Taxi Apps AKA The Ride Hailing Apps Of The Future. But What About The Resistance Against Them?

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Technology makes our lives better, helps us to get things done faster, and thereby allows to save more time so that we can focus on the more important things in our lives. While some may disagree with this statement, many would agree that technology is omnipresent and forms an integral part of our lives.

Let’s talk about the mobile transportation or ride hailing apps that are touted as the game changers, which has created a lot of hype and controversy all over the world including Malaysia.

The three most popular taxi apps in Malaysia are, My Teksi, Easy Taxi and Uber. There are also other local taxi apps such as Taxi Monger, UniCabLink and EzCab.

My Teksi is our home-grown ride hailing app which has made its name not just in Malaysia, but also abroad, whereas Easy Taxi is backed primarily by Rocket Internet from Germany, while Uber is an American based app originated from San Francisco.

Each of them has garnered a lot of interests from investors, consumers, as well as taxi drivers and at the same, they have attracted a great deal of attention from the regulators too, particularly Uber.

In terms of funding, to date, My Teksi has raised RM293 million, Easy Taxi has raised RM257 million, and Uber has raised RM5 billion. This goes to show that it is a multi-billion dollar industry and it sets to revolutionise, if not, transform the taxi booking system and the notorious practice in the taxi industry.

These taxi apps leverage on mobile technology to connect passengers to drivers in a reliable, efficient and safe way. These taxi apps basically have three main features:

  • allow the passenger to search for the nearest taxi in less than a minute;
  • provide transparency in the sense that the information of the specific driver who accepted the booking request (such as name, plate number, personal picture, car type, license number and phone number), estimated fare as well as estimated time of arrival will be displayed on the passenger’s smartphone/tablet screen; and
  • promote safety as the passenger can track the driver on the screen map in real time as the driver approaches passenger’s current location and share the location as the journey runs.

Using these ride hailing apps, getting a taxi has never been that easier and safer before!

In addition to the above features, some of these apps provide cashless payment feature (hence eliminating the need for bringing cash and getting a response from drivers like, “Bro, I have no small change la”).

To ensure safety is of the top priority, some of these ride hailing app companies will do stringent criminal background checks on the drivers and require them to meet certain requirements before allowing them to join the network. Drivers who received bad ratings from their passengers will be banned from providing the services, thereby indirectly forcing drivers to improve their services.

Many of you would be quite familiar with the following scenes before the days of ride hailing:

1st scenario

You step out from your office, trying to flag down a taxi. You wait for 10 minutes, finally, a taxi comes. You tell him your desired destination, the driver says, RM15. You ask the driver to use the meter, but the driver says the distance is too short, so it is not worth using the meter. You either haggle for a discount or waste another 10 minutes waiting for the next taxi to come.

2nd scenario

You call up the taxi booking hotline, and immediately you are put on hold for 5 minutes. Finally, someone answers, “pergi mana?”, and you tell him/her your desired destination. You are then put on hold for 5 minutes, while he/she go and check for any available taxi drivers who can pick you up. After 5 minutes, you either get a good response that says, a taxi will arrive in 10 minutes, or you get a familiar response like “no taxi” or “tak mau pergi”.

Many have lauded the introduction of these godsend ride hailing apps into the market as they set to solve the taxi woes, end the frustration and ease the pain when it comes to booking a taxi.

My Teksi and Easy Taxi are essentially taxi booking apps, where passengers can summon taxis through the apps.

They both work with licensed taxi drivers and do not charge passengers anything extra. They make money from the fixed RM2 booking fee, which is a government regulated surcharge for any booking that is arranged through a phone. Passengers will pay the metered fare as regulated by the government. From the look of it, it appears that they work within the boundaries of the law.

Unlike My Teksi and Easy Taxi, Uber is not quite like any other taxi booking apps, rather it is described as a ride-sharing app.

Uber, which is available in 222 cities in 45 countries, does not work with licensed taxi drivers. Instead, private vehicle owners can apply to become a driver for Uber and make money out of it.

A recent interview with Uber’s regional manager, Michael Brown, seems to suggest that for Malaysia market, Uber also partners with licensed for-hire chauffeur-driven limousine and registered rental car companies. Uber drivers do not use a taxi meter, but rather they use the ride hailing app to calculate fares based on distance travelled and time taken, which according to Uber, the fares are much cheaper than the regulated metered fare.

The fare is split 20/80, with Uber taking 20% and the driver taking the rest. Uber also has a surge pricing system whereby fares will go up in busy periods and on certain special occasions such as during bad weather or public holidays.

Change often brings resistance.

Due to Uber’s unique and novel business model, the response to Uber has been twofold: on one hand, passengers welcome Uber because they get better services for the fare that they pay; while on the other hand, incumbent taxi drivers are up in arms, claiming that Uber engages in unfair competition (for e.g. undercuts fares) and bulldozes its ways through the system by using drivers and cars not licensed/authorised by law.

In Malaysia, our regulators (Land and Public Transport Commission and the Road Transport Department) have come out to say that they will crack down on Uber vehicles that are found to be providing taxi-like service using private vehicles.

Uber drivers will face a fine or imprisonment and their car will be confiscated under the Land Public Transport Act 2010 if they continue to provide their services through Uber. Under the Road Transport Act 1987, any individual or company caught operating taxi services without the proper permits will also be fined and jailed.

Similar protests from taxi drivers and court orders banning Uber’s services have also taken place in various countries in which Uber is currently operating. Some people have claimed that as these Uber drivers do not have passenger liability insurance, this will put the passengers’ safety at risk.

Uber has consistently come out to claim that as they are not a car company, but a technology company, so they should not be subject to the same regulations as traditional transportation service providers.

Uber is currently in talks with our regulators and hopefully, they will come out with a win-win solution for all stakeholders. In the words of Peter Diamandis of Forbes, “Uber is one of a new generation of dematerializing, demonetizing and democratizing technologies that are disrupting the status quo”. It would definitely be interesting to see the interplay between conventional laws and new innovative (sometimes disruptive) technologies.

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About the author:
This article was written by Edwin Lee Yong Cieh, Partner of GLT Law – law firm in Kuala Lumpur, Malaysia (+6016 928 6130, [email protected]). Feel free to contact him if you have any queries.
This article was first published in CHIP Magazine Malaysia.
The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.

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