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Regulate Uber and GrabCar with a light touch

This will even the playing field and protect passengers, without hindering the progress of technology

Ride-sharing app companies Uber and GrabCar face the prospect of greater controls in Singapore; not just the companies but also their drivers.

A Ministry of Transport (MOT) review is under way, raising the possibility of some form of regulation by year end.

The ministry has so far held dialogues with commuters, taxi drivers and the National Taxi Association (NTA), an affiliate of the powerful National Trades Union Congress.

Details of the review are still sketchy. Senior Minister of State for Transport Ng Chee Meng, who is heading the review, has said that he has three priorities - ensuring that commuters' interests are taken care of, promoting healthy competition and levelling the playing field for taxi drivers where justified.

Transport Minister Khaw Boon Wan also said, when he announced the review in October, that it is important to be fair to both the incumbents and new players, and to take a balanced approach.


ST ILLUSTRATION: MIEL

But how fairness and balance are put into practice is still up in the air.

COMPETING DEMANDS

For taxi companies, being fair means holding Uber and GrabCar to the same regulatory standards.

Industry giant ComfortDelGro has refrained from making public comments on these upstarts, but smaller players have been more vocal. In October, the managing director of Premier Taxis memorably said of its ride-sharing rivals: "They're having a free lunch."

NTA chief Ang Hin Kee, an MP who is part of the labour movement, also sounded mildly annoyed in May when he spoke in Parliament about ride-sharing drivers. "For all intents and purposes, what they are basically doing is to operate like taxi drivers without having to comply with any of the regulations," he said.

To commuters, taking away the convenience, better services and occasional lower fares that Uber and GrabCar provide will be seen as a step backwards. It is a no-go zone.

The MOT will have a trying time balancing these competing demands. Still, it can focus its review on three key areas.

TRANSPORT OPERATOR OR TECH START-UP?

First, it has to take a hard look at how these companies actually operate, not just how they say they operate.

Uber and GrabCar see themselves not as transport companies but tech start-ups that match passengers with drivers.

So far, they have not run foul of the law here, primarily because they have found ways to work within regulations that have not kept up with technological advances.

Still, it is difficult not to see Uber and GrabCar as providing some form of taxi-like or chauffeured vehicle services. Uber even has its own car rental arm here.

Just ask the passengers who book Uber or GrabCar rides. In all likelihood, they will say that they are using Uber or GrabCar services, not those provided by the so-and-so limousine companies that Uber and GrabCar require their drivers to set up. Passengers also make payments to Uber, which takes a 20 per cent cut, not the drivers or their shell companies.

Since chauffeured vehicle services are already regulated in Singapore, it makes sense to extend and update the regulations since the use of such services has exploded with Uber and GrabCar .

FARE REGIME

Any update of the regulations ought to also examine how fares are set by Uber and GrabCar. This is the second area that the MOT should review.

As a commuter, I am thankful that Uber and GrabCar drivers ply the roads during peak hours where their services are most needed. But I am less enamoured of the surge in fares during peak hours.

GrabCar says on its website that its displayed fares include "peak and location surcharges" that are "supply and time dependent", but it does not say how the extra charges are calculated.

Similarly, Uber does not reveal the mathematics behind how it sets the formula by which fares are multiplied. Just past the stroke of midnight on Jan 1, Uber applied a surge factor of twice the normal fares across Singapore, whether a car is booked for pick up at the cemetery at Lim Chu Kang Road or the nightspots at Clarke Quay.

The demand at nightspots, I understand. But how the demand for Uber cars at the Lim Chu Kang cemetery can be so high at that time for fares to double escapes me.

The lack in transparency in setting fares runs the risk of the companies setting prices that hurt competition and commuters' interests.

While the authorities should not interfere with market forces, they cannot turn a blind eye when companies have the power to set and control prices for their own gain.

WHO CAN DRIVE?

Besides how Uber and GrabCar operate and how they set fares, the third area that the MOT has to examine is how drivers are screened. The safety of passengers is at stake.

When I signed up to be a driver at Uber and GrabCar in November last year, I was surprised by how swiftly I was accepted.

All it took was two hours at their offices.

And the 30-minute training they put me through was so superficial that it was largely forgettable - the trainers mostly ran through the steps of using the apps and highlighted the incentives for drivers.

While both companies screen their drivers, the exact scope of the screening is unclear.

For taxis, the Land Transport Authority (LTA) screens hopeful drivers for criminal records, and those with serious offences will not have their applications approved.

Are Uber and GrabCar drivers screened this way?

 

I know of a former cabby who said that he lost his taxi driving licence but was able to drive for both Uber and GrabCar. This calls into question the robustness of background checks.

As a passenger, I have met my share of bad drivers. In September last year, an Uber driver would not drop me off at the departure gates at Changi Airport Terminal 2, saying that he would drop me off at the carpark instead, about 250m from my check-in row. Last month, another Uber driver would not ferry me and a colleague after we got into his car at VivoCity, claiming that the booking had been cancelled.

If they were licensed taxi drivers, they would have breached LTA rules and would have faced demerit points, fines or even having their licences suspended.

But because they were unregulated, they got away with nothing more than a poor rating.

In this sense, the calls for Uber and GrabCar drivers to be put through some form of vocational licensing are not unreasonable.

Such licensing gives a degree of assurance to passengers that their drivers have been screened by the authorities, not just the companies, and that their behaviour is governed by some standard rules and not just an internal customer satisfaction rating system.

When applied uniformly and fairly, vocational licensing will not deprive serious-minded Uber and GrabCar drivers of their livelihood. Instead, it can boost their long-term credibility and standing.

That said, the current compulsory two-week taxi drivers' training course is so outdated that it should not be applied without modification to Uber and GrabCar drivers.

When I took the course in 2013, half my time was spent on using the street directory to look for landmarks and plan routes. The trainer even chided me for using Google Maps. The LTA should use the opportunity to review the training for taxi drivers.

SHAKING UP THE TAXI INDUSTRY

Uber and GrabCar are shaking up the taxi industry, but not in a totally undesirable way.

They have got their incentives structured correctly by using the carrot to coax drivers to drive during peak hours. This is in contrast with LTA which uses the stick by setting minimum distances and hours that cabbies have to be on the road, and slapping fines on taxi companies that do not meet the standards.

They also turned the heat on taxi companies and drivers, who then have to up their game, be it in lowering fares or raising service standards. And they are here to stay. Uber has shown a keenness to work with the authorities, and GrabCar has even found an investor in a venture capitalist firm owned by Temasek Holdings.

In this sense, their presence is a welcome one. All that is needed is regulation with a light touch to even the playing field and protect passengers, but without hindering the progress of technology or stifling innovation.

A version of this article appeared in the print edition of The Straits Times on January 14, 2016, with the headline 'Regulate Uber and GrabCar with a light touch'. Print Edition | Subscribe