An insight into taxi companies and drivers

POSTED BY Nigel Andretti ON 27 April 2016


OVER the years, the local media has regularly reported on disgruntled cabbies blaming taxi companies for their woes.

These included high rental charges and no EPF or SOCSO benefits — resulting in a poor image of taxi companies.

Bashing taxi companies became the norm for those who wrote on taxi issues based on third party information and misconceptions.

It would be better if those concerned and trying to help have a clearer understanding of the local taxi industry, so that facts are separated from fictions.

Firstly, there are several types of taxis and they range from limousine taxis based at 5-star hotels, airport taxis based at terminals, and hire cars which are non-metered taxis.

As for metered taxis, the fares are different for budget, Teksi 1 Malaysia (TEKS1M) and executive, with premier taxis phased out.

Most of the complaints were against budget taxi drivers for not using the meter. When executive taxis were introduced in 2007, it was the drivers who complained that passengers refused to pay the metered fares, which was tripled that of budget taxis.

Taxi drivers who expect EPF and SOCSO benefits suffer from delusion. They are customers and not employees of taxi companies. Asking for such benefits is similar to expecting banks to provide the same for granting a hire-purchase loan.

Taxi companies offer financing to drivers with own permits but are unable to obtain a bank loan. Drivers without own permits may rent from a taxi company or individual permit holder.

Many drivers prefer to deal with companies, as they could take delivery of a new or used taxi after paying several thousand ringgit as down payment.

They are fully aware that they are committed to pay monthly installments over several years as stipulated in the rental-purchase agreement, and once the loan is settled, the drivers get to
own the vehicle.

If they then choose to continue operating the same vehicle as taxi, the permit could be rented for
around RM20 per day. As such, paying around RM50 to RM60 per day for a Proton Saga or Persona taxi includes the car loan.

Since 2009, there was a surplus of metered taxis and permits in the Klang Valley, and taxi companies were offering competitive rental-purchase schemes to clear their stock of taxis.

Many permits were unused as the Commercial Vehicle Licensing Board (LPKP) had issued many budget and executive taxi permits freely from 2008, flooding the market by 2009.

The Land Public Transport Commission (SPAD) became operational in January 2011 and decided from the onset not to issue any more new metered taxi permits in the Klang Valley.

The 1,000 TEKS1M permits issued to individuals by SPAD were converted from those surrendered by taxi companies.

I drove metered taxis from 2000 to 2010 and gave up when there were too many taxis on the road and too few trips. Over this period, the market worsened every year.

Those who believe taxi companies are making excessive profits should buy them up as many have been downsizing from 2010, before ride-hailing apps were introduced to Malaysia in 2014.

The larger taxi companies grew big from acquiring permits from LPKP and also buying over many smaller operators, and will be the biggest casualties when chauffeur-driven services are deregulated.

Over the past several decades, the fortunes of taxi drivers have been even dicier. To keep costs at the minimum, the vehicles are insured for third party cover only and drivers would suffer a double whammy in a major accident from loss of income and huge cost for repairs.

In many other countries, most taxis are rented by drivers on 12-hour shifts, with the company footing the bills for maintenance and repair.

In Malaysia, such schemes are only offered by limousine and executive taxi companies operating out of 5-star hotels, where trips are closely monitored and drivers are paid commissions.

But this is not popular with metered taxi drivers as the vehicle doubles up as personal transport and they work whenever they like.

Compared to hire-purchase loans, interest on rental-purchase agreements is high as taxi companies are into high-risk financing.

Should the taxi be severely damaged in its initial years, the taxi company would have to bear the brunt of the total loss as the vehicle is insured for third party claims only.

Taxi companies would also have to contend with dumping. Drivers unable to cope with installments may just return the taxi or allow it to be repossessed.

Unlike banks that often institute bankruptcy proceedings against loan defaulters, there is no recourse for taxi companies as many of these drivers are already bankrupts.

After the LNG-powered Proton Exora was launched in 2009, many taxi companies offered this model and drivers eyeing for airport trips were quick to snap them up. But its Campro engine could not cope with the high heat generated from natural gas combustion.

Drivers began dumping these taxis back to the company when the engines were repeatedly overhauled and there were no takers for these used taxis.

Taxi drivers who were pragmatic switched to other jobs, such as driving buses or lorries to earn higher and more stable incomes. Those stubborn and think the world owes them a living would continue to complain.

Instead, they should have been grateful that without owning a permit or qualifying for a bank loan, taxi companies gave them a chance to earn a living driving taxis.

The better taxi drivers always use the meter unless customers insist otherwise as many passengers, especially streetwise foreigners, prefer to fix a reasonable fare than rely on meters, which can be tampered.

The best taxi drivers treat every passenger as a VIP. Some build up a large pool of regular customers as they get to meet new passengers every day and receive many bookings to the airport.

The typical taxi driver treats passengers like passing ship in the night, not expecting to meet them again and may exploit if given the opportunity. On the other hand, these drivers would provide satisfactory service when they are operating from a fixed location.

As such, drivers picking up passengers from truck radio or taxi app bookings are always on their best behaviour.

The worst taxi drivers are those operating from locations where fixing high fares are the norm. They are often seen outside their taxis touting for passengers and can be spotted a mile away by enforcement officers but little action was taken.

Training will not change the behaviour of these recalcitrant drivers — many of whom use forged medical certificates to renew their Public Service Vehicle (PSV) licences.

Lax licensing has allowed many to enter and remain in the system, and lack of enforcement has emboldened them. They have become the face of errant cabbies abhorred by the public leading to many treating all taxi drivers with equal disdain.


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