By Xavier Kong
KINIBIZ looks towards the steps that have been taken by Uber and GrabCar to find a place for themselves in Malaysia’s public transport legislation, and looks at the efforts SPAD has made in regulation.
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The ride-sharing app born in San Francisco that has taken the world by storm, Uber, along with homegrown ride-sharing service GrabCar, both have a few things in common, other than their offerings as a matchmaking app between drivers and riders. Those similarities are that they are both legal yet illegal, and that they had both functioned as disruptive forces to the local taxi industry, especially in the Klang Valley.
Still, disruptive as they were, these services stepped in and provided competition, along with what many would say is a much needed shake-up, to the Land Public Transport Commission (Spad) as well as the taxi service providers here in Malaysia.
Unfortunately, it can also be said that these new and revolutionary services were too abrasive in their entry to the Malaysian public transport sector. While it is understandable that change, while terrifying, is necessary, are these services introducing too much of it at the same time?
The problem with the business model
A point of focus here is just how the ride-sharing services are being disruptive, and the focus seems to be on the business model applied by the two services.
Both profess to be ride-sharing applications, and have been identified as fully legal as tech companies by the Malaysian Communications and Multimedia Commission. However, that is where the clear-cut lines of legality end, and the murkiness begins as to whether or not these services are legally operating in Malaysia.
Uber and GrabCar use their technology to be middlemen, in effect pairing up those in need of a ride along with a driver willing to provide that service. However, at least where Uber is concerned, the drivers are not employed by the company, but are instead termed as independent contractors.
This, in turn, kicks open yet another can of worms, and forms the basis of the resistance by the taxi drivers of the Klang Valley.
The points of contention
A major point of contention that taxi drivers have with the way Uber and GrabCar operate is that those driving under the banner of the ride-sharing apps do so without paying the hefty fees that are levied against taxi drivers, chief among them the rental of the vehicles, as well as the need to maintain a Public Service Vehicle (PSV) licence.
This leads to calls that Uber and GrabCar are utilising vehicles and drivers without the proper documentation to provide the same service as taxi drivers, but without the same costs. Some taxi drivers do not just rent their vehicles from taxi companies, but the authorisation to drive those vehicles and provide a taxi service as well.
However, Uber and GrabCar both turn to drivers who may or may not have the required PSV, and this in turn represents less of a burden on Uber and GrabCar drivers. However, without this particular licence, Uber and GrabCar are essentially functioning as illegal taxis. Still, this allows Uber and GrabCar to operate at lower prices, as shown in the table.
At the same time, there are calls that safety is an issue for those utilising the services of Uber or GrabCar, due to the point that there is no insurance for the passengers. However, this has been refuted multiple times by Uber officials, with Uber carrying a third-party liability policy on both rider and driver.
However, some quarters continue to press this particular point, and continue to claim that there is no insurance. Amran Jan, the chairman of the Metered Taxi Drivers Action Committee (Badan Bertindak Pemandu Teksi Bermeter, or BBPTB) claimed that there are Uber vehicles which are not covered by the appropriate insurance, so passengers of such vehicles are not adequately protected in the event of an accident. Uber and GrabCar were both unavailable for comment regarding this.
Yet another point pushed by taxi drivers is that Uber and GrabCar vehicles are unregulated. Taxi drivers are required to undergo a health screening, as well as bring their vehicles in at a Puspakom centre for an inspection every six months as part of the regulations imposed by Spad to ensure that taxi drivers and their vehicles met certain safety standards. This led to calls that Uber and GrabCar vehicles and drivers were unregulated.
However, Leon Foong, general manager of Uber operations in Malaysia, noted that Uber utilises ‘smart regulation’, which he explained as a “two-way feedback system that allows us to regulate both the driver, as well as the rider”.
“This way, we know immediately of drivers who have bad attitudes, or have problematic vehicles. We can then take steps to either pull these drivers off our system, or help them better themselves or their vehicles. The same applies for the rider feedback system, and we reduce instances of prank calls or bad riders for our drivers,” said Foong.
GrabCar could not be contacted for a response.
Spad’s responses
Spad has definitely been responding to the calls of taxi drivers against Uber, with the most recent answer being Ops Revus, where at least six vehicles had been seized in Kuala Lumpur for operating without PSV licences.
However, Spad has taken to a different approach against the drivers without PSVs, rather than the usual fine. SPAD plans to revoke the vehicle ownership of illegal taxi operators, under the Land Transport Act, with 80 vehicles having been impounded by the commission since October 2014, according to Spad enforcement general manager Che Hasni Che Ahmad.
Che Hasni added that of the 80 vehicles, 52 have had their ownership revoked, with the vehicles reportedly set to be auctioned off.
“These are cars which have been providing services without permits from Spad, which we have tracked down via intelligence and we’ve gathered evidence by using these services offered by various companies through websites,” said Che Hasni, adding that the commission has its sights on 59 other vehicles still at large.
Che Hasni also said that legitimate taxis that are caught operating without using their meters will face the same consequences, with 953 legitimate taxis already caught for this offence.
What next?
With Spad going on the offensive, the timeline mentioned by Uber’s Foong that could not be disclosed seems to have broken down. What does this mean for Uber’s plans to increase the number of their driver-partners in Malaysia to 10,000 by 2016? Will Uber and GrabCar continue to operate?
Unfortunately, both Uber and GrabCar could not be reached for responses, though MyTeksi has yet again professed its willingness to meet with both the authorities and the ride-sharing service providers to look for a solution.
Still, this, along with the point that the Malaysian taxi service has been rated the “worst in the world”, should serve as the wakeup call to taxi drivers as well as the authorities that they should buck up. Progress will remain progress, what is important is that progress does not leave Malaysia in its wake.
At the same time, coming in aggressive and swinging as Uber has done has certainly not helped it integrate itself into public transport sector. Competition may be competition, but moving in without complying to the legislation in place, or even hammering out something new to govern ride-sharing, places Uber on the wrong side of the law as well.
The entry of Uber and its brethren into Malaysia has simply caught Spad and the other authorities on the wrong foot, with the system, as well as its regulators, totally unprepared. Lessons need to be learned from this, and hopefully the authorities would be better prepared for the next disruptive entry, not just in the public transport sector, but in every sector in general.
Yesterday: Uber disrupts KL transport
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