Revamp regulation of all hired vehicles

Rather than introducing new and labyrinthine regulatory requirements specifically to curb taxi competitors such as GrabCar and Uber, perhaps it is time to consider a revamped, unified framework that would apply equally to all hired vehicle operators ("Competition between taxis, GrabCar, Uber should be fair" by Mr Sum Kam Weng; March 22).

Under the status quo, the market for hired transport is controlled by a few large players, thanks to high regulatory barriers to entry.

These companies control the means of production - the vehicles - and exercise a high degree of control over operations, at the expense of commuters.

Drivers are subjected to punitive vehicle rental fees, poor dispatch control and unhealthy working hours.

Meanwhile, passengers are subject to increasingly complex and unfriendly fare structures.

In contrast, GrabCar and Uber have succeeded in two areas.

The first is leveraging disruptive new technologies - namely cellular connectivity, cloud computing and "big data" analysis - to enhance service quality and optimise operational efficiency.

Ride-sharing apps offer a constant feed of information to drivers, ensuring consistent availability.

They also feature comparatively transparent pricing systems, streamlined payments and incentives, such as a driver rating system to boost customer service.

The second is adopting a hands-off approach.

Ride hiring is a transaction between the driver and his passenger, with the company itself playing a more unobtrusive background role.

Ride-hiring companies have, thus, demonstrated that the quality of the operation is less dependent on the ownership and control of large vehicle fleets, and more to do with individual drivers being able to make independent decisions based on good information.

With this in mind, reforms to taxi regulation should discard outdated concepts of large-scale control, and focus instead on allowing numerous independent operators to provide high-quality service.

The Land Transport Authority should remove restrictions on minimum fleet size, and focus instead on prescribing minimum professional standards for drivers, safety, no surcharges on peak-hour availability and single meter-fare structures.

Beyond those baseline standards, corporate and freelance operators should be free to differentiate themselves and compete on the basis of quality - peak-hour availability, driver standards, equipment in the fleet, strategic vehicle deployment, and so on.

When faced with a sea change in their industry, incumbents should not expect the rules to be skewed back in their favour.

Paul Chan Poh Hoi

A version of this article appeared in the print edition of The Straits Times on April 01, 2016, with the headline 'Revamp regulation of all hired vehicles'. Print Edition | Subscribe