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oBike shuts operations in Singapore, bike-sharing users left in the lurch

SINGAPORE — Thousands of users were left high and dry after homegrown bicycle-sharing operator oBike pulled out suddenly from the Singapore market, saying it was tough to meet new rules under a licensing regime to tackle indiscriminate parking.

SINGAPORE — Thousands of users were left high and dry after homegrown bicycle-sharing operator oBike pulled out suddenly from the Singapore market, saying it was tough to meet new rules under a licensing regime to tackle indiscriminate parking.

In a statement on its mobile application and social-media accounts, oBike said on Monday (June 25) that the new regulations “do not favour” its belief in providing a dockless bicycle-sharing service that will benefit public commutes and Singapore’s transport system, and it was stopping operations with immediate effect.

While analysts who spoke to TODAY expect the company’s exit to have minimal impact on the market, some said that its departure was very abrupt and “not right from the public-interest perspective”.

Scores of commuters are scrambling to reclaim the mandatory deposits they lodged with oBike, which claimed it has more than one million users here.

Other analysts said that the sudden pull-out could also dent consumer confidence in mobile transactions.

The authorities, too, appear to have been none the wiser, with the Land Transport Authority (LTA) saying in a statement that it was told only on Monday morning of oBike’s intention to stop operating in Singapore. “The LTA will be engaging oBike on its exit plans, including the removal of shared bicycles from public places,” an LTA spokesperson said.

The Consumers Association of Singapore (Case) told TODAY that it received 27 complaints against oBike since the start of this year. Riders largely complained that they failed to receive refunds on their deposits, despite lodging requests several months earlier.

Those who paid the operator in the last 120 days could consider lodging a chargeback claim with their credit-card issuer, the consumer watchdog said.

Saying it would follow up with oBike on the matter, Case urged affected consumers to approach the association for help.

oBike, which has a fleet of about 14,000 bikes, is the first operator to set up a bicycle-sharing service here last January. Earlier this month, it pulled out of the Melbourne market, as the Australian state of Victoria rolled out tough new rules to curb abandoned shared bicycles. oBike would, for instance, have had to fork out hefty fines if an abandoned bicycle obstructed a street for two hours.

In leaving the Singapore market, oBike did not specify what "difficulties" it encountered with the new licensing regime. In an earlier interview, Mr Tim Phang, oBike Singapore's general manager, told TODAY that the move to introduce a licensing regime placed a heavy burden on start-ups, which, in turn, meant that “bike-sharing users will suffer”. Not only will operators need to review their fleet and business models, some of these costs may be passed down to users eventually, Mr Phang said then.

oBike also did not say how users, who have to pay a S$49 deposit to use the service, could get a refund. Students pay a S$19 deposit.

Adding to the confusion, oBike said that users still wishing to use its services in Singapore can continue doing so with GrabCycle, an app by ride-hailing firm Grab that allows access to multiple bicycle-sharing and personal-mobility-device operators.

A Grab spokesperson later clarified that the company will no longer be able to offer oBike's bicycles on GrabCycle with immediate effect, as the operator will not have the appropriate bicycle-sharing licence to operate here. It will also not be maintaining its bicycle fleet, the spokesperson added.

Acknowledging that user experience on its GrabCycle app will be affected, the spokesperson added that the company will waive existing GrabCycle subscription fees and deposits, and offer a free four-week trial for users to try the service by its latest bicycle-sharing partner, Anywheel.

oBike did not respond to TODAY’s queries. Checks showed that the operator was incorporated as oBike Asia in November 2016.

It is involved mainly in the “renting and leasing of recreational and sports goods”, such as pleasure boats and bicycles, based on records from the Accounting and Corporate Regulatory Authority.

Singapore citizen Zhu Yimin was listed as the company’s director, and Chinese national Wu Lijuan was listed as its secretary. oBike Hongkong was listed as its shareholder.

IMPACT ON CONSUMERS

Professor Lee Der-Horng, a transport researcher at the National University of Singapore (NUS), said that with other major operators such as ofo and Mobike still around, riders should not be hit hard by oBike’s exit.

Over the last few months, oBike’s presence has been fading, and ofo and Mobike’s two-wheelers have been used more widely, he observed.

Mr James Sim, deputy manager with Nanyang Polytechnic’s School of Business Management, agreed that riders have other operators to choose from and there was “little product differentiation” between them.

“While there is a possibility of an increase in operating costs which will affect consumers, the increase will be minimal as there are still many other bike-sharing operators here,” Mr Sim said.

The manner of oBike’s exit did not sit well with Assistant Professor Terence Fan, a transport specialist with the Singapore Management University, who said that it was not right from a public interest point of view, even though such decisions were made occasionally by companies incurring losses.

Agreeing that the move was “very abrupt”, Associate Professor Lawrence Loh of the NUS Business School said, however, that consumers run the “natural risk” when they put down a financial commitment for a service in a dynamic online-based market.

While Asst Prof Fan said that oBike’s abrupt departure may dent consumer confidence in online transactions in future, Assoc Prof Loh disagreed: “It takes much more to affect confidence in mobile wallets and cashless payments. As in all things in the online world, there are certain risk factors.”

On the new rules governing indiscriminate parking, Assoc Prof Loh, who is director of the NUS Business School’s Centre for Governance, Institutions and Organisations, said that these require hefty financial investment on the part of operators, in setting up the infrastructure to comply with the rules at the designated parking spaces, for instance.

oBike introduced geofencing technology last October, where users are banned from using the service if they run out of points following a grace period. Users start with 100 points each, earning one point for parking properly each time, and incurring a 10-point deduction if they leave the bike outside the virtual geographical boundaries of designated parking spots.

Asst Prof Fan noted that this was different from charging riders continuously for parking indiscriminately until they find a proper parking spot, and the company could have had to retrofit its bikes and hardware to comply with the new rules — a costly affair.

Prof Lee also noted that the company would have had to fit devices on its bikes that allow them to communicate with new IT equipment in order to fulfil the LTA’s requirements. “The LTA’s requirements will be the last straw that breaks the camel’s back (for oBike),” he said.

As for what oBike could do with its bicycles, Asst Prof Fan said that if the company cannot fulfil its liabilities, other companies could challenge and seize its bicycles as a form of repayment. This would hinge on whether the bicycles are still in working condition and can be impounded.

The bicycles could then be auctioned to repay some of the deposits. Otherwise, users who want their deposits or subscriptions refunded could seek recourse from the Small Claims Tribunals, Asst Prof Fan said.

Second bike-sharing firm to leave Singapore on cusp of new licensing regime

oBike is the second bicycle-sharing operator to announce it is pulling out of the Singapore market, as the industry gears up for a licensing regime set to kick in from July 7.

GBikes, a smaller operator with about 3,000 rental bicycles, announced earlier this month that it would cease operations on the same day that the new licensing framework takes effect. The company did not give its reasons for its exit.

New laws passed in March require operators offering dockless shared bikes, personal mobility devices and power-assisted bicycles to be regulated under a new licensing scheme. Applications for the licence opened on May 8 for bicycle-sharing operators.

Operators have until July 7 to submit their applications, failing which they will have to stop operations. The licence lets them operate in public spaces for up to two years.

They will also have to take steps to ensure that users practise responsible parking, including requiring commuters to scan a unique QR (quick-response) code at the parking spot as proof of proper parking before they can end their trip, and continuously charging users who park indiscriminately until they return their bicycles to a designated parking space.

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