Malaysiakini Letter

Will Uber lose its licence in Malaysia?

YS Chan  |  Published:  |  Modified:

With the passing of amendments to the Land Public Transport Act 2010 and the Commercial Vehicles Licensing Board (CVLB) Act 1987 at the Dewan Rakyat on July 27, e-hailing companies will be eligible for an intermediation business license.

But if Uber Malaysia Sdn Bhd had already been granted this intermediation business license, will it be revoked as happened to its London operations after city regulator Transport for London (TfL) declared that Uber London Ltd is not fit and proper to hold a private hire operator licence?

The reason given was because Uber’s approach towards the employment status of its drivers demonstrated a lack of responsibility. Globally, it is facing a staggering number of lawsuits from governments, drivers, passengers and competitors. Some have been settled out of court while others have dragged on indeterminably.

Bank in 2009, Garrett Camp developed UberCab, a mobile app for the public to share rides using licensed black Lincolns, allowing fares to be shared by passengers in the same limousine. Later, Travis Kalanick was brought in as an adviser, and UberX was introduced in 2011 by recruiting private car owners to drive for the company.

While UberCab fares were 50 percent higher than normal cabs, UberX was meant to undercut existing taxis. The strategy was not profit per se, but market share to drive up the company valuation, which skyrocketed from US$60 million in 2011 to US$68 billion by Dec 2015.

A recent report revealed that on passengers paid only a fraction of the fare, with most of it subsidised by Uber. As such, the company has never been profitable, and lost US$2.8 billion last year, and US$708 million in the first quarter of 2017.

On June 21, Kalanick was pressured by investors to resign as CEO in the wake of numerous controversies surrounding Uber, caused by its toxic work culture. On August 27, Uber’s board unanimously voted in Dara Khosrowshahi, who had been with Expedia since 2005, to be the new CEO for Uber.

For Uber to change, it has to start with its corporate culture. Uber’s proliferation was due to the fact that it seemingly has little or no respect for existing regulations and businesses, including the welfare of millions of taxi drivers and their dependents.

UberX was introduced to the Klang Valley in August 2014, portraying itself as the antidote for recalcitrant taxi drivers, when in fact it was competing with local taxi apps, as some cabbies only pick up street-hailing passengers who do not use apps to book a ride.

The rates for UberX were RM1.50 starting fare, 55 sen per km and RM12, per hour when budget taxi fares were R3, 87 sen and RM17.14 respectively. It succeeded in capturing the main market share from MyTeksi – which was forced to rope in private cars and morph into Grab to compete successfully against Uber in the region.

In London, about 3.5 million passengers and 40,000 drivers will be affected if Uber loses its appeal and lawsuit against TfL. If Uber Malaysia Sdn Bhd were to be denied an intermediation business licence, a similar number of people will be affected locally.

However, the impact would be minimal compared to losses already suffered by local taxi companies and drivers. Moreover, Uber passengers and drivers could easily migrate to Grab or one of the new e-hailing apps entering the local market.

But it is more likely that Uber Malaysia Sdn Bhd will adhere to the set conditions, which include regulation of the type of service provided, measures to ensure the safety and security of passengers, and standards of performance with which e-hailing companies must comply.

Being locally incorporated, it would have to pay corporate tax and remit GST to the government, more so when the Customs Department is tightening laws on digital service providers.

Although Uber has disrupted taxi and tour operator business in Malaysia, it is likely to continue operating as local executives would emulate those at the parent company in reinventing themselves, as businesses are only sustainable if based on values, not greed.

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