Indonesia (BPS)
Academically, there are two definitions of the informal sector. One is the business and legal definition.
By this definition, the informal sector includes all economic activities conducted by unregistered or
unincorporated firms that do not pay taxes. The employment definition consists of employees who do
not have legal or social protection through registered or unregistered companies as well as employees
in non-commercial sector such as households.

In Indonesia, employment in the informal sector is defined in Law No. 13/2003 on manpower, whereby
a non-permanent employee who works without a formal employment contract that does not regulate
working arrangements, wages and line of authority is considered to have an informal job.
For the purpose of collecting data, Statistics Indonesia used a broad definition of informal sector. It
includes all economic activities conducted traditionally in an unstructured organization that has no
transaction accounts and in which the employment relationship is characterized by seasonal/casual
work and a personal relationship, rather than an employment contract. Statistically, the BPS estimated
informal employment by using a cross tabulation between “employment status” and “main occupation”
collected from Sakernas.
Table 2. The Number of Informal Workers, 2011 and 2018
2011 2018
Self-employed workers 19.4 million 23.6 million
Employers assisted by unpaid contrib-

uting family members or temporary 19.6 million 19.5 million
worker(s)
Unpaid contributing family members 17.9 million 15.1 million
Paid Casual workers 11.1 million 12.1 million
Total informal workers 68 million 70.5 million
Source: 2011 & 2018 Sakernas, BPS
Indonesia’s informal sector is dominated by micro- and small-family businesses. They rely on unpaid
family workers as the main source of workers. Nevertheless, in the past eight years, the commercial
prospect of Indonesia’s informal sector has improved, as indicated by growing income opportunities
in this sector. As shown in Table 1, the number of paid casual workers increased from 11.1 million in
2011 to 12.1 million workers in 2018. At the same time, the number of unpaid family workers decreased
from 17.9 million to 15.1 million, which suggests that Micro and Small Enterprises (MSEs) in the informal
sector are replacing unpaid family members with paid casual workers.
Besides improving availability of paid casual work, the opportunity to obtain an income through self-
employment in the informal sector also improved significantly. The number of self-employed workers
grew by 4.2 million to 23.6 million.
Despite the improvement in income opportunities, paid casual and self-employed workers in the
informal sector do not have adequate income to meet their basic needs. In 2018, the average monthly
income for paid casual workers was only Rp 1.3 million. Although self-employed workers could earn
slightly more at Rp 1.7 million, their income was still lower than the national average of regional
minimum wages at Rp 2 million per month.
Workers in the informal sector earn low incomes because they lack productive economic opportunities.
As revealed by data on their working hours, the number of workers who work regular hours, between
35 to 44 hours per week, fell from 15.2 million in 2011 to 14.3 million in 2018. Meanwhile, the number
of workers in the over-employed category, working 45 hours or more per week, increased by 3.4 million
to 26.7 million. Likewise, the number of severely underemployed workers who work less than 15 hours
per week rose by 2.2 million to 8 million (see Table 3). In short, it is getting more difficult for workers to
find jobs that offer productive and regular working hours in the informal sector, albeit improvement in
income opportunities.

Table 3. Distribution of Workers in Informal Sector, Divided by Weekly

Working Hours, 2011 and 2018
2011 2018
Underemployed
28.1 million 28.0 million
< 35 hours/week
Underemployed
5.8 million 8 million
< 15 hours/week
Temporarily not working 1.7 million 1.5 million
Over-employed
> 44 hours/week
Regular hours
35-44 hours/week
Average working hours/week 38.35 39.11
Source: 2011 & 2018 Sakernas, BPS
Improving productivity of informal sector

To improve the productivity of the informal sector, the government has made various attempts to
formalize businesses in the informal sector. In 2015, for instance, the government under the leadership
of President Joko Widodo introduced the Micro and Small Business License (Izin Usaha Mikro dan
Kecil, IUMK) to improve the legal position of MSEs in the informal sector. To incentivize Indonesia’s
MSEs in formalizing their business, the government has made IUMK mandatory for those applying for
government-subsidized loans (Kredit Usaha Rakyat, KUR).
Like previous policies, however, the government’s attempts to formalize businesses in the informal sector
only achieve limited success. This is because of the huge size of Indonesia’s informal sector. According
to an official estimate by the BPS, the informal sector employed more than half of the country’s official
workforce of 13.1 million in 2018. Of the informal workforce, 19.5 million are MSE owners assisted by
unpaid family members or paid casual workers, which totaled 27.4 million. In addition, 23.6 million are
self-employed as street peddlers, motorcycle taxi drivers (ojek) or providers of personal services (see
Graphic 4). Given its huge size, the government might need to extend more resources to successfully
formalize businesses in the informal sector.
The remaining alternative is to increase the demand for their services. Fortunately, current advancements
in information and digital technology has made this possible. Through a digital platform, technology
companies such as Grab make it easier for businesses and workers in the informal sector to participate
in more productive economic opportunities, which in turn improves their income opportunities and
therefore their livelihoods.
This research aims to examine the effect of technological advancements in digital technology, specifically
Grab’s digital platform technology, on Indonesia’s informal sector. Grab’s digital platform can improve
the income opportunities of MSEs and self-employed workers in the informal sector by pairing the
services they offer to potential customers via smartphones. Besides examining the effect on income,
this study also assesses its job creation potential.

GrabBike
WHEN INFORMAL SECTOR GOES DIGITAL

Ojek (motorcycle taxis) are common in developing countries. They are also part of a niche industry in
developed countries, for example, Limobike in the United Kingdom and Motocab in France, which are
licensed as public transportation service providers.
Unlike their peers in developed countries, ojek services are completely informal. Governments at the
national and local levels do not consider ojek as a mode of transportation that should be regulated.
Also, ojek are run by individual operators that group together in certain places called pangkalan (bases),
which are usually located near residential areas, office complexes, shopping centers, train stations and
bus stops.
Although ojek are operated individually, they are governed by unwritten rules. For example, ojek drivers
must line up to provide their services. If one driver violates the rules, he will be banished from the
pangkalan.
Despite its informality, ojek play an important role in the Indonesian transportation system, especially
in major cities like Jakarta, Surabaya, Bandung, Medan and Makassar, which have fragmented
transportation systems. They connect major transportation hubs like train stations and bus stops with
nearby residential areas and office complexes at affordable prices.
As an informal industry, ojek previously lacked safety and service standards. It was not unusual to find
ojek drivers who drove aggressively: speeding and violating traffic rules. Moreover, ojek had no fare
meter. Transactions were conducted through haggling. Without enough knowledge, passengers could
pay too much.
From an ojek driver’s perspective, there was no incentive to provide high quality services. Irregular
demand for services and a low level in productivity that resulted in poor income opportunities were
their main concerns. In short, everyone was trapped in a vicious cycle of low-quality ojek services.
However, things have changed following a digital revolution that has transformed ojek services since
2015. Today, ojek have quality and safety standards. Digital fare meters have been installed, providing
predictable fares for customers and better incomes for drivers. The digital platform that pairs
passengers and driver-partners effectively and efficiently reduces drivers’ idle time. More importantly,
the transformation occurred without changing the nature of ojek as a community of individual drivers
and has given them a strong sense of belonging to the profession.

Grab is one of the pioneering technology companies that digitized ojek services. As of the end of 2018, it
had more than 600,000 ojek drivers as its partners. After working with GrabBike, driver-partners in five
cities saw their monthly incomes grow by 113 percent on average, specifically from Rp 1.9 million – only
Rp 200,000 higher than the income of self-employed workers in the informal sector – to Rp 4 million or
double the average national minimum wage.
Besides having more than double the average income, GrabBike drivers also saw their income
distribution improve tremendously. Prior to working with GrabBike, 38 percent of the drivers had no
income or job. Meanwhile, 35 percent obtained less than Rp 3 million, and 22 percent had an income
range of Rp 3 million to Rp 5 million. Only 5 percent earned more than Rp 5 million per month.
After working with GrabBike, the share of drivers whose income ranged from Rp 3 million to Rp 5
million more than doubled to 50 percent in 2018. More strikingly, the percentage of drivers who had
an income of more than Rp 5 million grew more than fourfold to 23 percent, of which 5 percent had
incomes of more than Rp 7 million. On the other hand, the share of drivers whose income was less than
Rp 3 million dropped by 8 percentage points to 27 percent (see Graphic 5).
Graphic 5. Drivers’ Income Distribution Before and After Working with GrabBike, 2018
Using data on change in income distribution before and after working with Grab, we estimated Grab’s
economic contribution to the national economy. Before working with Grab, the aggregate income of
all GrabBike drivers in a month was Rp 1.15 trillion. After working with Grab, their monthly aggregate
income increased to Rp 2.45 trillion, creating additional value from income worth Rp 1.3 trillion to the
national economy. In 2018, the annual economic contribution was estimated to be worth Rp 15.65
trillion (see Table 4).
Graphic 6. Employment Backgrounds of GrabBike Drivers

Who Previously Had No Income or Job, 2018.

Out of the Rp 15.65 trillion economic contribution for 2018, Rp 9.85 trillion was generated by unlocking
the economic potential of those who previously had no income, which made up to 38 percent of all
GrabBike driver-partners. Half of these were not working before partnering with Grab. Around a quarter
had been laid-off from their previous job and the remainder had failed in their business ventures (see
Graphic 6).
Table 4. Estimate of GrabBike’s Economic Contribution to the National Economy, 2018.
Economic Contribution (per month)

( per- Before After
No. Income Median Before After (%)
cent) (Weighted) (Weighted)
Total Income
Total Income (After) Contribution
(Before)
0 0 0 340 38% 233,934 0 0% 0 0 0
1 < 3,000,000 1,500,000 310 35% 213,293 239 27% 164,442 319,939,677,060 246,663,170,379
3,000,001 -
2 4,000,000 199 22% 136,920 448 50% 308,243 547,681,683,742 1,232,971,830,735
5,000,000
5,000,001 -
3 6,000,000 25 3% 17,201 162 18% 111,463 103,206,347,439 668,777,131,403
7,000,000
7,000,001 -
4 8,000,000 9 1% 6,192 34 4% 23,393 49,539,046,771 187,147,510,022
9,000,000
9,000,001 -
5 10,000,000 3 0% 2,064 5 1% 3,440 20,641,269,488 34,402,115,813
11,000,000
11,000,001 -
6 12,000,000 2 0% 1,376 6 1% 4,128 16,513,015,590 49,539,046,771
13,000,000
7 > 13,000,000 14,000,000 10 1% 6,880 4 0% 2,752 96,325,924,276 38,530,369,710
898 100% 617,862 898 100% 1,153,846,964,365 2,458,031,174,833 1,304,184,210,468
Contribution in
15,650,210,525,613
one year
Graphic 7. GrabBike Drivers Who Previously

Had No Income or Job, by Age, 2018
Furthermore, the benefits created through new job creation is now distributed inclusively across all
age groups, in which middle-aged drivers aged 41 and above, which made up to 29 percent of drivers
who previously had no income or job, have the same employment opportunities as younger drivers
aged 30 and below, which accounted for 37 percent (see Graphic 7). A low barrier of entry coupled with
the relative ease in accessing Grab’s technology and training assistance provided by Grab have helped
older workers who lacked skills and access to skill improvement in transitioning to this new job.

Graphic 8. Distribution of GrabBike Driver-Partners

Who Already Have Job or Run a Business, 2018
Besides the benefits from creating new employment opportunities, GrabBike also opens up opportunities
for partners who already have employment or run a business to earn additional income to achieve
a better economic livelihood. According to our survey, 25 percent of GrabBike driver-partners were
within such a category in 2018, 19 percent of whom partnered with Grab while working another job, and
6 percent ran their own business while working with Grab (see Graphic 8).
Our survey also found that drivers partner with GrabBike because working with Grab improves their
quality of life. With flexible working hours and adequate income, partners can arrange their own work
schedule and allocate more time to spend with family.
Graphic 9. Driver-partners’ Motivation to Partner with GrabBike

GrabCar
GROWING TOGETHER THROUGH PARTNERSHIP
Unlike the ojek industry, the taxi industry is highly regulated. It has strict safety and operational standards
that are formulated by the central government. Local governments also have their roles in regulating
the taxi industry by determining fares and quotas, as well as administering enforcement.
However, a highly regulated system does not always result in reliable and quality services. In reality, taxi
regulations vary across cities and provinces. In Jakarta, taxi companies face intense competition under
a fair market rule. As a result, they compete fiercely in providing reliable and quality taxi services.
In contrast, the taxi industry in smaller cities and towns is insulated by the local government from
market competition, including from competition with national taxi companies. As a result, the quality
of taxi services in small cities is substandard. For instance, taxis in small cities operate without using a
taximeter, relying on haggling, which puts customers at a disadvantage.
Because of substandard services, customers in smaller cities and towns are reluctant to use taxi
services. With low demand, taxi drivers struggle to earn a decent income. They know that they should
provide quality services to improve demand for taxi services, but they are afraid that with the current
business structure, in which local taxis are owned and operated by individuals, they could not make the
necessary investment to upgrade their services.
However, everything began to change following the digitization of taxi services in 2014. Today, the
quality of taxi services in small cities and towns has improved and is on par with taxi services in big
cities. For instance, digital taximeters that were installed provide predictable fares for customers.
Because of the improvement in service quality, the demand for taxi services has increased, which in
turn has improved drivers’ incomes. The opportunity to earn a higher income has attracted people
who have no employment background as a driver to enter the industry. Most of them are working as
individual partners for technology companies that provide digital platforms that pair these individual
drivers with potential customers effectively and efficiently. As a result, the competition at the local level
has improved tremendously.
Grab is one of the pioneering technology companies in digitizing taxi services. As of the end of 2018,
GrabCar had more than 200,000 drivers as its partners. After working with GrabCar, driver-partners in
five cities saw their monthly income grow by 114 percent on average, specifically from Rp 3.3 million,
nearly double the income of self-employed workers in the informal sector, to Rp 7 million or 350 percent
higher than the national average of the minimum wage.

In addition to having more than double the average income, GrabCar drivers also saw their income
distribution improve tremendously. Prior to working with GrabCar, 33 percent of the drivers had no
income or no job. Meanwhile, 18 percent obtained less than Rp 3 million. Only 25 percent obtained
more than Rp 5 million per month.
After working with GrabCar, 68 percent of drivers had income of more than Rp 5 million. Of these
drivers, 23 percent had income ranging from Rp 5 million to Rp 7 million, 21 percent with Rp 7 million
to Rp 9 million, 10 percent with Rp 9 million to Rp 11 million and 15 percent earn more than Rp 11
million. On the other hand, the share of drivers whose income was less than Rp 3 million dropped by 10
percentage points to 8 percent (see Graphic 10).
Graphic 10. Drivers’ income distribution before and after working with GrabCar, 2018
Using the data on change in income distribution before and after working with Grab, we made an
estimate of Grab’s economic contribution to the national economy. Before working with Grab, the
aggregate income of all GrabCar drivers in a month was Rp 712 billion. After working with Grab, their
monthly aggregate income increased to Rp 1.52 trillion, creating additional value from income worth Rp
810 billion a month to the national economy. In 2018, the annual economic contribution was estimated
to be worth Rp 9.72 trillion (see Table 5).
Of the Rp 9.72 trillion in economic contribution for the year of 2018, Rp 5.55 trillion was generated by
unlocking the economic potential of those previously had no income, which made up to 33 percent of
all GrabCar drivers-partners – of which two-fifths had not been working before partnering with Grab.
Around one-fifth were laid-off from their previous jobs, and the rest failed in their business ventures
(see Graphic 11).
Graphic 11. Employment backgrounds of GrabCar drivers

who previously had no income or no job, 2018

Table 5. Estimate of GrabCar’s economic contribution to the national economy, 2018
Economic Contribution (per month)

Before After
No. Income Median Before (%) After (%)
(Weighted) (Weighted)
Total Income
(Before)
0 0 0 270 33% 72,447 0 0% 0 0 0
1 < 3,000,000 1,500,000 149 18% 39,980 66 8% 17,709 59,969,839,286 26,563,821,429
3,000,001 -
2 4,000,000 193 24% 51,786 194 24% 52,054 207,144,142,857 208,217,428,571
5,000,000
5,000,001 -
3 6,000,000 90 11% 24,149 187 23% 50,176 144,893,571,249 301,056,642,857
7,000,000
7,000,001 -
4 8,000,000 47 6% 12,611 171 21% 45,883 100,888,857,143 367,063,714,286
9,000,000
9,000,001 -
5 10,000,000 31 4% 8,318 79 10% 21,197 83,179,642,587 211,973,928,571
11,000,000
11,000,001 -
6 12,000,000 7 1% 1,878 45 6% 12,074 22,539,000,000 144,893,571,429
13,000,000
7 > 13,000,000 14,000,000 25 3% 6,708 70 9% 18,783 93,912,500,000 262,955,000,000
812 100% 217,877 812 100% 217,877 712,527,553,571 1,522,724,107,143 810,196,553,571
Contribution in
9,722,358,642,857
one year
Graphic 12. GrabCar drivers who previously had

no income or no job, divided by age, 2018
Furthermore, the benefits created through new job creation are distributed inclusively across all age
cohorts, in which middle-aged drivers aged 41 years old and above – comprising up to 36 percent of
drivers who previously had no income or no job – have the same employment opportunities as younger
drivers aged 30 years old and below, which accounted for 26 percent (see Graphic 12). Low barrier of
entry coupled with the relative ease of access to Grab’s technology and training assistance provided
by Grab helps older workers who lack skills and access to upskill during the transition to this new job.

Graphic 13. Distribution of GrabCar driver-partners

who already have a job or run a business, 2018
Besides the benefits of creating new employment opportunities, GrabCar also provided partners
who already have work or run a business the opportunity to earn additional income to achieve better
economic livelihood. According to our survey, 33 percent of GrabCar driver-partners were within such
category in 2018. Of which, 11 percent partnered with Grab while working another job, and 22 percent
ran their own business while working with Grab (see Graphic 13).
Our survey also found that drivers partner with GrabCar because working with Grab provides them
with an opportunity to obtain extra income while running their own business or working on their main
job, as well as improve their quality of life. With flexible working hours and adequate income, partners
can arrange their own work schedule and allocate more time to be spent with their family.
Graphic 14. Driver-partners’ reasons for partnering with GrabCar

GrabFood
CONNECTING SMES WITH MORE CUSTOMERS

In the past, on-demand food delivery in Indonesia was the domain of very few, large franchise fast-food
restaurants. With orders taken using toll-free numbers, they had their own fleets to serve their loyal
customers who had no time to visit their outlets. Some medium-sized and smaller-sized restaurants
would try to emulate this on-demand food delivery, but many would find it too expensive to build their
own fleet.
Things have changed dramatically since the founding of online ride-hailing companies such as Grab.
With its large fleets of drivers, Grab has all the necessary infrastructure to expand the on-demand food
delivery service into unchartered territory, i.e. targeting the micro and small food kiosks that, in the
past, would have never in their wildest dreams believed they would have on-demand delivery services.
The food and beverage sector has been important for the country, growing by 6.05 percent year-on-year
in 2018 and contributing 2.13 percent to the country’s GDP. Micro and small-sized enterprises (MSE)
dominate this industry at 99 percent. The majority of them, 90 percent, operate in the informal sector.
And yet, they have been an important provider of employment in Indonesia, especially for unskilled
workers.
The main problem of these MSE firms is that they contribute less in terms of value added to the economy,
compared to the medium and large-scale firms. The government has created several programs for MSE
firms to boost their size and contribution to the economy by providing easier access to credits, lower
tax rates and other measures. Not only that, state-owned enterprises and the private sector have also
joined the movement to help the MSE firms, including in food and beverage industries. But out of all
those efforts, the biggest contribution to these micro and small food businesses would be from the
introduction of on-demand food delivery services.
GrabFood, which provides on-demand food delivery services, brings benefits to its partners by allowing
them to reach their untapped market by expanding their customer base, and the ease of ordering and
delivering the products have also increased their sales and eventually profits. This is evident in the
results of a CSIS-Tenggara Strategics survey on 912 GrabFood partners in five big cities in Indonesia –
Jakarta, Bandung, Surabaya, Medan and Makassar.
The survey results show that GrabFood services have benefited micro and small food kiosk partners,
82 percent of whom operate in the informal sector as they do not have any business licenses, and they
have been GrabFood partners for the past 15 months on average. In fact, GrabFood has facilitated

the firms in their efforts to expand and elevate their businesses. More than 25,000 micro merchants
are now under the category of small merchants (using sales-based calculations in a year) after joining
GrabFood. 1
GrabFood increased the partners’ sales by 23 percent on average per week, while the food ordered
also increased by 25 percent on a weekday, and 20 percent on a weekend. The graph below shows one
example of changes in sales for partners. As the graph shows, 30 percent of partners had less than Rp
500,000 worth of sales per day before joining Grab. After they joined Grab, 83.7 percent partners had
sales more than Rp 500,000 per day. Moreover, 19.6 percent of partners had daily sales of more than
Rp 2,500,000 in one day before joining GrabFood. After joining GrabFood, the proportion of partners
that had more than Rp 2,500,000 daily sales in one day increased to 27 percent.
Graphics 15. Increase in GrabFood merchants’ sales per day
GrabFood also helps the smaller business partners whose sales are less than Rp 500,000. Fifty-two
percent of partners in this category enjoyed a sales increase to more than Rp 500,000 per day after
partnering with Grab, while 12 percent of them had more than Rp 1,000,000 sales in one day.
Although 43.97 percent of the partners said they provided delivery services using their own workers
and only 1.64 percent used the services of traditional ojek drivers before joining GrabFood, they still
enjoyed increased sales by joining GrabFood. This indicates that GrabFood provides more efficient and
effective tools in terms of reaching out to more customers. Still, the majority of partners, 54.39 percent,
said they did not have delivery services before joining GrabFood. These partners definitely benefit more
from joining GrabFood.
An interesting point to note here is that the utilization of GrabFood apps by merchants allows them to
have better sales without adding capital costs. In any production, firms will traditionally need to have
more labor or capital in order to increase output or sales. However, in the case of GrabFood apps, the
technology has allowed firms to have more production without any expansion in capital, as evident
in the survey that showed 60 percent of partners successfully increased their sales by 24 percent or
had an additional Rp 2.5 million in sales per week on average without incurring any additional capital
expenditure.
Another interesting finding from our survey is that the proportion of partners’ dine-in areas relative to
the total area of their restaurants increased after joining Grab from 41 percent to 44.5 percent. This
finding is not in-line with our initial hypothesis that online food delivery will reduce partners’ dine-in
areas as they receive more orders online. This finding indicates that partners’ joining GrabFood not only
increased the number of customers but also saw a boosted in popularity, resulting in higher revenue
1
According to Indonesian MSMEs Law No. 20/2008, firms with less than 300 million rupiah in earnings in a fiscal year are
categorized as micro firms; while small firms earn 300 million to 2.5 billion rupiah per year.

streams, including from those who come to their premises for dine-in. As orders and sales increased,
partners have also expanded their kitchen areas, relative to the total areas of their restaurants, from 35
percent to 41 percent after joining GrabFood.
Overall, GrabFood has improved the welfare of its partners, the majority of whom are in the informal
sector, and increased their contribution to the country’s economy. Based on our survey, GrabFood
partners contributed Rp 20.8 trillion to the economy in 2018.
Table 6. Estimate of GrabFood Merchants’ economic contribution per day for weekday to the
national economy, 2018 (in 000 rupiah)
Economic Contribution
Before After
(Weighted) (Weighted) Total Income
(Before)
1 < 500 250 270 30% 48,452 145 16% 26,017 12,112,955 6,504,217
2 500 - 1000 750 219 25% 39,305 204 23% 36,619 29,478,855 27,464,027
3 1000 - 1500 1,250 106 12% 19,029 157 18% 28,176 23,786,166 35,219,517
4 1500 - 2000 1,750 70 8% 12,569 81 9% 14,536 21,995,208 25,437,206
5 2000 - 2500 2,250 51 6% 9,147 65 7% 11,673 20,580,031 26,264,725
6 2500 - 3000 2,750 34 4% 6,108 54 6% 9,690 16,798,230 26,648,502
7 3000 - 3500 3,250 30 3% 5,389 37 4% 6,636 17,513,814 21,567,457
8 3500 - 4000 3,750 20 2% 3,582 30 3% 5,389 13,432,188 20,208,247
9 4000 - 4500 4,250 13 1% 2,335 19 2% 3,406 9,922,229 14,475,581
10 4500 - 5000 4,750 18 2% 3,230 14 2% 2,511 15,343,077 11,925,065
11 > 5000 5,250 60 7% 10,762 85 10% 15,255 56,499,141 80,089,421
891 159,907 237,461,895 295,803,964
22 Weekdays 5,224,161,690 6,507,687,206 1,283,525,517
Contribution in
62,689,940,280 78,092,246,483 15,402,306,202
one year
Table 7. Estimate of GrabFood Merchants’ economic contribution per day for weekend to the
national economy, 2018 (in 000 rupiah)
Before After
(Before)
1 < 500 250 224 25% 40,744 123 14% 22,371 10,186,076 5,592,747
2 500 - 1000 750 204 23% 37,114 179 20% 32,557 27,835,811 24,417,799
3 1000 - 1500 1,250 116 13% 21,108 141 16% 25,649 26,384,655 32,061,354
4 1500 - 2000 1,750 79 9% 14,376 108 12% 19,653 25,157,369 34,391,998
5 2000 - 2500 2,250 48 5% 8,731 58 7% 10,554 19,644,575 23,746,190
6 2500 - 3000 2,750 33 4% 5,997 52 6% 9,466 16,490,409 26,032,860
7 3000 - 3500 3,250 30 3% 5,453 36 4% 6,556 17,721,693 21,307,608
8 3500 - 4000 3,750 21 2% 3,822 30 3% 5,453 14,331,665 20,448,108
9 4000 - 4500 4,250 12 1% 2,191 14 2% 2,543 9,310,585 10,805,716
10 4500 - 5000 4,750 24 3% 4,365 23 3% 4,190 20,735,940 19,900,426
11 > 5000 5,250 88 10% 16,007 115 13% 20,916 84,035,126 109,808,137
159,907 271,833,905 328,512,941
8 Weekend days 2,174,671,237 2,628,103,526 453,432,289
Contribution in one
26,096,054,846 31,537,242,316.80 5,441,187,470
year

KUDO
EMPOWERING SMALL RETAILERS AND INDIVIDUALS
WITH FULL DIGITAL ECOSYSTEM IN A SMARTPHONE
In the last few years, Indonesia has experienced an e-commerce boom. In 2017, the country’s e-commerce
transactions were valued at US$7.06 billion, and are expected to grow by 47 percent to $10.4 billion
in 2019. The rise of e-commerce is estimated to create 22 percent of new jobs and an additional 2.8
percent GDP growth per annum.
However, Indonesia’s e-commerce boom cannot reach its full potential due to limited internet
infrastructure and the population’s lack of access to bank-based transactions as well as online payment
systems. According to research by Indonesia Euromonitor in 2017, 97 percent of the population still
relied on cash-based transactions. Moreover, almost 50 percent were still unbanked, and with 54.7
percent internet penetration in 2017 (APJII, 2017), only a small portion of the population, mostly in big
cities, could participate in e-commerce.
To help overcome this problem, Kudo (Kios Untuk Dagang Online) emerged as a solution. Using
smartphone and mobile phone-based internet apps, Kudo has established a technology platform that
brings a full digital ecosystem to empower traditional retailers in Indonesia. Kudo not only enables
people who lack access to internet and bank-based payments to participate in Indonesia’s fast growing
e-commerce sector, but also helps its store agents and individual-agents to expand their businesses
with just a smartphone and mobile internet.
With Grab’s purchase of Kudo last year, the company managed to expand instantaneously to hundreds
of towns and cities throughout the archipelago, connecting those previously not connected to the
worldwide web to participate in internet-based e-commerce transactions, especially in second- and
third-tier cities. The agent network consists of individual agents, as well as those with a store (warung
or kiosk).
CSIS and Tenggara Strategics conducted a survey in suburbs of five cities – Jakarta, Bandung, Surabaya,
Medan and Makassar – to estimate the benefits received by Kudo agents, as well as the whole economy.
The survey shows that the average income of individual Kudo agents in 5 cities increased 83 percent
to Rp 2.7 million per month from Rp 1.5 million per month before joining Kudo. The majority of Kudo
agents (54.7 percent) had an income of more than Rp 2 million per month. Before joining Kudo, only 29
percent of them earned more than Rp 2 million per month.

Graphic 16. Increase in income for individual Kudo agents
The survey also found that 30.6 percent of individual Kudo agents who previously had no income now
had monthly incomes. Around 28 percent of them earned between Rp 1 million and Rp 3 million a
month, 11 percent got between Rp 3 million and 4 million and 13.7 percent earned more than Rp 4
million per month. This shows that Kudo helps create employment opportunities.
Graphic 17. Income after joining KUDO
(Respondents who previously had no income)
For Kudo’s store agents in five cities, partnering with Kudo increased their sales by 51 percent to Rp
10.1 million per month from Rp 6.1 million per month. As many as 50 percent of Kudo store agents
that previously booked sales of less than Rp 1 million per week increased their sales to more than Rp
1 million per week. After partnering with Kudo, 70.6 percent of Kudo stores booked sales of more than
Rp 1 million per week, as opposed to only 41 percent of them before joining Kudo.
Graphic 18. Increase in income for Kudo store agents

Another interesting fact is that Kudo’s store agents managed to improve their income without making
any investment to expand their business. According to our survey, 13 percent of Kudo’s store agents
were able to increase their monthly sales by 22 percent, from Rp 9.7 million to Rp 11.8 million without
making additional investment in their stores. The only additional cost was a phone bill, whereby their
phone bill increased by Rp 127,000 on average per month after becoming Kudo store agents.
Besides increasing their earnings, Kudo agents also used the app for driving down their operational
costs, specifically phone credit and electricity costs. Our survey found that 82 percent of them used the
app to top up their phone credit. Furthermore, 78 percent used it to pay their electricity bills. Compared
to other similar apps, Kudo offers lower prices to pay bills. Kudo’s bonus and incentive program given
only to agents was another factor.
In aggregate, the increase in income contributed Rp 2.6 trillion to the economy in 2018, with Rp 2
trillion from individual Kudo agents and Rp 653 billion from Kudo store agents. If we include Kudo’s
individual-agents’ and store agents’ income from activities that are unrelated to Kudo, the total economic
contribution was worth Rp 6.6 trillion.
Table 8. Estimate of Kudo individual agents’ economic contribution to the national economy,
2018 (in 000 rupiah)
Before After
(Before)
1 0 0 98 31% 42,514 3 1% 1,305 0 0
2 1 - 1,000 500 93 29% 40,335 95 30% 41,209 20,167,495 20,604,712
3 1,000 - 2,000 1,500 36 11% 15,615 47 15% 20,390 23,422,331 30,584,360
4 2,000 - 3,000 2,500 39 12% 16,920 55 17% 23,860 42,298,995 59,648,870
5 3,000 - 4,000 3,500 14 4% 6,079 40 13% 17,350 21,277,887 60,724,563
6 4,000 - 5,000 4,500 16 5% 6,940 21 7% 9,105 31,229,775 40,973,465
7 5,000 - 6,000 5,500 7 2% 3,040 17 5% 7,370 16,718,340 40,536,248
8 > 6,000 6,500 17 5% 7,370 42 13% 18,224 47,906,475 118,458,007
320 138,799 203,021,297 371,530,223 168,508,926
Contribution in
2,022,107,111
one year
Table 9. Estimate of Kudo store agents’ economic contribution to the national economy, 2018
(in 000 rupiah)
Before After
(Before)
1 0 0 63 13% 6,849 2 0% 220 0 0
2 1 - 1000 500 113 24% 12,288 67 14% 7,289 6,143,783 3,644,357
3 1000 - 2000 1,500 62 13% 6,742 75 16% 8,158 10,112,707 12,236,452
4 2000 - 3000 2,500 63 13% 6,849 65 14% 7,069 17,122,855 17,672,320
5 3000 - 4000 3,500 45 10% 4,892 63 13% 6,849 17,120,299 23,971,997
6 4000 - 5000 4,500 33 7% 3,588 52 11% 5,653 16,146,597 25,438,940
7 5000 - 6000 5,500 21 4% 2,285 28 6% 3,046 12,566,131 16,754,841
8 > 6000 6,500 70 15% 7,611 118 25% 12,834 49,469,717 83,424,083
470 51,113 128,682,089 183,142,990 54,460,902
Contribution in
653,530,818
one year

Consumer Surplus
GRAB TECHNOLOGY INCREASES PEOPLE’S WELFARE
I. Introduction
Consumers gain from the spillover effect that the use of technology has in production processes.
Technology allows for more efficient operations by boosting productivity and pushing down production
costs, resulting in an expansion of output. Greater efficiency in production processes allows for output
of higher quality or at lower prices.
Consumers are not directly involved in this production process but benefit from the end result.
Therefore, general approaches to measuring the impact of technology on production processes,
such as output and productivity estimations or correlations with performance metrics like profit,
revenue or stock valuation1, do not reflect spillover benefits gained by consumers. Bresnahan
(1986) argues that the value of the spillover for consumers should be estimated by calculating the
consumer surplus2.
A well-known study estimating consumer surplus to measure the value of technological innovation was
conducted by Cohen et. al. (2016) on Uber Technologies Inc. Using a quantitative impact evaluation
technique called regression discontinuity design, they found that consumers gained around US$2.9
billion in consumer surplus in four cities of the United States in 20153.
The CSIS and Tenggara Strategics measured the value of Grab’s technology for its consumers
by estimating the consumer surplus from GrabBike and GrabCar services in Jakarta, Bogor,
Depok, Tangerang and Bekasi (Jabodetabek), or Greater Jakarta. Grab is Southeast Asia’s leading
solution application company that implements, among other things, a hyperlocal strategy called
GrabBike to cater to needs stemming from the unique commuting behavior in Southeast Asia.
II. Consumer Surplus Study

Consumer surplus is the benefit reaped by consumers from purchasing a good or service at a price
below the amount they are willing to pay. Subtracting from the maximum prices consumers are willing
to pay the price they actually pay in a transaction gives us the consumer surplus. For example, if we are
willing to pay Rp 200,000 for a trip to the airport and the price shown on Grab application for the trip is
Rp150,000, then we are gaining Rp50,000 in consumer surplus.
Brynjolfsson, E. 1994. Some Estimates of the Contribution of Information Technology to Consumer Welfare. MIT Center for Coordination Science. Working Paper.
1
Bresnahan, T. 1986. Measuring the Spillovers from Technical Advance: Mainframe Computers in Financial Services. American Economic Review 76(4): 724-755.
2
Cohen, P., Hahn, R., Hall, J., Levitt, S., & Metcalfe, R. (2016). Using Big Data to Estimate Consumer Surplus: The Case of Uber. National Bureau of Economic Research.
3
Working Paper 22627.

Graphic 19. Consumer Surplus and Willingness to Pay
Consumer sur lus is t e enefit rea ed y consumers from urc asing a good or
service at a price below the amount they are willing to pay.
However, while the purchase price can be directly observed from consumers’ transactions, the highest
price consumers are willing to pay is less obvious. We have to reveal consumers’ willingness to pay
in order to make this price observable. This is the part that requires the analysis of big data using a
rigorous econometric calculation.
Graphic 20. Estimating Consumer Surplus Using Big Data
The Grab consumer surplus study is the first digital economy study in Southeast Asia that uses big
data in estimating the consumer surplus. One difference between the Grab and the Uber studies lies
in the structure of the researched market. It provides nuances to existing studies by capturing the
implementation of the hyperlocal strategy of GrabBike, significant differences in transaction prices,
volume and payment methods and difference in customers’ commuting behavior and options.
T e ra consumer sur lus study is t e first digital economy study in Sout east
Asia that uses big data in estimating the consumer surplus.

Results & Discussion

This research estimated that Grab technology contributed around IDR 46.14 trillion in consumer surplus
for the Jabodetabek region in 2018. The consumer surplus obtained by GrabBike consumers was IDR
5.73 trillion, while GrabCar contributed IDR 40.41 trillion.
How does this affect consumers? Grab services allow customers to save money they prepared to travel
from point A to point B. The money they save, which was previously allocated for transportation, can
now be used to buy other items. That is, customers can use the surplus to buy goods or services that
can improve their quality of life.
If Grab were to suddenly cease its operation for one day, this study estimates that the economy would
suffer a loss of Rp 118.9 billion a day in consumer surplus. GrabBike customers would lose an aggregated
Rp 15.7 billion in consumer surplus in a day, while GrabCar customers would lose Rp 103.2 billion a day.
The loss of consumer surplus is due to the higher prices of alternative transportation options, therefore
narrowing the gap between the transportation cost and their maximum willingness to pay. However,
our consumer surplus estimate is only relevant in the short run. If Grab were to disappear for a longer
period of time, a long-term analysis would be more appropriate.
The findings of this consumer surplus research are consistent with the results of a CSIS-Tenggara
Strategics survey of Grab customers conducted in November and December 2018. Interviewing 500
customers in five cities — Jakarta, Bandung in West Java, Surabaya in East Java, Makassar in South
Sulawesi and Medan in North Sumatra — using systematic random sampling, the survey found that,
although 72 percent of consumers have two-wheeled private vehicles and 28 percent have four-wheeled
private vehicles, they prefer to use GrabBike and GrabCar services for several reasons, including
affordability, safety and convenience.
Based on the above factors, each customer enjoys a higher consumer surplus. In addition, the
opportunity to save money is more meaningful for 41.2 percent of customers who have dependents.
The survey also found that 59.2 percent of customers used Grab to go to work and 26 percent to go to
school, indicating that Grab services were very important for their productive activities.

Endnote
The digital economy is a two-sided market that allows both sides, producers and consumers, to benefit
from technology implementation. It creates a virtuous cycle where producers get more value when
consumers’ size becomes bigger and vice versa. However, the digital economy also carries the risk of a
digital divide, where some people are excluded from access to technology and all the benefits it brings.
The series of research conducted by CSIS and Tenggara Strategics shows that Grab’s technology is
inclusive and offers benefit to both producers and consumers on the Grab platform. Grab partners,
producers on the platform, benefit from the increased income and equal job opportunities that improve
their quality of life. Meanwhile, Grab customers, consumers on the platform, benefit from the savings
attained through consumer surplus, allowing them to purchase other items to improve their life quality.
CSIS-Tenggara Strategics’ survey analyzing Grab’s role in increasing the informal sector’s potential
found that its partners contributed around Rp 48.9 trillion (US$3.5 billion) to the Indonesian economy
in 2018. In addition, CSIS-Tenggara Strategics’ study on consumer surplus by analyzing Grab’s big data
showed that Grab contributed Rp 46.14 trillion (US$3.29 billion) to the economy in the form of consumer
surplus in the Jabodetabek area alone. Altogether, Grab contributed approximately Rp 95 trillion to the
country’s economy that otherwise would not exist.
Grab’s technology helps Indonesia to realize the benefits of the digital economy for producers and
consumers. The study results show that both Grab partners and customers benefit from the investment
in Grab. This is a point of interest to public policy makers since regulations should aim to protect the
interests of both sides and, most of all, support the technology companies – regardless of their origins
and the origins of their investors.

Grab's $3.5B Boost to Indonesia's Digital Economy

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Benefits of

Tenggara Strategics & Centre for Strategic and International Studies 1

Tenggara Strategics & Centre for Strategic and International Studies 2

METHODOLOGY OF GRAB PARTNERS SURVEY

Ta le es ondent Distri ution and Confidence e el of Sur ey

Business Unit Target Samples Interviewed Margin of Error Confidence e el

GrabBike 1,000 samples 898 +/- 3.27% 95%

GrabCar 1,000 samples 812 +/- 3.44% 95%

GrabFood 1,000 samples 912 +/- 3.24% 95%

Kudo 1,000 samples 796 +/- 3.47% 95%

Tenggara Strategics & Centre for Strategic and International Studies 3

METHODOLOGY OF CONSUMER SURPLUS STUDY

Graphic 1. Grab Customer Session

Tenggara Strategics & Centre for Strategic and International Studies 4

Graphic 2. Estimating Elasticity

Graphic 3. Elasticity and Consumer Surplus

Tenggara Strategics & Centre for Strategic and International Studies 5

IMPROVING INDONESIA’S INFORMAL SECTOR

Graphic 4. Share and Composition of Indonesia’s Informal Sector in 2018

Tenggara Strategics & Centre for Strategic and International Studies 6

Table 2. The Number of Informal Workers, 2011 and 2018

Employers assisted by unpaid contrib-

Unpaid contributing family members 17.9 million 15.1 million

Paid Casual workers 11.1 million 12.1 million

Total informal workers 68 million 70.5 million

Source: 2011 & 2018 Sakernas, BPS

Tenggara Strategics & Centre for Strategic and International Studies 7

Table 3. Distribution of Workers in Informal Sector, Divided by Weekly

Temporarily not working 1.7 million 1.5 million

Average working hours/week 38.35 39.11

Source: 2011 & 2018 Sakernas, BPS

Improving productivity of informal sector

Tenggara Strategics & Centre for Strategic and International Studies 8

WHEN INFORMAL SECTOR GOES DIGITAL

Tenggara Strategics & Centre for Strategic and International Studies 9

Graphic 6. Employment Backgrounds of GrabBike Drivers

Tenggara Strategics & Centre for Strategic and International Studies 10

Table 4. Estimate of GrabBike’s Economic Contribution to the National Economy, 2018.

Economic Contribution (per month)

0 0 0 340 38% 233,934 0 0% 0 0 0

7 > 13,000,000 14,000,000 10 1% 6,880 4 0% 2,752 96,325,924,276 38,530,369,710

898 100% 617,862 898 100% 1,153,846,964,365 2,458,031,174,833 1,304,184,210,468

Graphic 7. GrabBike Drivers Who Previously

Tenggara Strategics & Centre for Strategic and International Studies 11

Graphic 8. Distribution of GrabBike Driver-Partners

Graphic 9. Driver-partners’ Motivation to Partner with GrabBike

Tenggara Strategics & Centre for Strategic and International Studies 12

Tenggara Strategics & Centre for Strategic and International Studies 13

Graphic 11. Employment backgrounds of GrabCar drivers

Tenggara Strategics & Centre for Strategic and International Studies 14

Table 5. Estimate of GrabCar’s economic contribution to the national economy, 2018

Economic Contribution (per month)

0 0 0 270 33% 72,447 0 0% 0 0 0

1 < 3,000,000 1,500,000 149 18% 39,980 66 8% 17,709 59,969,839,286 26,563,821,429

7 > 13,000,000 14,000,000 25 3% 6,708 70 9% 18,783 93,912,500,000 262,955,000,000

812 100% 217,877 812 100% 217,877 712,527,553,571 1,522,724,107,143 810,196,553,571

Graphic 12. GrabCar drivers who previously had

Tenggara Strategics & Centre for Strategic and International Studies 15

Graphic 13. Distribution of GrabCar driver-partners

Graphic 14. Driver-partners’ reasons for partnering with GrabCar

Tenggara Strategics & Centre for Strategic and International Studies 16

CONNECTING SMES WITH MORE CUSTOMERS