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De-regulate car hire business if sand-boxing of SOCAR’s car-sharing app is successful

POSTED BY admin ON 01 October 2020

# YS Chan

If the testing of the SOCAR’s car-sharing app is largely proven successful after the one-year pilot programme, then the Ministry of Transport must de-regulate the car-hire business within the same time frame.

While there are 60 major car hire companies under the umbrella of the Car Rental Association of Malaysia (CRAM), there are many other unlicensed car rental operations in major cities, including Langkawi.

The legal car hire companies need to be freed of the yoke of a penaltative tariff rate of insurance: Bank Negara should allow insurance companies to press ahead with risk-based and usage-based insurance, at the same time, updating the insurance laws to allow private vehicle owners to insure their cars for commercial operation.

In the past, commercial vehicle permits were issued by the Registrar and Inspector of Motor Vehicles (RIMV) until the Road Transport Licensing Board (RTLB) was set up in the 1970s to ensure most of the permits were handed out to Bumiputera-owned companies or individuals.

However, permits for smaller vehicles carrying goods using pickups or vans were freely and automatically issued upon registration or transfer of ownership to sole proprietorships or private limited companies. These are categorised as de-controlled vehicles or permits.

In 1987, RTLB was renamed Commercial Vehicles Licencing Board (CVLB), with Peninsular Malaysia, Sabah, and Sarawak each having its own licensing board.

However, there is only one Road Transport Department (RTD) under the Ministry of Transport for the whole country.
In the 1990s, the issuance of “Bas Persiaran” and “Kereta Sewa Pandu Sendiri” permits were taken over by the Ministry of Culture, Arts and Tourism (Mocat), as the ministry had been issuing “Inbound” licences to companies operating tour buses and self-drive vehicles.

But with the establishment of the Land Public Transport Commission (SPAD) in 2010 and operational from 2011, issuance and renewal of “Bas Persiaran” and “Kereta Sewa Pandu Sendiri” permits were transferred to this new authority in Peninsular Malaysia.


Still, Mocat continued to issue these permits in Sabah and Sarawak while other commercial vehicle permits were granted by the state licensing boards. In June 2018, SPAD was decommissioned and most of its function taken over by the Land Public Transport Agency.

Earlier in 2014, SPAD held discussions with taxi operators proposing that “Private Hire Vehicles” be introduced the following year but the plan was made redundant as taxi operations and fares were undermined by the entry of UberX into the Malaysian market on Aug 7, 2014.


Two years later, the Cabinet approved the Taxi Industry Transformation Programme with 11 initiatives that included regulating e-hailing service. In July 2017, the Dewan Rakyat endorsed amendments to the Land Public Transport Act 2010 and Commercial Vehicles Licensing Board Act 1987, granting e-hailing drivers the legitimacy to be on the road.


E-hailing was wildly popular while the number of taxis continued to drop with cabbies switching to driving private e-hailing vehicles or bowing out altogether, as passengers were unhappy with higher taxi fares and some insufferably rude taxi drivers.


Interestingly, the Car Rental Association of Kuala Lumpur and Selangor, the forerunner of the present-day Car Rental Association of Malaysia (CRAM), called for the abolition of “Kereta Sewa Pandu Sendiri” permits as far back as 35 years ago in 1985.

In April 2019, CRAM reiterated that individual permits for each rental vehicle be discontinued as car rental companies should be allowed to operate any number of vehicles they wish to invest in, much like hotels and restaurants deciding on number of guest rooms or dining tables.


And if permits must continue, they ought to be issued freely as granted to de-controlled vehicles for over half a century. In any case, only the company need to be licensed, not its products. Moreover, the operator licence is more than enough to ensure licensee comply with regulations.


Recent events seem to suggest that permits for rental cars may soon be done away with. On Sept 15, an app-based people-to-people car sharing business Trevo, owned by Socar announced that it is offering RM200 financial aid to the first 1,000 hosts in a launch officiated by the Transport Minister.
It claimed to have more than 70,000 members and 1,500 car listings from 150 models ranging from Perodua to Porsche, even though using private cars for rental business is illegal until existing laws are amended and motor insurance extended to cover for hire or reward.

Speaking at the launch, Datuk Sri Dr Wee Ka Siong said the Ministry of Transport welcomes schemes from the private sector that are in line with the National Transport Policy involving public participation and stakeholder engagement in the development of transport initiatives.


It appears that private cars can now be rented out like licensed rental cars through people-to-people car sharing marketplace, just like private accommodations can be rented out like hotel rooms using AirBnB or similar.


If so, licensed car rental companies should be freed from the shackles of attaching individual permits to each vehicle, particularly when their renewals are complicated by differing expiry dates with the “Inbound” licence from the Ministry of Tourism, Arts and Culture.


Furthermore, their comprehensive motor insurance premiums used to be 4.7 times higher than private cars and have only been reduced to twice in recent years, and rental vehicles are subject to mandatory routine inspections at Puspakom, unlike private cars rented out through car
sharing.


While promoting the new economy, traditional law-abiding businesses should not be penalised or suffer unnecessarily. Regrettably, enforcement tend to focus on legitimate businesses which are easy targets compared to hunting down and eliminating illegal or unlicensed operators.

YS Chan

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