SINGAPORE, Jan 25 ― Ride-hailing firms such as Grab and GoJek will be licensed and both taxi and ride-hailing operators must allow their drivers to drive for other operators, if proposals by the Land Transport Authority (LTA) are carried through.
Right now, taxi operators are licensed by the LTA but ride-hailing firms are not. Grab is barred from driver exclusivity arrangements while taxi and other private-hire car firms are not.
The new rules proposed to govern the point-to-point transport sector come more than five years after private ride-hailing apps first disrupted the taxi industry here.
The proposals were released for public consultation by the LTA yesterday and the public may provide feedback until Feb 21.
The new rules aim to maintain an open and contestable market, while providing sufficient regulatory oversight to protect the safety and interests of commuters and drivers, the LTA said.
“Currently, taxi operators which provide primarily street-hail services are licensed but operators that provide pure ride-hail service are not,” the LTA said. Both, however, offer the same fundamental service of transporting commuters from point-to-point, it added.
The LTA wants to introduce two new types of licences that will replace the existing Taxi Service Operator Licence and the Third-Party Taxi Booking Registration Certificate:
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The Street-Hail Service Operator Licence will come with conditions similar to taxi-operator regulations today. For instance, licensees will have to maintain a minimum fleet size and own their vehicles. The LTA is studying the possibility of lowering the minimum fleet size required. The Ride-Hail Service Operator Licence will allow licensees to provide ride-hail services. Given the varying sizes of such operators, the LTA intends to differentiate the tiers of licences by size. The smallest will be exempted from having to obtain a licence while largest operators will be subject to more requirements. On the proposal to bar driver exclusivity arrangements, the LTA said that it will make an exception for drivers who are employees of operators, “as employment provides greater job protection for drivers”. The operator here with such an employment model is HDT Singapore Taxi.
For other drivers, “those who prefer more flexibility and autonomy, are free to choose which operators to drive for, thus providing more options for drivers”, the LTA said.
M issed opportunity to rethink taxi services?
The public consultation follows an industry consultation that started last November, in which key industry stakeholders such as the National Taxi Association, National Private Hire Vehicles Association, taxi and private-hire drivers and operators were engaged.
Transport expert Park Byung Joon, an associate professor at the School of Business of the Singapore University of Social Sciences (SUSS), said that the new regulatory framework will blur the distinction between taxi and private-hire operators even more.
It is not clear if the Street-hail Service Operator Licence can only be granted to existing taxi services, for instance. “If Grab gains (the licence), Grab will effectively have their own taxi fleet, too,” he said.
The entry of ride-booking player Uber into Singapore in 2013 removed the boundary between taxi services and private-hire transport services, Dr Park said.
The regulatory regime, he noted, was not what plagued the taxi industry. “The taxi industry was having a hard time not because of unfavourable regulation. It was due to the cash-burning by Uber and Grab to gain their own market share.
“Now that the cash-burning era is gone, the taxi industry (should) have some breathing room,” he said.
Economist Walter Theseira of the SUSS said that the LTA’s proposals are a missed opportunity to rethink how taxi services are run and how they can be improved.
“Do we need to force somebody who is offering street-hail services to come with a fleet of a minimum size, which all looks a certain way? Why is that necessarily a requirement as long as they are properly regulated? What is the continuing rationale for having taxis separated from regular private cars by Certificate of Entitlement and other things like that?” Associate Professor Theseira questioned.
With the private-hire companies in the picture, “those concepts have gone out the window because we have allowed any ordinary vehicle to be registered as a private-hire vehicle”, he said.
“So if we accept that keeping taxis as a separate class no longer makes any sense from a certain policy perspective, maybe we should just be a little more liberal regarding how we would organise (the sector).”
The regulatory framework should also have provisions on monopolies, rather than leaving it to a “generalist” such as the Competition and Consumer Commission of Singapore to correct it later, Assoc Prof Theseira said.
“There is a significant chance that these kinds of markets tend towards monopoly (because) the best way of providing a (ride-hailing) service is if there is one player that provides the service to the entire market.”
Grab and GoJek said that they would work with the Government.
Welcoming the LTA’s review of the point-to-point sector regulatory framework, Grab said it is heartened that the review will prohibit driver exclusivity arrangements for all players.
“This will address current gaps in the industry whereby taxi operators can dictate whether their drivers can receive fixed-fare ride-hailing jobs and other private-hire car operators can impose exclusive conditions on their drivers,” its spokesperson said.
R egulatory changes over the years
1998: Taxi fares deregulated to allow taxi operators to set their own fares and be more responsive to market conditions
2003: Taxi market further liberalised to allow the entry of new operators to encourage competition
2013: Framework introduced to ensure taxis are readily available, especially during peak hours
2015: Registration framework introduced to give LTA oversight over third-party taxi-booking service operators
2017: Some regulations introduced in response to the rise of private-hire car booking service operators. For example, the requirement for private-hire drivers to hold a vocational licence and for the cars they drive to display tamper-proof decals. ― TODAY
