My Take

Taking a ride into a legally grey area

PUBLISHED : Thursday, 13 August, 2015, 1:32am
UPDATED : Thursday, 13 August, 2015, 1:32am

Hong Kong's taxi market is a classic exercise in over-regulation. The results: smelly taxis, rude or borderline psychotic drivers, and long queues and waits during rush hours, rainy days and typhoons.

The introduction of Uber in Hong Kong threatens to disrupt those taxi monopolies. So, under pressure from the taxi lobby, police have staged a crackdown against operators of car-hailing apps. Officers this week arrested five drivers and three Uber employees.

There is no question Uber drivers break the law. But should they be tolerated because they supposedly offer a superior service?

The government has done so for a while. Even InvestHK used to advertise and offer support for its offices in Hong Kong - until the latest police operation. It's exactly the kind of tech-oriented, value-added service that the administration of Leung Chun-ying has rhapsodised about.

I have used Uber services and I was impressed. But why should we privilege Uber? Other companies offer a similar service.

Shouldn't any companies with a good app and serviceable vehicles be allowed to operate an Uber-like service? If so, are we not radically opening up the whole taxi market?

While that may sound good in theory, Hong Kong, despite its undeserved reputation for free-market capitalism, is not ready. We are banging against the cold-hard realities of a legally sanctioned protection racket. And police have no choice but to be the enforcers.

Hong Kong's urban areas have about 15,000 taxis, while those in the News Territories number below 3,000. An urban taxi licence is worth up to HK$7 million. So once we liberalise the market, you can do the maths on the amount of paper wealth that will be wiped out as a result.

For that very reason, the government is scared to let in Uber-like services that threaten to undermine the whole market.

For years, you have taxi drivers using their smartphones to form networks to pick up customers. They operate in a legally grey area.

My guess is, the resistance thrown up by the vested interests of the taxi trade means it will be many years before Uber or other similar services can operate legally in the open.

In the meantime, most will continue to work on the fringe.