Hailstorm over rides

MALAYSIA’s e-hailing industry is facing a familiar problem with no easy answer.

Drivers want better income, passengers want cheaper rides, platform operators need sustainable business models, and the government is under pressure to support them all.

The debate comes as more Malaysians turn to self-employment and gig work.

As of April, the number of own-account workers – a category that includes gig workers – was 3.15 million persons or 18.7% of the 16.82 million employed persons, up from 15.7% in 2025.

Official estimates also show about 1.64 million Malaysians were earning income through gig work as at end-2025.

Among them were more than 164,000 registered e-hailing drivers across 31 licensed e-hailing companies.

It is important to note that e-hailing drivers, who provide point-to-point passenger transport, are distinct from parcel hailing (p-hailing) riders and drivers, who deliver food and parcels.

As the industry grows, so too does pressure to ensure drivers can earn a sustainable living. Currently, the government’s subsidised RON95 fuel for eligible e-hailing drivers is one attempt to address the issue.

But it has also revived a broader debate over who should bear the cost of supporting the industry.

Should taxpayers continue footing the bill? Should platform operators give up a larger share of their commissions? Should passengers pay more? Or are Malaysia’s policymakers asking the wrong questions altogether?

After all, subsidised fuel is funded by taxpayers, while a large share of e-hailing users are likely to come from middle-and higher-income households, non-citizens and foreign visitors.

For now, the government has chosen to step in.

Under the expanded Budi Madani programme, over 106,000 registered e-hailing drivers qualify for subsidised RON95 fuel quota of up to 800 litres a month, depending on their monthly mileage.

Based on April’s average subsidy of about RM2.02 per litre, government support for eligible drivers could amount to about RM128mil a month, or roughly RM1.54bil a year, assuming all 106,000 eligible drivers fully utilise the maximum monthly quota of 800 litres.

The assistance comes as fuel subsidy spending continues to climb, with petrol and diesel subsidies expected to cost close to RM40bil this year.

Justified support

Economist Prof Yeah Kim Leng believes the support for the e-hailing drivers is “justified”.

Fuel remains one of the biggest operating costs for e-hailing drivers, he says, and reducing that burden is one of the quickest ways to improve their take-home income.

“Many full-time drivers also fall within the lower-income group and continue to face rising living costs, particularly in urban areas,” he tells StarBiz 7.

While Yeah says government support is necessary, he believes platform operators should also play a bigger role in ensuring drivers receive a fair share of the industry’s earnings.

One example often cited is Indonesia, which recently capped platform commissions for motorcycle ride-hailing at 8%, allowing riders to retain a larger share of passenger fares.

The regulation, which took effect on July 1, also requires platforms to provide additional social protection, including workplace accident insurance and enrolment into the country’s national healthcare system.

Yeah says Malaysia could consider a similar approach by reviewing how revenue is shared between platforms and drivers.

Rather than relying solely on government support, he says policymakers could engage platform operators to explore a fairer distribution of earnings while ensuring businesses remain commercially sustainable.

“There should be a more equitable sharing of revenue,” he says.

In response to StarBiz 7’s queries, Bolt Malaysia general manager Afzan Lutfi says any measures to improve drivers’ earnings should take into account the broader dynamics of the industry.

“We recognise that different markets may adopt different regulatory approaches based on their own local circumstances and policy objectives,” he says.

As such, he says any policy aimed at improving driver sustainability should strike a balance between drivers’ earnings, consumer affordability, service reliability and the long-term sustainability of the industry.

“Measures that help drivers manage operating costs while preserving accessible transportation options for consumers can contribute positively to the broader mobility ecosystem,” he adds.

Meanwhile, driver groups such as Gabungan eHailing Malaysia (GEM) have proposed lowering the commission cap to 10% – down from the current 20% to 30% – arguing that fairer revenue sharing would reduce drivers’ reliance on government assistance.

Its chief activist Masrizal Mahidin tells StarBiz 7 that drivers’ net earnings have fallen between 30% and 50% compared with three or four years ago, as fuel, maintenance, insurance and other operating costs have continued to rise.

As a result, many drivers are working longer hours simply to maintain the same level of income. To address the issue, GEM has long advocated a more transparent and balanced regulatory framework.

“We welcome international examples such as Indonesia’s 8% cap as a positive reference point,” he says.

While appreciating the government’s fuel subsidy and other support measures for gig workers, Masrizal Mahidin says “the fundamental issue remains fair and sustainable earnings.“

“If drivers were paid fairly and compensation reflected the true cost of operating their vehicles, dependence on subsidies would be significantly reduced,” he says.

“Subsidies should complement a healthy ecosystem, not compensate for structural weaknesses in driver remuneration.”

Masrizal says GEM’s long-term aspiration is to build an e-hailing industry that balances the interests of drivers, consumers, platform operators and the government while ensuring the industry remains competitive, innovative and sustainable.

But is commission really the issue?

Malaysia has capped the e-hailing platforms commissions from drivers at 20% of fares since 2019. However, in August 2024, the Transport Ministry approved Grab, the industry’s largest player, to pilot its Grab Service Fee (GSF) model, introducing a variable commission structure that can reach as high as 30% on certain trips.

The move has drawn criticism from drivers, with some claiming their effective deductions frequently exceed 25%.

But transportation think tank MY Mobility Vision founder Wan Agyl Wan Hassan argues that the industry’s challenges extend far beyond platform commissions.

“The narrative today is often simplified to drivers earning less, therefore platforms should absorb the cost by lowering commissions. But the reality is far more complex,” says the former head of policy and planning at the Land Public Transport Commission, now known as the Land Public Transport Agency (Apad).

According to him, e-hailing has evolved beyond a commercial service into an essential extension of Malaysia’s public transport network, providing first- and last-mile connectivity where public transport remains insufficient.

“We have a good public transport infrastructure but bad planning,” he says.

Wan Agyl warns that forcing platforms to absorb the entire burden through lower commission caps could produce unintended consequences.

Platforms may respond by reducing driver incentives and bonuses, increasing passenger fares, limiting services in lower-demand areas or slowing investments in technology and safety, he adds.

“Drivers and platforms share a symbiotic relationship. Assuming platforms can simply absorb lower commissions without consequences is a very shallow way of looking at the issue.”

Rather than focusing solely on commission rates, Wan Agyl believes policymakers should first establish a clearer understanding of how the industry functions.

Revealing industry metrics

He says there is little publicly available information on key industry metrics such as the number of active drivers and passengers, driver-to-trip ratios, vehicle utilisation rates, passenger waiting times and, most importantly, median driver earnings after operating expenses.

“We need to establish the facts before we intervene,” he says.

“If we don’t know whether there are too many drivers, too few drivers or whether drivers are actually earning sustainable incomes, then we’re simply treating the symptoms instead of addressing the root causes.”

He added that governments should request aggregated industry data instead of raw commercial data from platforms, acknowledging that operational data has become commercially sensitive.

Wan Agyl also questions whether Malaysia has the right balance between supply and demand.

Unlike the taxi industry, where driver permits were historically capped, e-hailing has no restrictions on the number of drivers because it was originally intended to provide flexible, supplementary income rather than a full-time career.

“Nobody can answer how many e-hailing drivers Kuala Lumpur actually needs,” he says.

Wan Agyl also called for regulators to move away from prescriptive rules such as commission caps towards outcome-based regulation.

Instead of asking whether platforms charge 20% or 18% commissions, regulators should focus on whether drivers are earning sustainable incomes after expenses, he says.

He stressed that no single policy – whether lowering commissions or increasing fares – would solve the industry’s challenges.

“There is no silver bullet.”

“If you simply reduce commissions or increase fares, you’re only addressing one symptom. You need to understand the industry’s underlying problems and address them one by one.”

Wan Agyl, who led the team responsible for designing Malaysia’s original e-hailing regulatory framework, says the 20% commission cap adopted in 2019 reflected international best practices at the time and was agreed upon by platforms, drivers and regulators.

However, he believes the framework should have undergone periodic reviews as the industry evolved.

“Every policy should be reviewed every three years.

“That doesn’t mean you change the policy every three years, but you should assess whether there are gaps or improvements that need to be made,” he says.

Wan Agyl also supports the objectives of the Gig Workers Act 2025, particularly provisions relating to social protection, contractual rights, income transparency and dispute resolution.

However, he believes implementation remains premature.

“The issue is not compliance. It is readiness,” he says.

The Gig Workers Act 2025 (Act 872) was gazetted on Dec 31, 2025 and officially came into force on March 31, 2026.

Wan Agyl argues that key systems, including the Social Security Organisation (Perkeso) integration, are not yet fully operational and could impose significant implementation costs, particularly on smaller platform operators.

Under the Gig Workers Act 2025, Perkeso coverage for gig workers shifts from a voluntary opt-in scheme to a mandatory requirement.

Platform operators are required to integrate their systems with Perkeso through an application programming interface to automatically deduct a 1.25% contribution from workers’ earnings for every completed job.

“The larger platforms may be able to absorb those costs, but smaller players may struggle. That is an engineering problem rather than a compliance problem,” Wan Agyl says.

He also questions the role of the Gig Consultative Council in discussions on fare structures, arguing that the authority to regulate fares and commissions for e-hailing services already falls under Apad.

Fare formula

Meanwhile, for Gerakan Badan Bertindak Sahabat E-Hailing Malaysia (GBBSEM), the industry’s biggest issue is not just what drivers are ultimately paid for each trip, but how fares are calculated.

The drivers’ advocacy group argues that e-hailing fares have fallen steadily over the years, forcing many drivers to work significantly longer hours to earn the same income.

GBBSEM deputy chairman Zailani Zainuddin claims Grab drivers are now paid as little as 25 sen per km, in addition to 43 sen per minute of a journey — base rates that he says no longer reflect the true cost of operating a vehicle amid rising fuel, maintenance and insurance expenses.

He noted that taxi fares have remained at RM1.25 per km since 2015, while GrabCar launched in Malaysia in 2014 with fares of around RM1.60 per km before competition gradually pushed prices lower.

“Our main goal is for the government to regulate e-hailing fares,” he says.

“We need to talk about the fare formula first before talking about commissions.”

Under existing regulations, e-hailing operators are allowed to impose a surcharge of up to 200% of the base fare based on dynamic pricing, meaning passengers can pay up to three times the base fare.

However, the government does not prescribe the base fare or the pricing formula used by operators, leaving them to determine fares through their own algorithms.

Zailani said the lack of transparency over how both base fares and surge pricing are calculated has become a major source of frustration for drivers.

“Nobody knows how the surcharge is calculated ,” he said.

Beyond fares and commissions, GBBSEM also raised concerns over Grab’s financing programmes, saying some drivers have become increasingly reliant on them as earnings decline.

While Zailani acknowledges that the financing helps drivers who might otherwise have no access to credit, he argues that the relatively high borrowing costs further erode take-home income.

According to Zailani, interest rates on Grab’s financing programmes is up to 21% per annum, with repayments deducted directly from drivers’ daily earnings.

“When fares become cheaper, drivers have to work longer hours just to earn the same amount.

“At the same time, part of their earnings is automatically deducted to repay the financing.”

He argues that some drivers become caught in a cycle where falling earnings force them to rely on Grab’s financing, after which they must continue driving on the platform to repay the loans through deductions from their daily earnings.

Financially, Grab’s lending business has become an increasingly significant contributor to the group.

Grab swung from a net finance cost of US$353mil in its financial year ended Dec 31, 2022 (FY22) to net finance income of US$60mil in FY23.

Net finance income subsequently increased to US$81mil in FY24 before more than doubling to US$203mil in FY25.

The momentum continued into the first quarter ended March 31, 2026 (1Q26), with net finance income rising to US$101mil from US$44mil in the previous corresponding quarter, while its gross loan portfolio expanded 130% year-on-year to US$1.44bil from US$625mil.

In a press release, Grab said the growth reflected stronger contributions from lending across its financial services business and digital banking operations.

Overall, Grab posted its first full-year net profit in FY25, at US$200mil, compared with a net loss of US$158mil in FY24.

In 1Q26, its profit surged to US$120mil from US$10mil in the corresponding quarter last year.

Grab and AirAsia Ride declined to comment for this story.