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What if Uber had stayed away from Malaysia?

POSTED BY Nigel Andretti ON 23 September 2016

By Y S CHAN

IN August 2014, UberX was introduced in the Klang Valley with a starting fare of RM1.50, RM0.55/km and RM12/hour.

Budget taxi fares were then based on 2009 rates of RM3, RM0.87/km and RM17.14/hour, which were subsequently raised to RM1.25/km and RM24/hour in March 2015.

For the past two years, Uber drivers that were fully aware of the risks they are taking exercised extreme caution.

Firstly, they have to ensure that passengers give them a good rating as complaints can result in them being excommunicated.

Secondly, they are wary of disgruntled taxi drivers at pick-up and drop-off points, who see Uber drivers as grabbing food off their tables.

Thirdly, they are on the lookout for enforcement officers, particularly those from the Land Public Transport Commission (SPAD), which has confiscated many private vehicles used as pirate taxis.

Fourthly, they cannot afford to be involved in collisions as their motor insurance policy will be null and void if the insurer found out the vehicle was used for carrying fare-paying passengers.

Soon, ride-hailing service will be allowed to operate and Uber drivers can breathe a lot easier.

But some are not happy that they have to obtain a public service vehicle (PSV) licence and send their vehicles for routine inspections at Puspakom.

However, these requirements are welcomed by full-time Uber drivers as they would ensure that only those who are serious are roped in and the vehicles certified for roadworthiness.

Leaving the door wide open for anyone to come in and leave will not augur well for ride-hailing services, as it would allow criminals to easily masquerade as drivers.

What appears on the screen of the passenger’s phone is actually the whereabouts of the driver’s phone and not necessarily the registered vehicle.

Anyone in possession of an Uber driver’s phone can easily find the location of passengers in need of a ride.

Allowing ride-hailing service to operate has already being decided by the government but taxi drivers and companies continue to protest.

Their favourite reason in trying to win over public opinion is that passengers will not be covered by insurance in private vehicles.

But they do not realise that passengers are not covered in all public service vehicles such as buses and taxis.

The law only requires these commercial drivers be insured for passenger liability and the cover is activated when the driver is at fault in an accident, and the insurer is required to pay the amount as awarded by the court after the injured passengers have filed a successful claim.

But there is no cover if the vehicle was driven under the influence of drugs or alcohol. It can also be an issue if the competent driving licence or the PSV licence has expired or renewed fraudulently.

Road Transport Department director-general, Datuk Nadzri Siron recently disclosed that there are 1.2 million Malaysians without driving licence, and 80% of students who use motorcycles to go to school do not have a valid licence.

As such, the basic “Act Cover” that requires all motor vehicles in the country to be insured for third party injuries hardly offer protection to many injured victims, taking into account a large number of insurance policies do not provide cover for unlicensed motorists.

And now the hypothetical question: What if Uber had stayed away from Malaysia?

Other ride-hailing apps would have come to our shores. MyTeksi would have been much slower in evolving into Grab, and take a much longer time to reach the US$1 billion it is valued today.

MyTeksi was launched in June 2012 as a taxi app but with Uber entering the local market in 2014, it quickly embraced ride-hailing using private cars. In South East Asia, it is able to give Uber a run for the money.

Ride-hailing apps offering lower rates than regulated fares has not stopped the proliferation of taxi apps, with more than a dozen available and counting.

These taxi apps are likely to suffer the same fate as radio taxi companies when the limited number of taxis are shared with too many operators.

Competition for drivers is bound to force some taxi apps to be lax by taking in those rejected by others and poor services provided by them will affect the overall industry.

Any operator that can cover each passenger for RM100,000 personal accident insurance and RM10,000 medical expenses cover is likely to capture the market for both taxis and ride-hailing apps.

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