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(File pix) In Malaysia, the business model of taxi companies mainly involved renting out permits and providing financing for taxi drivers. About half of all taxi permits in Peninsular Malay-sia were issued to taxi companies by the Commercial Vehicle Licensing Board.

IT is usual for people to champion an industry or vocation, but the approach varies. Those with professionalism will argue with reason, while those who engage in rhetoric will be popular but only with like-minded supporters.

In Malaysia, none are more vocal than a small group of taxi operators and drivers. Almost every business has been affected by the new economy and disruptive technologies, but most are adapting to changes rather than wasting time protesting.

But those who refuse to face reality and make changes will eventually perish.

It is best summed up by Leon Megginson, a professor of business management in the United States, who said: “It is not the strongest of the species that survives, nor the most intelligent, but the one most adaptable to change.”

The best example could be Kodak, which invented digital photography but failed to capitalise on it, allowing others to do so and destroyed its filmed-based model. Kodak hung on to its business model that had earned fortunes for its shareholders.

In Malaysia, the business model of taxi companies mainly involved renting out permits and providing financing for taxi drivers.

About half of all taxi permits in Peninsular Malay-sia were issued to taxi companies by the Commercial Vehicle Licensing Board.

In 2011, this role was taken over by the Land Public Transport Commission (SPAD), which froze the issuance of taxi permits, as there were too many taxis in the market. SPAD started to issue taxi permits with the introduction of Teksi 1Malay-sia. Since then, taxi permits have been issued only to individuals, much to the chagrin of taxi companies.

Taxi companies charge an average of RM20 per day for permit rental and are sore with SPAD for cutting off this income stream.

They continue to charge higher interest rates than banks on hire-purchase loans taken by taxi drivers.

The high rate of interest is necessary because many drivers default on installment payments under the rental-purchase scheme, or walk away if the cost of repairs, following accidents or mechanical failures, are too high.

As good taxi drivers outnumber bad ones, operators make good money. This accounts for the proliferation of taxi companies. But their business model does not include training and controlling their drivers.

That is why none of the taxi companies has emerged as the industry leader or the preferred company in the country.

In Indonesia, the Blue Bird Group is unquestionably No. 1 for taxi services, and is preferred by locals and visitors alike.

Taxi companies are concerned that their drivers make enough money so that they do not fall behind in their monthly loan repayments.

Politicians keep harping on the RM50 daily taxi rental fee. In reality, only RM20 goes to the rental. The rest is for the monthly loan repayment.

Many taxi drivers who are not happy to pay the permit rental have obtained their own permits or migrated to drive for Uber or Grab using private vehicles.

Those who are driving taxis can use these e-hailing apps and get equal chance to pick up passengers when they accept the same fares as private cars.

Taxi drivers are enjoying the best of both worlds, as they get to pick up street-hailing passengers as well and charge higher regulated fares. But taxi companies, like many other businesses, are badly affected.

Those who are smart had scaled down their taxi business many years ago, when the market was flooded with cabs in 2009 and when Uber came to Malaysia in 2014.

But the few who are incapable of offering new ideas or switching to other business will shout and scream before they go under.

Y.S. Chan, Kuala Lumpur

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