E-hailing regulations forcing drivers to quit

Grab Malaysia sees fewer registration of new drivers, mainly due to upcoming regulations

By LYDIA NATHAN / Pic By ISMAIL CHE RUS

Regulations imposed on the ride-sharing sector could do more harm to the industry, reduce the number of e-hailing drivers on the road and push prices higher, disrupting the shared economy business which has been thriving in the last few years.

Grab Malaysia country head Sean Goh said the region’s largest ride-hailing company has seen a reduction in the registration of new drivers, largely due to the upcoming regulations to be slapped on e-hailing drivers.

“We have been listening to feedback from our drivers-partners, who have raised concerns on some of the expected fees and requirements to register as an e-hailing driver,” he said in an email reply to The Malaysian Reserve (TMR).

He also did not dismiss the possibility that a shortage of drivers in the future may create upward pressure on fares. The Ministry of Transport (MoT) started to regulate the e-hailing industry since July this year, including imposing the same licensing requirements that are imposed on traditional taxis.

E-hailing drivers must comply with the Public Service Vehicle licence conditions, ensure insurance coverage for driver, passenger, vehicle and third party, register for a six hour course and send the registered vehicles for inspection at Puspakom Sdn Bhd.

Ride-hailing companies also have to register with the Companies Commission of Malaysia and the Land Public Transport Commission.

It is estimated there are about 200,000 active e-hailing drivers in the country, The regulations came into effect on July 12, 2018, but the government is allowing a one year moratorium so as not to disrupt the industry, which has been growing at a stunning pace at the expense of traditional taxis.

Grab had previously said it recognises the need to create a level playing field for the local transport landscape.

“Moreover, we are encouraged by how supportive our MoT has been towards protecting the well being of our community of passengers and drivers,” Grab said.

Quulo Ventures Sdn Bhd MD Vinesh Nair said more drivers have quit following the government’s decision, but he understands the authority’s position.

“I agree they want to level the playing field, but then the same benefits should be extended across the board. For instance, financial incentives like for fuel and tolls,” Vinesh said to TMR.

Vinesh said the government should look into standardising everything across all the platforms.

“Even between the e-hailing services, the competition has become quite out of hand. Most drivers work for a few platforms at one time,” he said.

Vinesh added that the regulations are definitely backfiring because it is hitting all the players equally hard and all of them are trying to mitigate the situation by undercutting fares.

“At the end of the day, the drivers are the ones who are affected the most. Everyone wants to compete. So, we all come up with different pricings in fares.

“If this is not looked into right now, it will become a big problem in the future,” Vinesh said.

Think tank Institute for Democracy and Economic Affairs (IDEAS) CEO Ali Salman said regulations that increase costs across the board for drivers risk disincentivising part-time drivers by means of licensing cost and mandatory inspections.

“These costs may seem less, but it is relatively more significant for someone that drives e-hailing part-time and spent fewer hours driving.”

He added that this is crucial as according to the MoT, 75% of the total 200,000 e-hailing drivers are part-time drivers.

“If part-time drivers are reduced due to the regulation, this risks reducing the supply, which in turn will increase the costs for consumers.

“So, ironically, these regulations, which include a price cap on surge pricing, could increase the cost of e-hailing,” he said, adding that there is a need for a formulation of a friendly regulation that caters to all drivers.

A Grab driver who wished to remain anonymous said most cars operating on the road will not pass the new tests for vehicles.

“Some of the cars on the road have not been serviced because they want to save money. So, they drive without doing the proper safety checks. This, of course, has to do with the high rate of commission taken from us.”

He also admitted that some drivers use the app to find passengers, but would go offline to take their regular customers.

“We go offline because we charge them less compared to the fares that are set by Grab, but we do it outside the hours. That way we do not have to pay the commission,” he said.