Uber hits the brakes in Taiwan

A woman carries her suitcase to get into a taxi in Taipei, Taiwan on Feb 2, 2017.
A woman carries her suitcase to get into a taxi in Taipei, Taiwan on Feb 2, 2017. PHOTO: EPA

Firm suspends services after racking up $50m in fines, backlash from taxi industry

Global ride-hailing company Uber is putting the brakes on its services in Taiwan amid growing pressure and fines.

Uber said in a statement yesterday that it was suspending its ride- hailing operations from next Friday to "reset the conversation" with the government, to "innovate the transport technology" in Taiwan.

This came after Uber racked up NT$1.1 billion (S$49.9 million) in fines within a month after an amendment to a law banning unlicensed taxi services took effect.

There had been reports that the Transport Ministry was about to order Uber to cease operations.

Calling the pullout a "tough decision", Uber said that the Taiwan government is "moving away from embracing innovation and 21st century trends in transportation".

"In the face of this impasse, we must create a new path forward," the company said. "We hope that pressing pause will reset the conversation and inspire President Tsai (Ing-Wen) to take action."

Uber has had a bumpy ride in Taiwan, drawing sharp objections from the taxi industry and raising questions from the government as to whether it was flouting laws.

At issue is its business model as an Internet-based platform rather than a transportation service.

The government said Uber owed sales taxes estimated at nearly NT$100 million. Last year, the Taipei City Professional Drivers' Union filed a formal complaint accusing the company of tax evasion.

The San Francisco-based company said in its statement that it has made 15 million trips since launching in Taiwan in 2013. Some one million people there have downloaded its app, with 10,000 active drivers.

Besides Taiwan, Uber has faced pushback from regulators and drivers in many other markets. It pulled out of China last August and has suspended its taxi and van services in Hong Kong.

In response to news of Uber's suspension of its ride-hailing services, Taiwan's Economic Affairs Minister Lee Chih-kung said yesterday that while it is important for Taiwan to promote start-ups, they must also abide by the law. He said his ministry would continue to negotiate with Uber on its operations.

Taxi drivers like Mr Li Wen-shu were happy to hear of the suspension.

Mr Li claimed to have lost nearly NT$2,000 a month since Uber's arrival. He said: "We need to protect our own rice bowl and hope that the government will not abandon us for new technologies."

Some observers said Uber's move may undermine Ms Tsai's efforts to attract tech start-ups to boost Taiwan's flagging economy.

Opposition legislator Jason Hsu, a proponent of Uber, said the government is taking the "easy way out".

"Even with the heavier fines, the taxi industry has not improved. The government is just protecting an old and outdated industry and depriving consumers of better transport options," he told The Straits Times, pledging to continue to facilitate dialogue between Uber and the government.

He said: "This is a step backwards for a government that claims to want to promote and embrace the digital economy and innovation."

A version of this article appeared in the print edition of The Straits Times on February 03, 2017, with the headline 'Uber hits the brakes in Taiwan'. Print Edition | Subscribe