Hong Kong’s proposed regulation of ride-hailing services shows that the government intends to take a slice of the market while reining in platforms and supporting the taxi trade, but the plan hinges on balancing the competing interests of all players, experts have said.
Industry insiders added that the Transport and Logistics Bureau faced several challenges in achieving all three objectives.
Secretary for Transport and Logistics Mable Chan, who took office last December, told lawmakers on Friday of her determination to resolve the long-standing conflict between taxis and ride-hailing services. Taxi drivers have repeatedly raised concerns that many Uber drivers do not hold valid hire-car permits while platforms have argued they provided better service.
The bureau unveiled its regulatory blueprint earlier last week, outlining a comprehensive framework for governing drivers, vehicles and platform operators.
Besides listing the necessary licences and permits that operators and drivers must hold, the proposal also includes a yet to be specified cap on the number of vehicles providing ride-hailing services and a levy imposed on platforms for each trip.
Officials have cited the experience of the Australian state of Victoria, which introduced a levy to compensate cabbies affected by the legalisation of ride-hailing platforms.
The government will also charge platforms a licensing fee based on the number of vehicles they operate.
US-based Uber started operating locally in 2014 and had taken a dominant position until recent years as Tada, Amap and Didi Chuxing entered the market. Amap is operated by Alibaba Group Holding, which also owns the South China Morning Post.
“Once the ride-hailing sector is opened up and legalised, it will be the beginning of a new era,” lawmaker Michael Tien Puk-sun said. “I think that the demand is very big, especially with how severe extreme weather is nowadays.”
Tien added that he believed demand in the city in the next five years could support a similar number of ride-hailing vehicles seen in Singapore. The city state currently has 59,371 such cars as of 2024, according to official data.
Observers also noted that the government aimed to take a slice of the lucrative ride-hailing sector, curb the influence of platforms through regulation and charges, and support the taxi trade, a move which comes amid the launch of a premium cab fleet.
Although the planned legal framework is pending further details, Ringo Lee Yiu-pui, governor and honorary life president of the Hong Kong, China Automobile Association, said the effectiveness of these strategies depended on whether the government could balance the different interests of all sides.
Lawmaker Tien said he believed that the regulatory regime could meet the government’s multiple goals.
He said he did not think that cabbies would be forced out of the market as they still had the advantage of being able to pick up customers on the street, despite competition from ride-hailing operators.
The bureau’s survey conducted between November last year and January led to an estimate that showed ride-hailing services accounted for 22 per cent of 880,000 point-to-point trips with passengers a day, with the rest being taxis.
In response to complaints about taxi drivers from tourists, who often cited cherry-picking of passengers and overcharging, the government issued its first of five taxi fleet licences earlier this week. The premium taxi fleets are designed to offer enhanced services at a higher fare.
Walter Theseira, associate professor of economics at the Singapore University of Social Sciences, said that the ride-hailing sector had expanded rapidly with legalisation in Singapore and other markets, and he expected that the situation would be similar in Hong Kong.
“When ride-hailing becomes either legal or more tacitly endorsed, it expands very quickly and it [does so] largely because ride-hailing offers a superior consumer experience to traditional taxis,” he said.
“The main innovations actually being the online booking systems, tracking of your vehicle and everything, feedback, as well as fixed fares that are based on supply and demand.”
He added that in Singapore’s experience, many drivers had also decided to switch to ride-hailing after realising the greater earning potential afforded by these platforms.
Whether ride-hailing platform operators could stay ahead, however, depended on if the taxi sector could implement practices such as app-based bookings, ratings and driver management.
The academic said that taxis were unlikely to disappear from Hong Kong’s transport landscape. Instead, he expected cabbies might prefer ride-hailing systems or apps to find customers.
Theseira also raised concerns about the fairness of potentially only charging a levy on the ride-hailing sector, as well as how the taxi industry should be supported by authorities.
“Taxi drivers and operators, if you’re going to support them, they should be supported to adapt to whatever market practices have been proven to be commercially successful by commuters in terms of those ride-hailing practices,” he said.
“It is not to support them to do the same old thing, unless that is really what commuters want.” -- SOUTH CHINA MORNING POST
