Malaysia regulates ride-hailing firms, to investigate monopoly risk after Grab-Uber deal

Grab
Grab taxi. Photo: Bloomberg

Beginning July 12, Malaysia will regulate ride-hailing firms and impose on them the same licensing and other regulations currently applicable to taxis, the Transport Ministry said in a statement today.

Ride-hailing firms will now have to register themselves under the Companies Commission of Malaysia (SSM), be subject to vehicle inspection and inspection fee, as well as provide insurance protection for the driver, vehicle and passenger. A one-year moratorium will be given to the drivers and companies to comply with the new regulations.

The Land Public Transport Commission (SPAD) said it conducted a survey with 46,000 respondents where 52 per cent respondents stated that they use ride-hailing services to hail a cab and 70 per cent of respondents would like ride-hailing services to be regulated by the government.

“The amount of trips done by e-hailing services has increased from 6 million trips monthly in 2016 to now 18 million trips a month for 2018. But to date, less than 200,000 registered e-hailing drivers are active (those that use the e-hailing app at least once a month) and from that 200,000 drivers, less than 50,000 of them are full-time drivers.

“For taxi drivers, about 67,000 taxis that are operating across the country where 52 per cent of them are individually owned. After listening to the taxi drivers, SPAD has drafted policies and conditions to regulate the e-hailing industry,” said the ministry.

The Transport Ministry also touched on the extreme commission charges charged by an undisclosed e-hailing company on its drivers. It has capped the commission rate at 10 per cent for e-hailing services and 20 per cent for taxi companies. Surcharge for taxi and e-hailing fares are also capped at two times the original ride fare.

On top of that, the ministry stated that it has also received numerous complaints related to price surge after the Grab-Uber deal. Hence, the government plans to further investigate the monopoly risk in the ride-hailing market through the Malaysian Competition Commission (MyCC).

“The government would like to ensure that there is a healthy land transport industry where companies and drivers are conducting business and generating revenue in a rightful way and at the same time, provide safe and reasonably-priced services to the public,” it said.

In Singapore, the Grab-Uber deal has also come under scrutiny of the competition watchdog but Grab co-founder and CEO Anthony Tan said that the startup is “extremely confident” that it will be able to resolve the matter with the Competition and Consumer Commission of Singapore (CCCS).

Last week, the CCCS said that the merger has led to a “substantial lessening of competition” in ride-hailing platforms, and has proposed financial penalties for both Grab and Uber.

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