Hong Kong needs route for taxis, ride-hailing firms to co-exist: lawmakers

Hong Kong should find a way to allow the taxi trade and ride-hailing services to compete and complement each other, even though cab owners blame competition from unregulated platforms for lowering the value of their licences, lawmakers have said. Debate on the way forward for the trade followed calls from some industry leaders for the government to buy back their taxi licences for HK$5 million (US$637,100) each, an idea Chief Executive John Lee Ka-chiu ruled out on Tuesday. Owners argue that their licences have consistently depreciated because of the rise of online ride-hailing platforms such as Uber. The number of taxi licences has remained constant at 18,138 since the government stopped issuing them in 1994. However, licences can be transferred and traded, leading some drivers and investors to use them as a form of speculative asset. The price of a licence and a taxi dropped from a record high of HK$7.66 million in 2009 to HK$2.02 million this month, resulting in significant potential financial losses for owners. The value also fell sharply in 2019 as social unrest rocked the city, dropping from HK$6.02 million to HK$4.96 million. Taxi driver Chow Kwok-keung said he took over his father’s licence in the 1990s, when it was worth HK$2 million. Chow later expanded his fleet from around 50 taxis to about 170 and became the chairman of the Hong Kong Taxi and Public Light Bus Association. “I bought the licences at different prices, with the highest being HK$7 million each,” he said, adding that he had not bought one in the past 10 years. Chow said that when the industry was at its peak and had greater prospects, he was able to strengthen his taxi team and sufficiently support his family. But on average, he had incurred a loss from buying licences given their current value, he said. “It is really sad to see licence prices dropping from their highest point,” he said, adding it was very difficult to sell them under the current circumstances. Licence prices had fallen because ride-hailing platforms were on the rise and disrupting the industry, he said. “If the government were to repurchase the licences from the industry, that would of course be good,” he said, putting a price tag of around HK$5 million on each with inflation. He clarified that the call for a government buy-back was not an industry initiative but the trade had agreed with the idea when asked by the media. But Chow said that if the government banned ride-hailing platforms, it could help the taxi industry and potentially increase licence prices. Many taxi drivers now rent vehicles from owners rather than buying expensive licences. Lawmaker Gary Zhang Xinyu said that while the depreciation was partly due to increased competition from ride-hailing companies, it was also because owners bought the licences at a time of low interest rates and the rental yield had decreased over the years. “The price is dependent on the macroeconomy. Once the interest rate increases, the price will also be affected,” he said. With taxi fares increasing over the years, drivers had greater bargaining power over rent, causing the rental yield for licence holders to drop, he added. Zhang said the way out for the taxi industry was for the government to distinguish it from platforms providing ride-hailing services, for both sectors to co-exist and complement each other. “Taxis provide a base supply for transport while ride-hailing services act as a support to increase supply during peak hours,” he said. “Our next step is to regulate ride-hailing services and make sure they play a separate role from taxis … regulating ride-hailing services is beneficial for the government’s revenue and consumer protection.” Holders should not “emotionally blackmail” the government to repurchase their licences, Zhang said, adding the government did not have a “moral responsibility” to do so. Roundtable convenor Michael Tien Puk-sun agreed, saying that it was difficult to convince the public that the government should buy back the licences. “The price is even more out of touch with reality,” he said. “The taxi industry was a monopoly. Now with more competition, the value of the licence will depreciate.” Tien said unscrupulous drivers and poor service had tainted the industry and cabbies were at a disadvantage in the face of competition from ride-hailing companies. “Licence holders have consistently profited from this licence for a long time. Fluctuations in licence value are not a government consideration,” he said. Earlier on Tuesday, the chief executive rejected the idea of the government repurchasing licences, saying the documents had always given cabbies exclusive rights.

Hong Kong needs route for taxis, ride-hailing firms to co-exist: lawmakers

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Owners blame ride-hailing services for their taxi licences falling in value but legislators say there is more to it

Owners blame ride-hailing services for their taxi licences falling in value but legislators say there is more to it