Singapore, a keen early adopter of the sharing economy, has fired a warning shot across the bow of Airbnb and Uber with tighter rules that could shake up their business models and growth ambitions in Asia.
The rules, some say, are a sign that even governments sympathetic to companies that allow citizens to rent out their expertise or property have a hard time striking the right balance between encouraging disruptive technologies and keeping them in line, Reuters reports.
“I know a lot of people will give back their keys, that’s for sure,” said Lionel Ong, 33, an Uber driver, who wants to look for a less demanding part time job.
As its traditional manufacturing industry has hollowed out in the past decade or so, the affluent city-state has been quick to embrace opportunities in the digital economy, hosting the Asian headquarters of Airbnb and Uber, inviting its executives to conferences and investing in Uber’s regional rival Grab through a unit of its investment arm for Temasek.
It’s too early to say what impact the new rules would have on Uber and Airbnb, but they highlight increasing scrutiny by regulators globally and growth challenges facing these new economy businesses.
April Rinne, an expert on the sharing economy who has advised companies and governments, including Singapore, says the city state’s case mirrors other early adopter countries like Denmark, where legislators are mulling laws which would require taxis to have seat sensors, video surveillance and taxi meters.
“It’s a watershed that should also sound warning bells,” Rinne said.
Singapore’s new rules, passed this month, will be implemented in stages from the second half of this year. They allow officials to suspend a ride-sharing company for up to a month after three or more instances of their drivers getting caught without a proper license or insurance. The drivers themselves face fines and jail.
In the case of Airbnb, officials will have the right to force their way into homes to check whether residents were renting them out illegally, adding teeth to a rarely enforced law which bans the renting out of private property for less than six months.
The sharing economy business is billed for explosive growth, estimated by PricewaterhouseCoopers to reach US$335 billion by 2025, from around US$15 billion in 2016.
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