With the passing of amendments to the Land Public Transport Act 2010 and the Commercial Vehicles Licensing Board Act 1987 at the Dewan Rakyat on July 27, and Dewan Negara on Aug 15, e-hailing companies must apply for an intermediation business licence.
The amendments are scheduled to be gazetted next month. If Uber Malaysia has been granted a licence, will it be revoked as what happened to its London operations after city regulator Transport for London (TfL) declared that Uber London Ltd was not fit to hold a private hire operator licence?
The reason given was that Uber’s approach and conduct demonstrated a lack of corporate responsibility. Globally, it is facing a staggering number of suits from governments, drivers, passengers and competitors. Some have been settled out of court, while others have dragged on indeterminably.
In 2009, Garrett Camp developed UberCab, a mobile app for the public to share rides using licensed black Lincolns, allowing fares to be shared by passengers in the same limousine.
Later, Travis Kalanick was brought in as adviser and UberX was introduced in 2011 by recruiting private car owners to drive for Uber.
While UberCab fares were 50 per cent higher than normal cabs, UberX was meant to undercut taxis. The strategy was not profit, but market share, to drive up company valuation, which skyrocketed from US$60 million in 2011 to US$68 billion by December 2015.
A recent report revealed that on average, passengers paid only 42 per cent of the fare and the rest was subsidised by Uber.
As such, it had never been profitable and lost US$2.8 billion last year, and US$708 million in this first quarter.
On June 21, Kalanick was pressured by investors to resign as chief executive officer in the wake of controversies surrounding Uber, caused by its toxic work culture.
On Aug 27, Uber’s board unanimously voted in Dara Khosrowshahi, Expedia CEO since 2005, to be the new CEO for Uber.
For Uber to change, it has to start with its corporate culture. Uber’s proliferation was due to the fact that it has little or no respect for regulations and businesses, including the welfare of millions of taxi drivers and their dependents.
UberX was introduced to the Klang Valley in August 2014, portraying itself as the antidote for recalcitrant taxi drivers when in fact it was competing with local taxi apps.
The rates for UberX were RM1.50 starting fare, 55 sen per km and RM12 per hour when budget taxi fares were RM3, 87 sen and RM17.14 respectively.
It succeeded in capturing the main market share from MyTeksi, which roped in private cars and morphed into Grab, and competed against Uber in Southeast Asia.
In London, about 3.5 million passengers and 40,000 drivers will be affected if Uber loses its appeal and suit against TfL. If Uber Malaysia were to be denied an intermediation business licence, a similar number of people will be affected locally.
However, the impact would be minimal compared with losses suffered by taxi companies and cabbies earlier. Moreover, Uber passengers and drivers could easily migrate to Grab or one of the new e-hailing apps entering the market.
But it is more likely for Uber Malaysia to adhere to the set conditions, which include the type of service provided, measures to ensure the safety and security of passengers, and the standard of performance with which e-hailing companies must comply.
Being locally incorporated, it would have to pay corporate tax and remit Goods and Services Tax to the government, more so when the Customs Department is tightening laws on tax foreign digital service providers.
Although Uber has disrupted taxi and tour operator business in Malaysia, it is likely to continue operating as locally-based executives would emulate those at the parent company in reinventing itself, as businesses are only sustainable if based on values, not greed.
Y.S. CHAN
Kuala Lumpur