Hong Kong government’s franchised taxi scheme would hamper free market in the sector
It is untrue that the government can no longer impose any regulations on cabs operating under the old licensing system. The taxi industry has urged the government to impose harsher penalties on drivers who behave badly, on repeat offenders and for poorly maintained fleets. It also asked the government to strengthen regulations on existing licences that would lead to improvements in the industry.
But the government repeatedly cites current licensing restrictions as a reason for the difficulty in cracking down on malpractices in the trade, while doing nothing to lower the threshold for prosecution for taxi driver malpractices.
Taxi operators are willing to enter a contractual agreement with the government to provide premium services that follow regulations if we get a level playing field. Giving existing taxi operators or owners a choice to upgrade their taxis would facilitate healthy competition within the taxi industry.
Passenger demand can also motivate existing taxis to upgrade to a provide premium service under government regulations and supervision.
Contrary to officials’ view that the industry’s proposal to turn ordinary taxis into franchised taxis would deter new players and hamper fair development of the market, the taxi trade is a free market and new operators are free to enter the trade by renting a taxi fleet and managing their business.
A good example is the operator of a taxi-hailing app, HKTaxi, once an outsider which has become an active player in the taxi industry. Diamond Cab, SynCab, Jumbo Taxi are other new players offering a diverse taxi service to the public.
The franchised taxi scheme proposed by the government, on the other hand, presents a strong deterrent to potential new players and existing taxi operators. The franchised business would require heavy monetary investment with an expiry date. Also, the franchise taxi scheme with a ceiling set for 200 vehicles for each franchise licence owner shows that the government is discouraging a free taxi market with a caged business proposal, one that does not allow room for business growth.
The public should be given the information that helps it fully understand the feasibility of utilising existing resources to improve public transport services in the city.
Sonia Cheng, founder and executive director, SynCab
