To date, the government’s attitude toward ride-hailing app Uber has been ambiguous. The Ministry of Transportation and Communications has imposed fines totaling NT$65 million (US$2.1 million) on Uber since it entered the local market in 2013, but it has become clear that the government does not want to totally eliminate the service, despite repeated protests by taxi drivers.
On Tuesday last week, the Investment Commission said the government might consider banning Uber Technologies Inc from operating in Taiwan, because the US company is providing a transportation service, but is registered as an information services provider. However, just a day later, the Cabinet changed its tone and said it had yet to come to a final decision on revoking Uber’s permit to invest in Taiwan.
It is true that Uber has been operating illegally in Taiwan for a few years, hurting other transportation service providers and, most importantly, not paying taxes, because its earnings are all booked overseas. However, the increasing popularity of Uber suggests a new consumer behavior and the economic benefits of the rapidly evolving Internet-based “sharing economy.” On Saturday, Uber boasted it had collected 50,000 signatures in an online petition started on Friday to support a government revision of regulations and to allow the ride-hailing service to continue operating in Taiwan.
Obviously the company is responding to a growing market demand and provides a chance for some people to supplement their incomes through the sharing economy. Therefore, it would be a mistake for the government to simply shut the door on an innovative service once and for all. It would also be unfair to consumers seeking access to better services, in view of the local taxi industry’s shortcomings in terms of business operations, passenger experience and payment methods.
The commission is scheduled to present its review of the Uber issue to the Ministry of Economic Affairs on Thursday and local taxi drivers have threatened to take to the streets this week if the Cabinet considers amending regulations to ensure that the “rise of the sharing economy” works. Recent consumer sentiment and the tone of policy indicate that taxi drivers are very likely to be disappointed.
Rather than trying to ban Uber, or subjecting the ride-hailing service to the same regulations as conventional taxi companies, the Ministry of Transportation and Communications, the Investment Commission and the Consumer Protection Commission should work out new rules that allow Uber to pay its fair share of taxes and operate in an appropriate manner in Taiwan.
At the same time, the government needs to provide traditional taxi companies with a stronger position from which to compete with Uber, through either the reduction of taxi license fees and other costs imposed on the industry, or the upgrading of their services using mobile technologies. The government can also help make the taxi industry more competitive by easing regulations on pricing, such as allowing for different types of taxis to offer various levels of service and charging different fares. Opening up a market is about survival of the fittest, be it traditional taxis, Uber drivers or other new transportation service providers. Uber’s recent decision to partner its China operations with Chinese ride-sharing giant Didi Chuxing is not only an issue of legalizing the service, but also the result of cruel market competition.
It would be pointless to ban the ride-hailing service in Taiwan, as the government has pledged to embrace the new digital economy and encourage innovation. The government must break from traditional patterns of thinking and avoid protectionist policies, with a dual approach — giving the local taxi industry a lift while welcoming Uber — likely the best strategy going forward.
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