25 October 2016
Uber could be operating in a gray area of regulation, where rules for the taxi business may not necessarily apply. Photo: HKEJ
Uber could be operating in a gray area of regulation, where rules for the taxi business may not necessarily apply. Photo: HKEJ

Uber issue exposes poor taxi service in Hong Kong

Like in many other parts of the world, Uber Technologies has found itself in a sort of a mess in Hong Kong. 

Police have raided the local office of the controversial car-hire service and arrested several of its drivers and staff. 

The company is being accused of operating without a local license and insurance coverage for its drivers.

Of course, anyone who violates Hong Kong laws must be prosecuted.

But before the justice department brings the case to the court for trial and the judge hands down the verdict, the public, and especially the government, should refrain from labeling Uber as an illegal car-hire service.

The police raid on Uber’s office on Tuesday could be an indication that the taxi industry, which is bound to suffer a great deal if the service goes full blast in the city, is exerting huge pressure on the authorities to take action against Uber.

It is also said that many taxi license holders are pro-Beijing politicians, who could be making use of their influence on the administration to hold back Uber’s advance into their business territory.

As such, the police should stop creating the impression that Uber is an illegal operation.

The public should not be led into thinking that the service is not worthy of their patronage, or that using the service is tantamount to participating in an illegal operation.

In fact, police are still investigating the case, and those who had been arrested were allowed to post bail.

Police also have to seek advice from the justice secretary, the government prosecutor, on whether to bring the case to the court.

But the authorities’ actions and remarks give the impression that Uber is guilty even before a case has been filed in court.

Police Commissioner Stephen Lo, for example, said his men took the action against Uber after consulting with the insurance sector on the issue of insurance coverage for its drivers.

This, despite Uber’s insistence that its drivers and the passengers they carry are covered by insurance.

James River Insurance is one of the first US insurers to offer insurance coverage for the company’s ride-sharing service.

The San Francisco-based car-hailing service has encountered similar legal hurdles in other countries where it is operating.

Industry observers note that Uber could be operating in a gray area of regulation, where rules for taxi operation may not necessarily apply.

Wen Wei Po newspaper, in an article published on Wednesday, said police are not fully confident that a case against Uber could be established because Uber trips do not involve cash as all the fares are settled by credit card.

According to some experts, Uber could argue that it is charging platform service fees rather than fares for the journey, in which case it should not be classified as a taxi business.

But the main issue in the Uber controversy is the poor state of taxi service in the city.

Since 1997, the number of taxi licenses has been frozen at 18,000, which means that the total supply of taxi units in the city has remain unchanged since the handover.

It was only earlier this year that the transport department proposed to add 25 new taxi licenses for Lantau Island. But that, of course, will not address the strong demand from urban commuters.

Many Hongkongers support Uber because they hate the poor service provided by some local taxi drivers.

Many taxi license holders consider their licenses as a kind of investment rather than a public service responsibility.

Currently, an urban taxi license is worth around HK$6.8 million, down from the peak of HK$7.25 million in May this year.

License holders rent out their licenses to taxi drivers to pay for the mortgages. But given the high license price, drivers do not earn much, and this in turn has led to poor service, such as drivers refusing short-journey passengers.

The police action against Uber will only benefit taxi operators who are threatened by a new entity that offers better service to the riding public.

Instead of working against Uber, the government should launch a complete review of the taxi service.

For example, it could consider lifting the regulation that limits the number of private hire car permits to only 1,500.

Should the government work with Uber to remove such limitation, the number of private hire cars in the market would increase and taxi service would improve.

The government should erase the mindset that a taxi license is an investment tool and promote the idea that the taxi business is primarily a public service.

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EJ Insight writer

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