26 October 2016
Hong Kong government has been accused of being hostile to Uber in a bid to protect the traditional taxi operators. Photos: Reuters, Bloomberg
Hong Kong government has been accused of being hostile to Uber in a bid to protect the traditional taxi operators. Photos: Reuters, Bloomberg

Uber needs to be regulated, not barred

In Hong Kong, there are three Uber services available, Uber Black, Uber Taxi and Uber Van. Uber taxi is similar to licensed taxi and it charges based on the meter. Uber Van is quite similar to GoGoVan app, and it charges on the basis of distance.

Most drivers of Uber Black work part-time to make extra pocket money in their spare time, and most clients are celebrities, businessmen or big families who do not want to share the vehicle with strangers.

Uber Black charges 30 to 50 percent more than the average taxi, and passengers have a comfortable ride offered with bottled water. They would be treated as VIPs. Passengers can grab a Uber Black within minutes after sending the order in downtown areas. That would save plenty of time in waiting at taxi stands during busy hours.

Those who support the tough stance by Hong Kong police argue that licensed taxis have insurance coverage to ensure passenger and third-party safety. However, Sam Gellman, general manager of Uber Hong Kong, told reporters earlier that all the firm’s rides are covered by insurance including third-party insurance for their passengers.

However, some lawyers noted that there is gray area in third-party insurance. A conclusion will be made only when there is a verdict from a court if Uber proves that they purchased such insurance.

Some observers have said the Hong Kong government was being hostile to the new start-up in a bid to protect vested interest groups.

Uber Taxi drivers have revealed that they don’t pay any commission to Uber, which offers them an additional platform to access customers.

In this situation, some netizens have speculated that the crackdown was pushed by local license holders, who fear the rapid expansion of Uber would threaten their monopoly and affect rent income. And that the license holders are trying to protect the value of their expensive investment.

As a legal entity, Uber ensures that all rides are covered by insurance. If so, authorities should regulate it as one of those emerging internet service companies, granting non-individual business license and applying similar supervision standards with other hire vehicles in terms of insurance and other regulations.

Also, authorities could allow Uber to expand the size of the fleet gradually, and all Uber drivers have to pass taxi driver exams. And taxi drivers could also act as Uber drivers, in order to mitigate market impact. The administration should not crack down on these emerging services.

In addition, the government should review its definition of insurance coverage, freight car and passenger car. Currently, the authorities have various restrictions on hire vehicles apart from taxi. Therefore, it’s time to review whether it’s proper to maintain such market structure, or if it should be opened up for new other models.

InvestHK, an agency set up to attract foreign investment, had earlier presented Uber as a “success story” on its website. However, the page has been removed after the Hong Kong police crackdown on Uber drivers and the raids on the firm’s offices.

Did InvestHk understand the business model of Uber when it decided to introduce it to Hong Kong? Has it taken note of the debate the company has stirred up worldwide in recent years?

While the government has the right to take legal action, the recent moves on Uber have generated an impression that it is acting to protect vested interest groups.

Who will suffer the most from the crackdown on Uber? Are we safeguarding the interests of the general public? These are the questions that authorities must ask themselves.

WY Jimmy wrote this article, which appeared in the Hong Kong Economic Journal on Aug. 14.

Translation by Julie Zhu

[Chinese version中文版]

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