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Hong Kong taxis

Consumer Council rebukes Hong Kong government on its failure to embrace ride-hailing services

The consumer watchdog says market reforms are needed to give consumers more choices as many passengers express dissatisfaction with taxi drivers

PUBLISHED : Tuesday, 28 November, 2017, 4:18pm
UPDATED : Tuesday, 28 November, 2017, 11:28pm

Hong Kong’s consumer watchdog rebuked the government on Tuesday for failing to open up the ride-hailing market and called for reforms to make the services more accessible in the city.

Releasing a study on Hong Kong’s e-hailing market and taxi service, Professor Wong Yuk-shan, the Consumer Council chairman, said the government should start by relaxing requirements in the current private hire-car permit system to make it easier for e-hailing vehicles to be on the road legally.

At present, it is difficult for car-hailing firms, such as Uber, Ryde and Hopsee, to obtain one of the 1,500 hire-car permits because of strict criteria, including the requirement to provide a business address and identify specific routes the car will be cover.

“We propose adopting a progressive approach to regulate e-hailing services to create a level playing field with taxis, Wong said. “Reforming the existing 1,500 hire car permit system to allow the entry of ride-hailing firms to the market is a good starting point.”

Under the council’s proposal, a licensing regime would be created to regulate the e-hailing industry and would set requirements for insurance coverage, background checks on drivers, record keeping of every trip and setting up ways for passengers to lodge complaints and feedback.

Wong said that depending on the market’s reaction and the pace of the reforms, the number of e-hailing operators the council would expect in the city is between three and 11, adding that existing cabbies can also be players under the scheme.

The government has maintained a tough stance on ride-hailing firms since they first began to pop up in the city in 2014.

Last month, 21 Uber drivers were charged for operating without a permit following a police crackdown in May. Another five drivers have filed to appeal their convictions in March of driving without a permit and third-party insurance.

Wong said the market reform was aimed at giving consumers more choices as many passengers were dissatisfied with the service provided by the city’s taxi drivers. Common complaints include rudeness, overcharging and refusing to give passengers rides.

The lack of an effective platform for ride-sharing services “has driven even more taxis and consumers to choose the stand and hail market segments, further stifling competition in the overall market”, he said.

The council also poured cold water on the government’s proposed franchised taxi service scheme that would have three operators run 600 premium taxis in an attempt to improve service.

Wong said he had reservations about the scheme because start-up costs for operators would be high when factoring in a fleet of new vehicles and drivers.

“These operators may invest less on the technological software but this is very crucial to enhancing the taxi service,” he said. “The council is of the view that in comparison to the overall total of 18,000 plus taxis currently operating, the scale of the [franchised taxi] service is rather limited to be of any observable change.”

However, a spokesman for the Transport and Housing Bureau insisted the franchised taxi scheme had responded to the public demand for quality e-hailing service. “Depending on the outcome of this proposal at the Legislative Council, we’ll then decide whether or not to consider introducing other new services such as regulated e-hailing cars,” he said.

Wong said opening up the market for online ride-sharing services was a way to make a Hong Kong a “smart city”, which was one of the goals in city leader Carrie Lam Yuet-ngor’s first policy address in October.

“The council hopes the government will seize this opportunity to adopt a forward-looking strategy that will embrace e-hailing services … firmly establishing Hong Kong’s position as a smart city in the digital world.”

Kenneth She Chun-chi, Uber Hong Kong’s general manager, welcomed the council’s proposals saying it would serve as a good starting point for Uber, which has more than 30,000 drivers in the city, to legally operate in Hong Kong.

But the city’s taxi trade stood firmly against allowing a flood of competition from ride-hailing firms to enter the market.

“If the government allows some premium taxis to charge higher fares, there will be incentives for us to upgrade our service and vehicles,” said Chan Man-keung, chairman of the Association of Taxi Industry Development.