Here‘s Why Khaw Boon Wan’s Attempt to Level the Playing Field for Taxi Drivers Will Drive Costs Up
Other than that one incident when he suggested that the leaders of a certain opposition party commit ritual suicide for committing a mistake, I generally like Minister Khaw Boon Wan. Not only is he an unofficial “influencer” with his blog posts, but over the past decade, he’s been quite the ministerial superhero.
After all, when he became Minister for Health, he handled the double whammy of SARS and the NKF scandal. When he was Minister for National Development, he implemented property cooling measures in response to the skyrocketing housing prices. Now that he’s Minister for Transport, he’s going to take on his biggest challenge yet.
Uber.
More accurately, he’s tasked Senior Minister of State for Transport Ng Chee Meng to review private car-sharing apps and to “forge a fair solution” and “level the playing field” for taxi drivers. Mr Khaw announced this in his first blog post as the new Transport Minister, and his call for “a balanced approach” sounds like a good plan.
Except it isn’t.
Wait, wait, wait… what’s wrong with the “playing field” for taxi drivers right now?
Simply put, it’s a lot easier to become an Uber driver in Singapore than it is to become a taxi driver. At first glance, it may not seem so bad:
Taxi Driver | Uber Driver |
At least 30 years old | At least 25 years old |
Must be a Singapore Citizen | Singapore Citizen or Permanent Resident |
Valid Class 3/3A driving license for a continuous period of at least 1 year | Valid Class 3/3A driving license for a continuous period of at least 1 year |
So if you’re a Singapore PR, or if you’re below 30, you won’t be eligible to become a taxi driver, but you can become an Uber driver. But that’s not the end of it.
What about how much it costs to be a taxi driver compared to an Uber driver?
Taxi drivers are required by law to obtain a vocational license, and this is the main difference compared to Uber drivers, who don’t have to be licensed. A taxi driver vocational license costs $40 for the application process and another $355 for a 5 module course that is expected to take 95 hours. That’s like going back to driving school!
On the other hand, Uber drivers have no such requirement. All they do need to do is set up their own business (which can be easily done online), and obtain a vehicle that is registered for commercial purposes with commercial insurance coverage for up to 4 passengers. Most Uber drivers choose rent this vehicle, naturally. Rentals tend to be about $65 per day, and in rare cases, go as low as $50.
What’s more, since 2014, LTA demands that taxi drivers have to meet a daily minimum mileage of 250 kilometres on weekdays, while simultaneously ensuring that 85% of a taxi company’s fleet are on the roads during peak periods. Uber drivers, being “private contractors”, don’t need to follow either of these restrictions. In fact, they are given incentives to drive more often, especially during peak periods.
Wow! Then why is Uber still charging me a comparable price for my journey?
That’s the big question here, isn’t it? Essentially, Uber saves on not needing to train their drivers, or provide rental and maintenance services, and passes on these savings to you, the customer. How? By not charging you for the convenience their service brings.
After all, convenience is the main reason why so many users have switched to private car-sharing apps like Uber. It cannot be understated. There is no booking fee, their mobile app is easy to use, and they run on cashless transactions. Yet their fares (outside of surge pricing) are similar to, and sometimes even cheaper than flagging down a taxi.
Hmmm… I think I know what you’re getting at… if the “playing field” gets levelled…
Exactly. Levelling the playing field and forcing Uber drivers to take on vocational licenses would simply reduce the amount of savings that Uber is passing on to their drivers and customers. This will eventually drive up costs of uberX rides. Which, at first glance, would be the eventual outcome that taxi drivers are hoping for. But here’s what may also happen.
Say Uber eventually becomes no different from other taxi companies in Singapore. Because younger Singaporeans have been enjoying the convenience of apps like Uber without paying for the premium, they are likely to continue using Uber despite the rising prices. After all, Uber has the market advantage – no other taxi company currently has a booking app as comprehensive as Uber’s, without charging exorbitant fees for the use of credit cards.
In response, other taxi companies will need to invest time and money to develop better apps to compete, or lose out in the long run. This will drive operational costs up, and you know the companies aren’t going to absorb the cost. They’ll be passing it on to us, the customers.
So what can we suggest to “level the playing field” so that consumer costs don’t go up?
Very simply, LTA needs to reduce the cost and duration of a vocational license. Then, even if Uber drivers are expected to take up these licenses, it will hopefully not increase their costs by such an extent that they’ll pass it on to us, the consumers.
That’s really it. At the end of the day, Uber is not a taxi company and shouldn’t be treated like one. Since Minister Khaw is against banning them outright, then the onus needs to be on taxi companies to streamline their operating costs and expenses. The government can’t be expected to spoonfeed taxi companies just because their profits are affected by a new, sleeker industry player.
What other suggestions would you suggest to “level the playing field”? We want to hear from you.
The post Here‘s Why Khaw Boon Wan’s Attempt to Level the Playing Field for Taxi Drivers Will Drive Costs Up appeared first on the MoneySmart blog.
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