The cancer in the taxi industry

By Xavier Kong

Malaysia’s taxi industry has stayed mostly the same over the years, but it has received breaths of fresh air in the form of technological innovations and industry disruptors. However, will the unwillingness of the industry to meet new challenges, or even to answer older challenges, be able to keep the industry alive?

________________________________________________________________________

The taxi industry is one that is decades old, which has planted itself as an integral part of the Malaysian public transport system, usually as a means of direct transit from point A to point B, or otherwise as last-mile connectors in conjunction with other means of public transport, such as buses or trains.

However, over the years, the system under which the taxi drivers of Malaysia have operated, namely the taxi operation/leasing model, more commonly known as the “pajak” system, has been identified as something that would be detrimental to the system as a whole in the long run.

The system involves taxi drivers leasing a vehicle and/or a permit which allows the driver to offer a taxi service, with the taxi driver paying an amount in rent to the owner of the permit, who usually owns it through a holding company.

This has been described as a form of modern slavery by none other than our own prime minister, Najib Abdul Razak, who had made the comment in June 2012, and promised a revamp of the taxi system through the abolishment of the monopoly of the permits by a few companies.

Of course, seeing as the system is still in place now in 2016, four years later, it can also be said that beyond that initial show of action, the prime minister has not kept his word.

The story so far

The Malaysian taxi service had been operating as it always had, receiving “accolades” for the service that has been rendered, especially to tourists from foreign lands. This has led to the KL taxi service being identified as the worst in the world by UK website LondonCabs.co.uk, with the website calling the cabbies out on poorly maintained vehicles, as well as their refusal to use the meters which they are supposed to, leading to overcharging, or resorting to detouring even when they did use the meter.

The site also suggested that users waiting for another cab should the one flagged down refuse to use the meter.

Of course, KL cabbies responded through their associations, saying that it was not their fault, instead pointing fingers at the Public Land Transport Commission (Spad) for not working together with taxi driver associations, as well as pointing out that it was too easy for taxi licences to be obtained, with Badrol Hisham, president of the Kuala Lumpur Sentral Taxi Drivers Association, saying that “anyone can be a taxi driver, even ex-convicts”.

Badrol also called for tighter screening of taxi drivers, as well as more intensive training by Spad to improve the attitude and service standards of taxi drivers.

MyTeksi joins the game

Then, in June 2012, along came local startup MyTeksi, co-founded by Anthony Tan, grandson of Tan Yuet Foh, co-founder of Tan Chong Motor Holdings Bhd, with the aim of uplifting taxi drivers in Malaysia, as well as Southeast Asia.

The mobile application worked as a taxi-booking service, connecting taxi drivers to users through the use of technology, for the same surcharge of RM2 that came along with booking a cab, while providing details about the cab to the passenger, and vice versa, to prevent confusion.

The application also has a feedback system, allowing passengers to rate or make complaints about the taxi drivers and allowing the application to police the taxi drivers that are carrying their banner.

The application also promises to help taxi drivers better themselves and their lives by boosting revenue through a more efficient use of time, as Tan noted that a majority of the time is spent idling or having multiple cabs moving to pick up a passenger who had booked a cab due to a lack of communication.

Enter ridesharing

However, in 2013, along came San Francisco-based ridesharing global phenomenon Uber, which launched its services in Malaysia in October 2013. The application, which connects drivers to riders, offers both accountability, better service, and lower fares than taxis, but has entered the game on a disruptive scale, and was, by all accounts, legally ambiguous, due to the issue of the drivers using private vehicles as fare-charging cars while not having the proper papers, which makes the service illegal.

However, Uber’s local chapter has stated that it is doing whatever it can to work with authorities to allow Uber to continue operating, as the service fills a niche in the market, as consumers were finally offered a choice other than the taxi service.

The service was also emulated by MyTeksi in the form of GrabCar, which launched in May 2014. This was, however, seen as a betrayal by taxi drivers, who claimed that this was a stab in the back by a company that they had put their faith and trust in.

MyTeksi, now operating under the moniker GrabTaxi following its regional expansion, noted that the GrabCar service is not meant to serve as competition against taxi drivers, but it was introduced in hopes of complementing the taxi service already in place. However, taxi drivers under its banner do not see this as the case though, and have continued to protest against the offering of the GrabCar service, claiming MyTeksi is reneging on their promise to uplift the taxi drivers under its banner.

Taxi driver associations have proved vocal against the inherent rise of these services, which have since expanded out of the Klang Valley to other parts of Malaysia, with Uber now operating in Johor Bahru and Penang.

Taxi driver associations have noted that the advent of these industry disruptors has cut into the revenue of taxi drivers, who were already barely making ends meet due to vehicle maintenance as well as the permit rental fees. This, along with the rising cost of living in Malaysia, drove taxi drivers to numerous memorandums and protests, with a number even resorting to violence and unauthorised sting operations.

On the other hand, the companies that have a hold of over 60% of taxi licences in Malaysia have been strangely silent on this front. One would think that they would throw-in with the taxi drivers who are renting their licences, but this does not appear to be the case, signalled by a lack of overt support.

So what has Spad done?

The commission, already under fire for failing to revamp or remove the pajak system, is taking heavier fire for its perceived lack of action against ridesharing services. However, it should be noted that Spad has not actually done nothing.

As of October 2015, Spad has impounded over 90 vehicles that were allegedly used for ridesharing without the required documentation, with Spad chairman Syed Hamid Albar noting that ridesharing vehicles were no better than illegal taxis or “kereta sapu”, which led to a crackdown on ridesharing services.

However, the effort of the commission appeared to be undermined by other factions in the government, with KINIBIZ having attended an event by another governmental office, which had informed attendees that the event was in collaboration with GrabCar, and that there was a promotional code that could be used.

At the same time, there is also the sentiment that Spad itself is divided, due to the survey launched by the commission in November 2015, which polled consumers about what they would choose if given the choice of ridesharing or using the taxi service. The response was in favour of ridesharing, with the biggest gripe of those surveyed being the bad service provided by taxi drivers.

The latest development in this drama of transportation stands with the legal action that is being taken against Spad by taxi driver associations for negligence in handling ridesharing, and thus failing taxi drivers. There was also an announcement that Uber plans to expand their services in Malaysia by increasing their driver partners by another 100,000 by the end of 2016.

Syed Hamid speaks

At the same time, there was also a rebuttal by Syed Hamid, who claimed that Spad is being made a scapegoat and a punching bag in this matter. The chairman of Spad pointed out that the commission had approached the Malaysian Communications and Multimedia Commission (MCMC) for action against the Uber app, but was denied as the MCMC had viewed that as a form of censoring the Internet. However, the MCMC denied ever receiving such a request from Spad.

Syed Hamid also pointed out that the Transport Ministry has gotten ahead of itself with its supposed legalisation of the ridesharing services, which in turn has caused Spad to have egg dripping from its face. He further claimed that the ministry has jumped the gun, considering Spad is still finalising its decision on the ridesharing services.

With regards to the legal action against Spad, the chairman commented that the action is being taken on speculation, and that the commission has not made any decision regarding ridesharing yet.

In the next article, KINIBIZ’ very own Tiger has some suggestions to make regarding the issue, with hopes that those involved would take heed.

Tomorrow: Ten things to remember in the taxi drama