TMR

SHARES of GoTo Group are seeing signs of new life ahead of a shareholders’ meeting that may help pave the way for its long-awaited merger with larger rival Grab Holdings Ltd.

GoTo’s stock has risen about 20% in Jakarta so far this quarter, beating global ride-hailing and delivery peers. Support from major shareholders and the Indonesian government for a takeover by Grab have helped drive a turnaround after years of underperformance.

At a meeting Wednesday, GoTo shareholders will vote on whether to approve the appointment of Hans Patuwo as chief executive officer, replacing Patrick Walujo, who has opposed the deal with Singapore-based Grab. A new CEO may speed a transaction that would create a Southeast Asian tech sector powerhouse.

“The two companies together would make a much bigger entity – it would have a much bigger scale and more market share,” said Angus Mackintosh, an analyst at Aletheia Capital. “It would be a massively dominant animal.”

GoTo — which offers services from transportation and food delivery to online shopping and financial services — had been considering the merger as an option as it struggled with profitability. Even with the recent stock rebound, GoTo’s market value has plunged to less than $5 billion from a high of more than $30 billion shortly after its listing in 2022.

Co-founders of the company and prominent investors including SoftBank Group Corp. pushed for the ouster of Walujo, who took the helm in 2023. Indonesia’s sovereign wealth fund Danantara is among those now trying to facilitate a deal with Grab, lending a stamp of approval from the nation’s leaders.

The business outlook has brightened somewhat, with GoTo raising its guidance and analysts projecting it will turn a profit next year.

Still, “in the near term, M&A sentiment is outweighing fundamentals,” Macquarie Group Ltd. analyst Ariyanto Jahja wrote in a note last week. Government support plus likely board changes have made a merger more probable, he added.

Meanwhile, Uber Technologies Inc.-backed Grab is expected to post a profit this year, though it too has struggled with periods of red ink since it listed in New York in late 2021. It’s been eyeing a deal with GoTo in order to improve its operating leverage.

A merger would “help Grab strengthen its market share in the Southeast Asia region” and thereby discourage any potential competitors, Citigroup Inc. analyst Alicia Yap wrote in a report last month. It could lead to cost savings by allowing the companies to lower discounts they offer customers, which would increase margins, she added.

While a combination would be good for profits, it has sparked concerns in Indonesia about higher prices for consumers as well as possible job losses. A merged Grab and GoTo would potentially control over 90% of the nation’s ride-hailing and food-delivery market, according to Citi analyst Ferry Wong.

In that context, “Danantara’s participation may ease monopoly concerns,” Wong wrote in a Nov. 24 note. “While execution risks remain, we believe the management restructuring would improve the likelihood of regulatory approval for a merger.” –BLOOMBERG

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ByteDance’s Pecém project taps RE and strategic location to draw wider AI and tech investment 

by PETER MILLARD & AUGUSTA SARAIVA 

A 200 billion reais (RM168 billion) commitment from ByteDance Ltd’s TikTok to help build a massive data centre complex in Brazil is cementing the nation’s position as the leading location in the region for artificial intelligence (AI)-related investment. 

China-based ByteDance on Dec 3 announced its intention to proceed with the Pecém project in the northeastern state of Ceará. Brazil is considered the best-positioned country in South America to tap into the global boom in data-centres used to run AI because of its abundant supplies of renewable energy (RE), an interconnected national power grid. 

Pecém is also close to a major hub for submarine telecommunications cables that connect the continent with Europe and Africa. 

The ByteDance venture, the biggest of its kind by far in Brazil, is a win for President Luiz Inácio Lula da Silva who has touted the country as a destination for AI investment. 

It also the latest in a series of deepening tech and green-energy investments by Chinese companies in Brazil. The partnerships predated the re-election of US President Donald Trump but have grown as both nations find themselves at odds with the US administration’s trade and energy priorities. Trump had targeted Brazil, one of the world’s major emerging economies, with high tariffs and publicly rebuked its leaders. Trump has backed off recently and is working with Lula on mending US-Brazil relations.

China, for its part, is lagging the US in the race to develop ground-breaking AI technologies. It’s also locked out of the US for these kinds of investments. 

Brazil is also home to the most power capacity financed by Chinese companies as of 2022, according to Boston University’s Global Development Policy Centre. 

“Under the Trump administration, the US has systematically attempted to limit and dismantle China’s economic weight and influence over Latin America,” said AtlasIntel CEO Andrei Roman. 

“The Pecém investment demonstrates that China is willing and capable to fight back, while Brazil will gladly accept its investments.” The Chinese firm will partner with data centre developer Omnia Holdings Ltd and Casa dos Ventos, one of Brazil’s leading RE providers.

The planned complex in Pecém is “a very strategic location,” Omnia CEO Rodrigo Abreu said in an interview. “It’s relatively close, at the same time, to Europe, Africa, North America and the rest of Latin America.” 

Pecém also beat out sites in India, Norway and Malaysia for ByteDance’s investment, said Fabio Feijo, the head of ZPE Ceara, the export-driven special economic zone that’s part of the Pecém complex. 

“Data centers are not the end goal — they’re the bait to attract high-tech industries and Big Tech operations,” Feijo said in an interview, describing the vision as “Ceará Valley.” 

TikTok is also deepening ties in Brazil as the company has failed thus far to come up with a plan to save its service from being blocked in the US. 

The Chinese government pledged a month ago to work with Washington to resolve the fate of TikTok’s US business but stopped short of supporting a deal that’s been touted by Trump to spin off ByteDance’s crown jewel into a new venture owned mainly by American investors. 

Under a US security law signed last year by former President Joe Biden, Beijing-based ByteDance was ordered to either sell TikTok US or face a ban in the country. The initial deadline was in January 2025, but Trump has extended it multiple times in an effort to reach a deal. 

Pecém is part of Lula’s broader AI ambitions. Nearly half of all planned and existing data centres in South America are in Brazil, according to Data Centre Map, a website that tracks the industry. 

Lula has also signed a provisional measure to offer incentives to companies looking to build data centres in Brazil, including allowing businesses to import some equipment tax-free. 

“The goal is to use data centres to structure new production chains,” Brazil’s Industry Development Secretary Uallace Moreira said in an interview. “Data centres by themselves don’t generate jobs.” 

Still, there’s a lot of hype and speculation about Brazil’s outlook. Only a third of the announced data centres in Brazil will actually happen because some have no connection to the grid and others are just too far from Sao Paulo, the country’s business and financial centre, according to Aurora Energy Research. 

A data centre boom also doesn’t come without risks. Brazil needs to build out transmission lines and deploy industrial-scale batteries to stabilise the supply of RE, which varies according to the weather, or else Brazil could move from an energy surplus to a deficit as data centres and electric vehicles (EVs) boost consumption, said Ty Eldridge, the CEO of Sao Paulo-based RE company Brasol Participacoes e Empreendimentos SA. 

“Energy is going to get more expensive and more scarce,” he said. There are “huge challenges even with government support.” — Bloomberg

• This article first appeared in The Malaysian Reserve weekly print edition

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by JULIE FRAYSSE 

SANTOSH Devi is proud to have brought light — and hope — to her hamlet in western India, taking up solar engineering through a programme for women like her whose husbands suffer chronic disease from mining work. 

Her husband is bedridden with silicosis, a respiratory illness caused by inhaling fine silica dust which is common across some 33,000 mines in Rajasthan State, where the couple and their four children live. 

Santosh, 36, has joined seven other women for a three-month course at Barefoot College in Tilonia, a two-hour drive from her village in the desert state’s Beawar District. 

There, the group learned the basics of solar engineering — installing panels, wiring them, and assembling and repairing lamps — to help light up homes and provide electricity for anything from charging phones to powering fans. 

With their sick husbands out of work, the training has allowed these women to make a living and support their families. 

Barefoot College has trained more than 3,000 women from 96 countries since it was set up in 1972, according to Kamlesh Bisht, the technical manager of the institute. 

The college offers rural women new skills with the aim of making them independent in an environment where jobs are scarce and healthcare generally inaccessible. 

Santosh, who is illiterate, said she wants to “offer a good education and a better future” to her children, aged five to 20.

She now earns a small income by installing solar panels, and hopes to eventually make the equivalent of US$170 (RM792) a month. 

The time away from her family was tough, but Santosh said it was worth it. 

“At first, I was very scared,” she recalled. “But this training gave me confidence and courage.” 

She showed with enthusiasm the three houses where she had installed a photovoltaic panel powering lamps, fans and chargers. 

Slow Killer 

Her husband used to cut sandstone for pavers exported around the world. 

But now he can barely walk, needs costly medication and relies on a meagre state allowance of US$16 a month. 

Wiping away tears with the edge of her bright red scarf, Santosh said she has had to borrow money from relatives, sell her jewellery and mortgage her precious mangalsutra, the traditional Hindu wedding necklace, to make ends meet. 

The family share a similar fate with many others in Rajasthan state’s mining belt, where tens of thousands of people suffer from silicosis. 

According to pulmonologist Lokesh Kumar Gupta, there are between 5,000 and 6,000 cases in just a single district, Ajmer. 

In Santosh’s village of 400 households, 70 people have been diagnosed with silicosis, a condition that kills slowly and, in many cases, has no cure. 

An estimated 2.5 million people work in mines across Rajasthan, extracting sandstone, marble or granite for less than US$6 a day. 

Those using jackhammers earn double but face even higher exposure to toxic dust. 

Vinod Ram, whose wife has also graduated from the Barefoot College course, has been suffering from silicosis for six years and struggles to breathe. 

“The medication only calms my cough for a few minutes,” said Vinod, 34, who now weighs just 45kg. 

He started mining at age 15, working for years without a mask or any other protective gear. 

No Choice But to Work 

His wife Champa Devi, 30, did not even know how to write her name when she arrived at Barefoot College in June. 

Now back home, at a village not far from Santosh’s, she is proud of her newfound expertise. 

But her life remains overshadowed by illness and poverty. 

Champa, who has dark circles under her eyes, has installed solar panels in four nearby homes but has not yet been paid. 

For now, she earns about 300 rupees (RM14) a day working at construction sites — hardly enough to cover her husband’s medical bills, which come up to some US$80 a month. 

The couple live in a single dark room with thin blankets covering the floor, and the near-contact sound of detonations from nearby mines. 

“There is no treatment for silicosis,” said pulmonologist Gupta. Early treatment can help, but most patients come only after five to seven years, he said.

Under state aid schemes, patients receive US$2,310 upon diagnosis and their families get another US$3,465 in the case of death. 

Ill miners, who are physically capable, sometimes continue to cut sandstone for a pittance to support their families, despite the dire health risks. 

Sohan Lal, a 55-year-old mine worker who suffers from shortness of breath and severe cough, sees no other option but to keep working. 

“If I were diagnosed, what difference would it make?” he said. — AFP

• This article first appeared in The Malaysian Reserve weekly print edition

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