KONTAN.CO.ID - KUALA LUMPUR. Malaysia will allow motorcycle-hailing firms such as Indonesia's Gojek and local start-up Dego Ride to start operations on a limited scale from January 2020, Malaysia's transport minister said on Tuesday.

Gojek - whose backers include Alphabet's Google and Chinese tech companies Tencent and JD.com - and Dego Ride will start operating based on a proof-of-concept basis to measure demand for the service over six months, Minister Anthony Loke Siew Fook said.

"Bike hailing will be an important component in providing a comprehensive public transport system, as a mode for first- and last-mile connectivity," Loke told parliament.

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The pilot project would be limited to the Klang Valley, Malaysia's most developed region and where the capital Kuala Lumpur is located, although the government would consider expanding it to other areas if there was demand.

The six-month, proof-of-concept pilot programme would allow the government and participating firms to gather data and evaluate demand, while the government worked on drafting legislation to govern bike-hailing.

"Bike-hailing will be subject to similar regulations as laid out for e-hailing," the minister said, referring to existing ride-hailing operations by companies such as Grab.

Gojek did not immediately respond to a request for comment, but its co-chief executive, Andre Soelistyo, told reporters on Saturday that the company was preparing expansion into Malaysia and the Philippines.

"It is our dream for the next year. The services that we have in Indonesia can be opened in other countries quickly. We leave (it) to the leader of the countries to choose," Soelistyo said.

In March, Philippines regulators upheld a decision to refuse Gojek a licence due to its failure to meet local ownership criteria, but Soelistyo said they would build the business on their payment system already set up in the country.

Gojek's impending entry into Malaysia will likely pose the biggest challenge to Grab, which took the lion's share of the nation's e-hailing market after it bought over Uber Technology Inc's operations in Southeast Asia last year.

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Grab, which is backed by Japan's SoftBank Group Corp , has struggled to adapt to new regulations requiring all ride-hailing drivers to apply for specific licences, permits and insurance, and have their vehicles and health checked.

Grab Malaysia said in October that only 52% of its driver-partners were licensed under the regulations that took effect the same month.

"Bring it on! It is indeed healthy competition," Grab Malaysia said on Twitter after the minister's announcement.