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Levelling the e-hailing and taxi field: would it be detrimental to consumers?

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E-hailing which faced obstacles from some stakeholders in the early days of adoption, is now an accepted part of the public transportation ecosystem in many cities and towns in Malaysia. Malaysians have once again proven that they are fast adopters of new trends and technology. The government must be commended for its enlightened stance that consumers will be the ultimate beneficiaries with private e-hailing vehicles co-existing with traditional taxis. The idea of course, is that with more choices for the public seeking ride options based on price, comfort and safety, a healthy competitive landscape can then be nurtured, which benefits all.

Considering that there are countries who took the harsh step of banning e-hailing, succumbing to pressure from vociferous taxi groups, the Malaysian government’s stance is one of careful contemplation and foresight, listening to the voices of all relevant stakeholders. It is important to stress that the introduction of e-hailing does not exclude traditional taxi drivers who can easily adopt e-hailing to earn extra income. While the government is correct in its approach to institute a relevant regulatory framework to oversee e-hailing operations, it is also pertinent to note that additional compulsory requirements on e-hailing drivers (mainly part-timers), can stifle the nascent sector and negatively impact the public. The sector requires a more equitable playing field vis a vis taxi drivers and e-hailing drivers.

We believe that e-hailing can bridge this gap more effectively once more taxis integrate into the e-hailing ecosystem. Technology is showing its ability to democratize a sector where discernible, positive outcomes benefit the end-user, the public. Overall, the consumer response to e-hailing services in Malaysia has been overwhelmingly positive, with the Land Public Transport Commission or SPAD reporting that 80 percent of consumers prefer e-hailing to regular taxis.

The government has outlined measures which in its view, will help level the playing field for taxi and e-hailing operators as traditional taxi operators continue to lambast e-hailing as detrimental to their livelihood. This topic has been somewhat contentious in the last several years. Grab has consistently opined that technology is the key to improve and transform urban public transportation. In Southeast Asia, Grab has given 620 million people access to transportation choices beyond just traditional public transport options. The Grab mobility platform emphasises convenience, safety and reliability.

In Malaysia, there are about hundreds-of-thousands e-hailing drivers where only around 20% of them are full-time drivers. Notwithstanding a one-year grace period, the government now requires e-hailing operators to comply with standard levels for vehicles and driver worthiness (which are the same as for any public service licence which includes e-hailing operators to provide insurance coverage for driver, passenger and third party). The new regulation also requires e-hailing vehicles to undergo inspection once a year for any vehicle older than three years. E-hailing drivers must also attend a six-hour training course. Beginning November 1, it is also compulsory for e-hailing drivers (full-time and part-time) to contribute to SOCSO or Social Security Organisation.

The reality on the ground is somewhat ominous for e-hailing operators. The new regulations are discouraging new drivers to join the e-hailing sector. Grab for instance, have noticed a reduction in the registration of new drivers. The introduction of new fees and time requirements are the main obstacles. A shortage of drivers can of course put pressure on fares which is not beneficial to consumers. The intended outcome, envisioned by the government, of a healthy, co-existence of the e-hailing and taxi ecosystem may be negatively impacted.

In the past, traditional taxis have been accused of deliberately taking longer routes to increase fares as well as taxi meter avoidance and unsafe conduct. Such behaviour is less reported to the authorities now since e-hailing became a popular option for many urbanites. But higher prices due to fewer e-hailing drivers signing up due to stringent regulations, could see the return of unbecoming behaviour by some bad apples in the taxi industry, now largely muted due to healthy competition offered by e-hailing operators. Such a development, if it were to reoccur, will not benefit the ultimate stakeholder – the public.

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