Singapore review of ride-sharing economy should be about protecting consumers, not taxi operators

Country's transport minister wants to ensure a "level playing field", but the focus really should be to safeguard the interest of consumers, not market players.
Written by Eileen Yu, Senior Contributing Editor

Singaporeans are calling for the government to set some rules and regulations for ride-sharing apps, while the transport ministry has highlighted the need to ensure a level playing field for market players. A review of such services, though, really should be about safeguarding consumer interests and not that of business operators.

An online survey conducted by YouGov Singapore between October 8 and 11 found that 53 percent of respondents called for the government to regulate ride-sharing apps that tapped the use of private cars, such as Uber, GrabTaxi, and Hailo. Some 22 percent believed the government should not intervene, while 11 percent said such apps should be banned completely.

The study polled 1,929 respondents from YouGov's panel, which comprises registered users above the age of 16 who signed up for the free account to participate in the market researcher's surveys.

Among respondents who use ride-sharing apps, 66 percent said they did so due to ease of use and 59 percent did likewise to view the availability of drivers. Another 52 percent pointed to the convenience of tapping such apps to secure a ride.

Among the top reasons for avoiding ride-sharing apps was the uncertainty over how consumers would be charged, with 44 percent highlighting this as a deterrent. Another 25 percent expressed concerns about the security of payment, such as the storing of credit card details, while 24 percent felt overall fees for using ride-sharing services would be more expensive than hailing a regular taxi.

Source: YouGov Singapore
Among those that preferred booking rides on private cars, however, 52 percent said they did so because it was cheaper than booking a taxi. Another 47 percent pointed to the better service quality provided by private car drivers, while 29 percent said waiting time was typically shorter for such rides. Across the board, 15 percent preferred to book private cars than a regular taxi.

Clearly, there's great potential for ride-sharing services in Singapore and the key market players aren't missing a beat. GrabTaxi, for instance, opened a US$100 million research and development facility here in April and, in August, secured its largest funding round of US$350 million as it looks to grow its footprint across Southeast Asia.

Things may change, though, with the Singapore government currently evaluating this market space.

Transport Minister Khaw Boon Wan said in a post earlier this month that he was reviewing the use of ride-sharing services and assessing whether the government would need to "where justified...level the playing field".

"Like all new business models, there will be winners and losers, but if consumers benefit, the models are likely to survive or even flourish," Khaw said, adding that "modifications" along the way would be guided by market forces.

He noted that countries such as Germany had banned such apps, but described such moves as hasty in judgement and an over-reaction since these were new business concepts.

While the minister seemed receptive to the emergence of this "shared economy", he also stressed the need to ensure a level playing field for all market players. Pointing to how uberX drivers were not required to carry a vocational license, Khaw said: "While taxi drivers welcome competition, they demand that the playing field be level. I think our taxi drivers have a point."

He added that the government would be consulting taxi drivers and the general public in order to come to "a fair solution" and "strike a balanced approach".

Need for online, offline safety

The minister made no mention about the need to also safeguard consumers, but I'm hoping this will--and should--be an important part of the government's review. If it decides, for instance, that Uber drivers must have a vocational license, this should be required to ensure they're aware of road safety rules and to help register, and identify, drivers to protect passenger well-being.

Currently, taxi drivers in Singapore are required to be aged 30 and above and have a valid driving license for a continuous period of at least one year. They're also required to pass a medical examination and undergo a training course at the Singapore Taxi Academy, which includes modules on road safety, route planning, and quality service delivery. Drivers must pass this course as well as three practical tests.

In comparison, Uber drivers must be 25 years and above, and have a valid driver's license for a continuous period of at least one year, Drivers of its premium UberExec service, which features specific car models, must have at least two years of professional driving experience.

There also should be safeguards around payment including a proper recourse for consumers should their personal details be breached or if they were automatically billed for a ride when the driver failed to show up.

I believe most concerns about consumer safety can be resolved by requiring all drivers of ride-sharing services to be registered--be it with the transport regulator or the service provider such as Uber or GrabTaxi--so they can be quickly identified should an incident occur. Drivers also would be less inclined to commit a wrongdoing if they knew the crime could be traced back to them.

Beyond this, market players--incumbents or otherwise--should be left free to compete based on the services they provide. Already, consumers are lauding the services offered by the likes of Uber and GrabTaxi, which include service ratings of their drivers and integrated payment via the app so passengers don't need to fumble through their wallet for change.

Market competition brings better services and forces incumbents to rethink their own service delivery, creating an ecosystem that focuses on innovation and continual improvement. This should be the main impetus for the government, rather to instill an environment that simply assures a "level playing field".

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