Malaysia’s motorbike-hailing services may struggle to take off

Vehicles sit in traffic on a road in the Bangsar area of Kuala Lumpur, Malaysia. Photographer: Sanjit Das/Bloomberg

When Malaysia launched a six-month trial for motorcycle taxis in January, 28-year-old Hidayat, a full-time delivery rider, signed up in the hopes of earning better money.

One month later, he looks more disappointed than hopeful.

“On average, I get five to seven clients per day. Sometimes, [there is] only one customer,” he told DealStreetAsia.

The university graduate, who lost his application manager job after his firm filed for bankruptcy in 2018, says it will be difficult for bike-hailing services to gain momentum in Malaysia.

“Malaysia is different from Indonesia. When you ride a bike here, you have to worry about being snatched and robbed. Safety is also a concern as two wheels are presumably more vulnerable than those on four,” said Hidayat.

Unlike the Philippines, where a pilot project for motorcycle taxi services was met with high user demand, Malaysia’s users have had a muted response to the trial in Klang Valley. Four out of five respondents we interviewed cited rain and safety concerns for not using motorcycle taxis.

The Malaysian government is hoping the gig economy can help lower the 11 per cent youth unemployment rate but industry players say motorcycle taxi services are unlikely to take off on account of the country’s improved public infrastructure and high private vehicle ownership.

Expand Table

Bike-hailing regulations across Southeast Asia 

ThailandMotorcycle taxis allowed to be used for public transport in 2005;
Draft guidelines in place for bike hailing;
Aims to legalise ride-hailing by March
IndonesiaRegulations on app-based motorcycle taxis came into effect in May 2019, starting with a few states
Vietnam
Pilot e-hailing program initiated in 2016;
Rules requiring bike taxis to register with authorities to take effect in Jan 2021
Philippines
Launched pilot in June 2019 to study the viability of motorcycle taxis;
Extended pilot program to March 2020

Malaysia
Started six-month pilot in Jan 2020 to study the viability of bike taxis
Singapore
Prohibited

Fast and “Controversial”

After banning motorcycle taxis in 2017 due to safety concerns, the Malaysian government’s U-turn last year allowing the six-month pilot took everyone by surprise. However, it was not the only Southeast Asian country to have changed its mind about the sector.

In January, the Philippine government recalled an order to terminate a pilot programme for motorcycle taxis in the country, saying an ongoing trial will continue until March 23 as originally planned. The order was recalled after the island country’s senate committee grilled the land transport officials over the abrupt termination of the programme.

“The Philippines is more similar to Indonesia in the need for motorcycle taxis to be regulated. There is a strong political will from the government to support app-based ride-hailing motorcycle taxis as they want to bring fintech into the countries to modernize their economies,” said Anton Alifandi, associate director (country risk) at London-based IHS Markit.

With high public demand for motorcycle taxis in the Philippines, it is expected that these services will be legalised in the country after the pilot run, especially as campaigning for the next elections is set to begin in early 2021.

The Philippines’ motorcycle hailing market was originally dominated by one player, Angkas, but the government introduced a cap on riders per firm, giving other players such as Joyride and Movelt an opportunity to make inroads. The government’s move was met with protests by Angkas riders towards the end of last year.

A strong political will in adopting motorcycle taxis was also seen in Indonesia where President Joko Widodo overruled his minister to allow app-based motorcycle taxis to operate in the country. Last year, the country finally released an “Ojek” rule to regulate fares and ensure customer safety.

“In Malaysia, the situation is very different. There is scepticism (about the service) in some ranks of the government. There is not a strong need for the service because the traffic situation is not as bad as Jakarta. Malaysia is also much more prosperous,” said Alifandi, who doubts motorcycle taxis in Malaysia will be as successful as in other neighbouring countries.

The two-wheeled e-hailing service has, indeed, received lukewarm support from some ministries. Malaysia’s Transport Minister Anthony Loke has earlier said that bike hailing is only allowed for “first- and last-mile connectivity,” or to link public transport network to passenger destinations.

“The government will face hurdles in implementing motorcycle taxis on a large scale, not only due to the absence of dedicated motorcycle lanes along most highways but also because it is against the government’s will to promote public transport,” said Lee Heng Guie, an economist and executive director at the Socio-Economic Research Centre.

Concern amid weak market demand

Fundamentally, in addition to safety concerns and improved public transport, there is a low demand for motorcycle taxis in Malaysia as car and motorcycle ownerships are high compared to other markets in Southeast Asia.

Calculations based on 2017 statistics from ASEAN Stats Data Portal and World Bank

“Honestly, I don’t know [whether the demand is sustainable] because there are too many risks to factor in [including] rider and passenger public safety. An increase in personal vehicle usage may hinder Malaysians from using the service too,” Dego Ride chief executive officer Nabil Feisal Bamadhaj told DealstreetAsia.

Dego Ride, whose services were banned in 2017, re-launched its bike hailing services as part of the ongoing pilot project. Indonesia’s Gojek, which has previously expressed interest in tapping the Malaysian market, has also earlier indicated that its ride in the country could be tough as Malaysians are not used to the “motorcycle taxi” culture.

Meanwhile, rival Grab has been participating in the pilot for on-demand motorcycle services in Klang Valley since January 3.

“There are currently 250 active driver-partners and we plan to have 500 GrabBike driver-partners by the end of the month as we expand to more areas,” Grab Malaysia country head Sean Goh said.

So far, investors are wary of motorcycle taxi services in Malaysia.

“This is a crazy idea, even car-hailing is not making money,” private equity firm Creador’s founder and chief executive officer Brahmal Vasudevan said.

Malaysia will eventually let the market decide the fate of bike-hailing services. However, in the absence of strong domestic demand, players may have to find their niches.

“Motorcycle taxis will probably compete on low prices and possibly diversify into dispatch business. But to make profit is not easy as the operator needs to have a strong financial capacity to entice both riders and users,” said Lau Zheng Zhou, research manager in Economics and Business at the Institute for Democracy and Economic Affairs.

Expand Table

Major app-based motorcycle taxi operators in Southeast Asia

CountryKey players
Thailand
GrabBike, Win Bike, GoBike
Indonesia
Gojek, GrabBike, Bonceng, Angkas
Vietnam
GrabBike, Go-Viet, Fast Go, Be
Philippines
Angkas, Joyride, Movelt
Malaysia
Dego Ride, GrabBike
Singapore-

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.