LETTER | It was reported that in a meeting with the Council of Eminent Persons (CEP), the president of the Malaysian Taxi, Limousine and Rental Car Drivers and Operators Association Mohd Syahrir Abdul Aziz appealed for Grab to be banned in Malaysia.

He asked why the need for Grab when taxi drivers are available and lamented that many proposals had been made to improve the taxi industry, but were ignored by the government.

He also said the ride-hailing concept should have been adapted to benefit taxis and alleged the previous administration used the service to help solve the problem of jobless graduates.

Syahrir was also disappointed that incentives for taxi drivers were not granted properly, complaining there were one-off, such as tyres and permits but no loans to change vehicles.

For the CEP and the public to ascertain the validity of these statements, it is necessary to look at how taxi drivers, particularly those helming associations, have painted themselves into a corner.

Firstly, the entry barrier was low for anyone wishing to drive a taxi. For those without a permit, they could easily rent one from taxi companies or individuals in possession of unused permits.

As many taxi drivers do not qualify for hire-purchase loans from banks, they resort to purchasing the vehicles from taxi companies, including those who have their own permits.

As such, taxi companies enjoy profits from rental of permits, which is around RM20 per day, plus high-interest charges for rental-purchase loans, also known as the “pajak system” as the risks involved are much higher.

Unlike banks that would insist vehicles under hire-purchase be insured with comprehensive insurance, taxi companies allow cabbies to insure under third party cover, as premiums are much lower. In most cases, it would be worth the risk for both taxi company and driver.

Except in the event of a total wreck or theft. During the first half of the rental-purchase period, which could range from three to five years, taxi companies would have to bear a greater loss, while taxi drivers would suffer more during the second half after having paid most of the loan.

In 2009, large number of taxi permits were issued to both taxi companies and individuals by the Commercial Vehicle Licensing Board. In August the same year, taxi fares were raised and it did not take long for the market to be flooded with taxis.

By the time the Land Public Transport Commission (Spad) began operations in January 2011, it decided from the onset not to issue any taxi permits, as there were too many in the Klang Valley, resulting in cabbies getting too few trips.

Although attrition rate was high, it was replenished by an equal number of new entrants, and together with taxi drivers that have either missed out in applying for taxi permits or did not qualify, many taxi drivers repeatedly lament their plight that they were paying high daily rental to taxi companies, forgetting that no one forced them to sign a rental-purchase agreement and paid several thousand ringgit to take delivery of a taxi.

Also, the daily rate was just an easy method to calculate loan repayments. I drove a budget taxi for six years and went to the taxi company only once a month to make payment. Paying lesser amounts would mean more frequent but unproductive trips to the taxi company.

Under the Taxi Industry Transformation Programme (TITP) unveiled by Spad in August 2016, cabbies exiting from the “pajak system” upon settlement of their rental-purchase loans could apply for individual permits, and some may qualify for a RM5,000 cash grant for the purchase of a taxi.

But those who could not obtain hire-purchase loans would still have to turn to taxi companies for rental-purchase, and this is something Syahrir was griping about. But then again, it should not be the responsibility of the government to arrange loans for everyone.

Many taxi drivers are unashamedly behaving as if the world owes them a living and must be the only group of self-employed people that ask for incentives and benefits such as EPF and Socso forgetting they are customers and not staff of taxi companies.

As such, taxi companies could not compel their drivers to attend training nor control their behaviour. Many cabbies have no inkling of customer service and are often rude, but passengers have no choice using their service until Uber became available locally in 2014.

Syahrir suggested that the ride-hailing concept should have been adapted to benefit taxis. He must have forgotten that the more progressive taxi drivers were already using taxi apps which allow passengers to hail a ride from their mobile phones.

For example, MyTeksi was launched in June 2012 as a taxi app and quickly captured the market from radio taxi companies, which deployed an inefficient method of using telephone operators as intermediaries, and almost impossible to get a radio cab during the rush hour.

But with Uber using private cars and charging much lower fares, the majority of the passengers had no qualms riding in them with no concern of insurance cover. Moreover, a better condition private vehicle is anytime safer than an old taxi, with insurance secondary.

It was the modus operandi of Uber to enter markets globally without engagement with local authorities or concern for the welfare of local taxi drivers. It successfully made use of gullible private vehicle drivers to operate a pirate taxi service.

Except for Spad actively seizing unlicensed vehicles used for ride-hailing, the Road Transport Department (RTD) seemed clueless as the number of pirate taxis impounded by it was negligible, although the enforcement unit of the latter is several times larger than the former.

It would be incorrect to say the authorities were caught totally flat-footed, although it is still true in other areas as long as those operating in cyberspace do not pay tax for sales and profits derived locally.

Over the years, Spad, RTD and even the Ministry of Tourism and Culture had introduced various training programmes for taxi drivers. But campaigns centred on sloganeering were wasteful and expensive exercise.

For example in 2012, then prime minister Najib Abdul Razak hailed taxi drivers as the nation’s image ambassadors when launching the Tourism Taxi Ambassador Programme and 4,000 were eventually appointed tourism ambassadors.

But in 2015, a UK website, placed Kuala Lumpur taxi drivers at the top of a list of 10 worst taxi drivers across the globe.

The authorities realised that it would take too long to change errant taxi drivers through education and training and that the use of technology would force them to behave. As such, instead of banning e-hailing service using private cars, laws were introduced to regulate the service.

Not long after Uber was operating in Malaysia, MyTeksi too added private cars to its taxi app, as passengers migrated in droves to cheaper rates offered by Uber. Not only MyTeksi copied Uber’s business model, it also gave the competitor more than a run for its money.

MyTeksi morphed into Grab and captured the lion’s share not just in Malaysia but also in Southeast Asia, eventually taking over Uber’s business in the region from March this year. Grab continues to offer both private car and taxi services in its app.

Except for the animosity shown by taxi associations and some divers, the public and e-hailing drivers, many of whom were former taxi drivers, are happy with Grab. Malaysians should be proud of our home-grown Grab, which is now worth more than US$6 billion.

Under the TITP, any party can apply for the intermediation business licence to operate e-hailing service. What taxi drivers and associations could do is to find a right partner to invest in a ride-hailing app, and the two dozen taxi apps operating in the country could consolidate and easily add private cars to their service.

Malaysia is a free country practising free enterprise. There is no justification in calling for a ban of any legitimate business.

What taxi drivers and associations could do is to call for full implementation and enforcement of the Land Public Transport Act 2017 and the Commercial Vehicles Licensing Board Act 2017, which were passed by Parliament in July last year.

They are due to be gazetted in the second quarter of this year. If drivers of private vehicles are also required to obtain the public service vehicle licence, it would deter as many as half of the e-hailing drivers from continuing with their part-time work.

Since 2000, I have been following closely on the developments of the local taxi industry but there were no sound proposals offered by taxi companies, drivers and associations.

At the turn of the century, city cab companies were allowed to choose and paint their corporate colours on taxis. But this was later dropped, as none of the big taxi companies rose to the occasion like Blue Bird taxis in Indonesia, which are favoured by the public.

The Proton Exora was selected as the model for Teksi1Malaysia (TEKS1M) but other models were later allowed as the high heat generated by natural gas combustion caused the engine valves of the Campro engine to burn, unlike the hardy Mitsubishi engines used in old Protons.

In August 2016, Spad liberalised the vehicle models that could be used as taxis. Under this move, all vehicle brands and models which achieve a three-star safety rating under the Asean New Car Assessment Programme (NCAP) would be approved, and this included the Perodua Axia.

But there are no Perodua taxis on the road, probably due to the blockade imposed by RTD, which is responsible for registering, and through Puspakom, the inspection of all commercial vehicles.

Finally, it makes good sense for Spad to be placed under the Ministry of Transport, after the power to grant commercial vehicle permits was hived off to the Road Transport Licensing Board in the 1970s.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.