Wider range of rides is worth grabbing

The Government's decision to require private car hire drivers to obtain vocational licences and be subjected to only basic conditions is significant in more ways than one. First, the requirement, which is aimed at burgeoning private third-party taxi services pioneered by tech innovators like Grab and Uber, will help make rides safer and more secure for commuters.

Few are likely to argue against rules that will subject private car hire drivers to medical tests, background checks, and a demerit point system to maintain service quality. Also necessary are registration of their cars with the Land Transport Authority and convenient identification of such vehicles through the issue of tamper-proof decals. In fact, commuters may well agree with the National Taxi Association's call for additional rules such as the standardisation of insurance coverage for the private car hire sector. Practices are now mixed and benefits vary. GrabCar offers a free extra layer of coverage for all rides, others don't.

Second, the liberal strategy the Government has adopted towards the private car hire taxi service has positive implications. Instead of clamping down on the new players, as the authorities elsewhere have done at the instigation of cab operators, it has opened up the market. By choosing to regulate with a light touch, the Government has enacted rules to ensure passenger safety and security without hobbling private third-party taxi services with hefty add-on costs. For incumbents who own large fleets of taxis and an army of full-time drivers who rent their cabs, the new rules will go some way towards levelling the playing field. By comparison with other nations where Uber's presence has provoked a disruptive and even violent reaction from incumbents, the Government's strategy facilitates peaceful co-existence.

Still, it's unclear how the new, uber-friendly rules for third-party car hire services will change the market. More may vie for a slice of that business. Indeed, almost immediately after the Government's decision was announced, several incumbent operators unveiled plans to start their own Uber-type services. These moves seem logical enough, given the fact that Grab, Uber and their ilk have, within such a short span, managed to throw in 8,000 to 10,000 drivers, or a third of the total number of drivers, into the cab fray during peak hours. Apart from taking advantage of lower costs and fewer restrictions, cab firms are doing this to hold on to their drivers.

If the trend continues, it could be a game changer with better-regulated taxi drivers operating alongside private chauffeurs specialising in premium services and drivers linked to ride-hailing platforms who can oblige all requests at a price. Ultimately, what consumers want is a range of choices that offer convenience and competitive fares.

A version of this article appeared in the print edition of The Sunday Times on April 17, 2016, with the headline 'Wider range of rides is worth grabbing'. Subscribe