Close

HEADLINES

Headlines published in the last 30 days are listed on SLW.

Rules clarity a plus for Grab, Gojek in S-E Asian minefield

Rules clarity a plus for Grab, Gojek in S-E Asian minefield

Source: Business Times
Article Date: 07 Oct 2020
Author: Sharanya Pilllai

Licensing regime could drive up compliance costs, but is friendlier than other markets.

Singapore's regulatory framework for the point-to-point (P2P) transport sector, which is set to be rolled out later this month, marks the maturing of the ride-hailing industry here.

The licensing regime may add to the compliance costs of ride-hailing rivals Grab and Gojek.

But the clarity that these firms are receiving from the Singapore authorities is a plus for them, some observers say.

This comes as the regulatory environments in other South-east Asian markets remain tricky for Grab and Gojek. How they tackle these challenges could provide key turning points in the battle to seize market share - or the reported merger efforts.

In August last year, Singapore implemented the P2P Passenger Transport Industry Act, which required all ride-hail and street-hail service providers with a fleet size of over 800 vehicles to be licensed from June. This has since been delayed to later this month.

The legislation is widely seen as addressing the uneven playing field between taxi and ride-hailing firms. Many sections of the Act that covered taxi operator licensing were replicated for private-hire licensing, noted Associate Professor Walter Theseira from the Singapore University of Social Sciences (SUSS).

"The legislation actually treats taxi operators and ride-hailing companies much more closely than people might think, and gives broad powers to the regulator to decide on matters such as fleet and driver size for taxi operators; driver size for PHCs; driver-operator agreements, and even pricing through the public transport council," he pointed out.

Once the licensing regime is in place, Grab and Gojek likely face more compliance costs. Operators with a ride-hailing licence will have to pay a licence fee of 0.6 per cent of their gross annual revenue.

But there are also benefits. For instance, both Gojek Singapore's general manager Lien Choong Luen told The Business Times that the firm welcomes the clause allowing all taxi drivers to sign up with any ride-hail platform and provide fixed-fare rides.

"We look forward to a regulatory environment which protects commuters and drivers while ensuring an open and contestable point-to-point market," he said.

Likewise, a Grab spokesperson said: "(We) believe that the regulations addressing exclusivity will level the playing field for the industry and provide drivers with more choices."

Singapore's approach towards the ride-hailing sector has been friendlier than many developed markets.

For instance, South Korea in March passed a new law that effectively banned homegrown ride-hailing service Tada, noted Associate Professor Park Byung Joon of SUSS. The country's vociferous taxi lobby was a key factor.

In sharp contrast, "Singapore, from the very beginning, has been very accommodating to companies like Grab and (previously) Uber. You can say that it has been leading the way in regulations to accommodate and not ban them," he said.

Compared to the rest of South-east Asia, Singapore has been "ahead of the curve" in terms of regulatory clarity, said Reshmi Khurana, managing director and head of South-east Asia for Kroll.

Singapore's licensing regime tries to strike a balance between innovation and maintaining a competitive playing field, said Joel Shen, special counsel at Withers KhattarWong.

"The underlying message is that we're not going to reject these businesses, as some governments have, just to protect existing companies. It's encouraging in that sense, but also demonstrates a receptiveness towards the incumbent (taxi operators)," he added.

For now, it may still be too early to say whether local taxi operators like ComfortDelGro or the ride-hailing firms could gain the upper hand in Singapore. This is especially since the regulation could evolve as transport demand recovers post-Covid-19.

Assoc Prof Theseira reckons that pricing innovations may face scrutiny. "Other market practices which may be questioned are how ride hailing systems assign rides to drivers and commuters, which can be done on factors beyond proximity such as preferentially assigning rides to some drivers or commuters based on past loyalty," he said.

As Singapore begins to regulate ride-hailing as a mainstay of the transport sector, could other South-east Asian countries emulate its approach? While the city-state could be a rough reference point, it may not be a good benchmark for much larger and less urbanised markets, Assoc Prof Park said.

Indonesia will be particularly challenging. Some cities, such as Bali, have an especially entrenched taxi industry that has created hostile operating environments for the ride-hailing firms, Mr Shen noted.

And conditions are getting tougher. Last year, the country's Ministry of Transportation implemented higher tariff rates in 88 cities for motorcycle taxis booked using apps.

Ultimately, the fate of ride-hailing in South-east Asia depends on how progressive regulators are willing to be. Clamping down on ride-hailing completely will be the easier way out, but less beneficial to innovation and consumer choice.

As Mr Shen sees it: "It takes an enlightened regulator to say, I'll give you some space, as long as the objectives are achieved, and as long as the benefits are not at the expense of the consumer."

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Print
1171

Latest Headlines

Straits Times / 28 Oct 2020

TOC defamation trial: Defence questions witness' credibility

The second day of the criminal defamation trial of The Online Citizen editor Terry Xu and TOC contributor Daniel De Costa saw the latter's lawyer M. Ravi attempting to cast doubt on the credibility of the prosecution's witness.

Straits Times / 28 Oct 2020

Forum: Clarity needed in legal duty to report crimes

The present law is obviously inconsistent with the aim of counsellors to help victims towards recovery and the counsellors' ethical duty to maintain confidentiality of information given to them.

No content

A problem occurred while loading content.

Previous Next
201016-1101_ECCMoots_SAL_BB

Terms Of UsePrivacy StatementCopyright 2020 by Singapore Academy of Law
Back To Top