In war between taxis and ride-sharing services, old cabbies are the ultimate losers

Mohd Yusof Mohd Diah, 65, says taxi drivers have invested too much in their taxis to make that change to Uber and Grab. — Pictures by Choo Choy May
Mohd Yusof Mohd Diah, 65, says taxi drivers have invested too much in their taxis to make that change to Uber and Grab. — Pictures by Choo Choy May

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KUALA LUMPUR, Sept 25 — For the past 25 years, 65-year-old Mohd Yusof Mohd Diah has driven countless passengers through the busy streets of Kuala Lumpur earning a decent income all this while.

Before that he was a civil servant for more than 20 years. He left to work in the private sector because it paid more but that did not last as he was retrenched.

With little skills and already at an age where it would be difficult to get a new job, he decided to drive a taxi for a living.

Working around 10 hours five days a week gave him a comfortable income of around RM2,500 on a good month. It’s not much for a life in the city, but it helps pay everything from food to rent and his children’s education.

“We weren’t destitute but we weren’t rich too, of course. But we made just enough,” Mohd Yusof, a father of four, told Malay Mail Online.

But all that changed when American ride-sharing company Uber, and later homegrown Grab (which offers passengers a choice of both private cars and taxis) began to muscle into the public transportation market.

Thanks to a business model that allows them to charge passengers cheaper fares, Uber and Grab are almost dominating the ride services at the expense of the taxi industry.

“Since they came, about 30 to 50 per cent of my income has been affected. Before, cab drivers like me can make enough to cover the rental (fee of the taxi) and petrol if you work from 8am to 3pm.

“Now I have to work until night and seven days a week only to make about RM1,200 to RM1,500 a month. I’m old. I don’t have the strength to work like this anymore but I’m forced to,” Mohd Yusof said.

Thousands of older drivers — they make up half of the 70,000 taxi drivers in the country — find themselves being displaced by the digital ride-sharing revolution that is rapidly taking over Malaysia’s transportation services market.

They have fought back, staging protests against both the government and Uber and Grab to try and highlight their predicament, pointing to unfair competition and treatment by the government which imposes strict laws on taxi drivers, while allowing the two companies to operate without any regulations.

Between hope and despair: Older taxi drivers find it hard to transition to the new ride-hailing business model.
Between hope and despair: Older taxi drivers find it hard to transition to the new ride-hailing business model.

Uneven competition

But the protests backfired and they found little public sympathy. Instead, they further infuriated Uber and Grab fans who took to social media to show support for the two companies, while accusing the protesters of being “reactionary” or “lazy” individuals with entrenched interests who are calling for Uber and Grab’s dissolution because they can’t adapt to “fair competition”.

As these taxi drivers have pointed out repeatedly, the competition was never fair in the first place. Unlike Uber or Grab, which makes use of existing private cars and monetizes them without any regulation, the taxi industry is one that is heavily bogged down by laws, bureaucracy and costly compliance charges. Even the fares are regulated.

Firstly, taxis are required to adhere to provisions of the Land Public Transport Act. This means only those who have undergone rigorous screenings and training by several government agencies can become taxi drivers. Also, all this costs money.

A medical screening alone can cost up to RM300. At the same time, applying for a Public Services Vocational licence (PSV), a prerequisite to drive a taxi, can cost around RM390.

To apply for a job with Uber and Grab all you need is a valid driving licence with no prior criminal record. On the latter, questions have been raised if Uber and Grab have the resources to thoroughly screen applicants.

But most importantly, the taxi system itself is designed to force drivers into contracts that would financially prevent them from jumping over to Uber and Grab, which is often the question asked by critics of the taxi industry and Uber and Grab supporters.

When an applicant applies to become a taxi driver with a registered cab operator, they enter into a contract where they will pay a certain amount of fees either daily or monthly to rent the taxi.

The amount varies according to the model and car age. Most taxi companies use Proton models for their budget range, which can be identified by their red and white colours.

Rental for a relatively new Persona can go up to RM90 a day. An older Iswara will be cheaper at around RM55 a day. This is excluding petrol and toll costs which can go up to RM70 a day.

There is also the option of paying the rental fee monthly but most older drivers tend to pay on a daily basis. An individual taxi driver will continue to pay the fees for five years when he would then own the taxi.

But that doesn’t mean he’s free from any financial obligations to the company. They are still required to pay operators for the taxi permit. This costs up to RM900 a month.

All this explains why cab fares are pricier than ride-sharing, which virtually pays little regulation fees if at all. Uber and Grab are also capital-intensive. Both companies have huge investment backing worth billions of ringgit, which makes it possible for them to keep fares low.

So the total amount paid to have a taxi inclusive of the compliance fees can go up to RM75,000. The car may be yours but by then it may be seven years old even if you rented a new model, which make it impossible for drivers to jump over to Uber and Grab since the two firms require that your car be no less than six years old.

“It’s easy to say jump to Uber. Do they accept us? They don’t want us (because our car is old),” said a Chinese taxi driver who called himself Boo.

The 67-year-old father of three lives alone in a public flat in Cheras after his wife died a few years ago.

These days, more and more passengers prefer using Uber or Grab instead of just hailing a taxi and sometimes having to haggle about fares.
These days, more and more passengers prefer using Uber or Grab instead of just hailing a taxi and sometimes having to haggle about fares.

Tech alienation

Boo has been driving a taxi for close to 30 years. He said prior to the emergence of Uber and Grab he could make around RM1,800. But today he struggles with income as little as RM900. He didn’t reply when asked if his children give him money.

Boo has had two other taxis before but had to sell them since only cars below 10 years are allowed to be used as taxis under the Land Public Transport Act. Taxi drivers have protested this system, which they say forces them to be in perpetual debt.

They would have to get rid of their old cars and enter into new rental-purchasing contracts with the taxi companies if they want to earn a living driving taxis.

“What else can I do? I have been doing this for 27 years and I’m 67 now. I am alone. My wife is dead. Driving taxi is the only thing I know,” said Boo in an indignant tone.

Technological alienation is also another factor keeping older drivers from Uber and Grab. Since their services are smartphone-based, it’s not the most old-people friendly.

Drivers like Boo said they cannot even afford a smartphone while Mohd Yusof said most old drivers he knows find the app-driven system difficult to cope with.

“If you ask them they’ll likely won’t say. They’d be too shy to admit that they don’t really know how to use the smartphone apart from WhatsApp,” referring to the popular text messaging application.

Following complaints and protests from taxi drivers, the government said it would soon unveil a “win-all” roadmap for both the taxi industry and ride-sharing companies.

Spad recently said they would regulate Uber and Grab to make the competition fairer but observers believe the government isn’t likely to regulate the two companies heavily seeing that they too have a stake through Khazanah Nasional Bhd The state sovereign fund was reported to have a stake in Uber through its global growth equity investment General Atlantic LLC.

Ministers like Datuk Seri Tengku Adnan Mansor and even Spad chief Tan Sri Syed Hamid Albar blamed indisciplined rogue taxi drivers for driving customers away, but seldom admit that poor enforcement is also to be blamed.

Then there is the fact that government regulation itself makes the competition unfair in the first place.

Taxi drivers lament regulations on the taxi industry make competition against Uber and Grab a heavily handicapped one.
Taxi drivers lament regulations on the taxi industry make competition against Uber and Grab a heavily handicapped one.

The clearest example is the conditions imposed on applicants of new individual taxi licences proposed by Spad. The idea is that giving out individual permits would be a one-time payment that could free drivers from the charges imposed by big operators.

The cost reduction would make them more competitive but conditions like drivers needing to have at least RM18,000 in their savings account would make it almost impossible for them to apply.

“This condition doesn’t make sense. The idea is that the money will show drivers have the funds to purchase a new car when the individual licences are given but most taxi drivers are poor. Don’t say RM18,000, they don’t even have RM3,000. The best idea is to use existing permits and convert them into individual permits so they can continue using the taxi that they’ve paid for,” said Kamaruddin Mohd Hussain, the chief of 1 Malaysia Taxi Drivers Association.

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