PTC gets powers to rein in overcharging on ride-hailing apps; operators to be licensed from June 2020

SINGAPORE — The Public Transport Council (PTC) will have teeth to rein in overcharging on ride-hailing applications and commuters who evade fares in private-hire cars, under changes to laws which were passed in Parliament on Tuesday (Aug 6).

And from June next year, larger operators of street-hail and ride-hailing services — those with at least 800 vehicles on their books — will be licensed under a new regulatory framework, Dr Janil Puthucheary, Senior Minister of State for Transport, told Parliament.

He was speaking during a debate on the Point-to-Point Passenger Transport Industry Bill.

Whereas taxi operators are today bound by PTC regulations that standardise fare structure, there are no such rules governing fares by private-hire car operators.

With the share of trips made on private-hire cars rising, the PTC will be armed with powers to extend the regulatory approach for taxi fares to private-hire cars, Dr Puthucheary said. The Government will amend the PTC Act to pave the way for this.

At present, ride-hailing — provided by major players such as Singapore-based Grab and Gojek, an Indonesian firm — accounts for more than two-thirds of all point-to-point trips in Singapore. Taxis fulfil three in 10 trips, said Dr Puthucheary.

Making overcharging and fare evasion offences for trips on private-hire cars will “deter such behaviour, and protect both commuters and drivers”, he added.

He said licensed ride-hailing operators will be allowed to set flat fares independently for the private-hire cars and taxis using their platforms. “The only requirement is that these flat fares for taxi and private-hire-car bookings by licensed ride-hail service operators must be provided upfront to commuters,” he added. This is already the practice among operators today.

Ride-hailing companies may also continue to provide metered trips with taxis, as is the case right now.

As for street-hail operators — namely the taxi companies — current fare regulations will remain unchanged, and the authorities will continue to require them to charge metered fares for rides that begin from the kerbside.

Licensed operators will also be allowed to adjust metered and flat fares.

NEW LICENSING REGIME

Dr Puthucheary said that ride-hailing and street-hail operators will receive their licences in June next year when the new regulatory framework kicks in. 

Licence applications open in February next year.

Ride-hailing operators will require a licence if they have 800 or more vehicles on their platforms. Those expected to be licensed include Grab, Gojek, homegrown company Ryde, and Tada, which launched a year ago.

The Land Transport Authority (LTA), the industry regulator, will exempt those with fewer than 800 vehicles from the licensing regime.

But they will continue to be subject to basic regulations to ensure commuter safety. For instance, these operators must ensure their drivers and vehicles are licensed and insured.

If drivers flout the rules, the LTA can issue a suspension order to forbid drivers from using these platforms under the Road Traffic Act.  

As for street-hail operators, they must continue to have a minimum fleet of 800 taxis.

Operating services without a licence will incur penalties. Unlicensed operators may be fined up to S$10,000 or jailed up to six months, or both.

On top of these, a fine of up to S$500 may be handed out for each day the offence continues after conviction. It will also be an offence to drive for illegal operators. 

NO EXCLUSIVITY, PLEASE

Licensed operators will be barred from offering exclusive deals that prevent drivers from providing services for other operators.

Such arrangements make it difficult for new players to break into the market and favour the incumbents, and are detrimental to the interests of drivers and commuters, Dr Puthucheary said.

The authorities will make an exception only for operators who employ drivers directly, as full-time work is inherently exclusive, he added.

For instance, electric-cab operator HDT Singapore Taxi employs its drivers, unlike other firms that rent taxis to drivers. It is the first operator to offer drivers a basic salary with benefits, such as contributions to the Central Provident Fund, a savings scheme, and annual leave. 

COMMUTER SAFETY

To strengthen safety, the LTA will also have the muscle to stipulate requirements for licensed operators, which would extend regulations governing the taxi industry to ride-hailing operators as well.

For example, the government agency will monitor the accidents and offences amassed by drivers when they fulfil trips for an operator.

“Operators whose drivers have committed too many accidents or offences can be penalised through regulatory sanctions,” said Dr Puthucheary. LTA did not give details of the standards to be set or the penalties, although it said the requirements would be similar to those that apply to taxi operators.

Operators will also have to ensure the vehicles used for transport services pass requisite vehicle inspections and are roadworthy.

The authority may also bar operators, including those exempted from the regime, from using vehicles that are found to be defective and pose risks to safety.

WHY NOW?

Since the likes of Grab entered the Singapore market about six years ago, the number of private-hire cars has risen exponentially.

In 2013, when Grab set up operations here, the 28,000 taxis plying the roads were the primary mode of point-to-point transport.

Today, the pool of taxis has tumbled to about 20,000, dwarfed by the 45,000 private-hire cars.

There have been benefits: Commuters have enjoyed shorter wait times and higher service standards, and drivers have better odds of finding riders, cutting the time which they spend cruising empty on the roads, Dr Puthucheary said.

But these benefits can be “easily lost” if there is inadequate regulatory oversight, he noted.

“Operators may compromise commuter and driver safety at the expense of profits," he said. “Operators might also try to compete by locking in drivers using exclusive contracts (that) would affect market contestability, which, in turn, harms commuters by increasing prices." 

The new regulatory regime is thus a “necessary piece” in Singapore’s long-term vision for a well-connected and convenient land-transport system, Dr Puthucheary said.

“This will help to facilitate an open market to support the development of responsive point-to-point services, while also providing sufficient regulatory oversight to protect the safety and interests of commuters and drivers,” he added.

WHAT SOME OPERATORS SAY

Some ride-hailing operators told TODAY that they welcomed the move to make fare evasion an offence for private-hire cars.

Tada said this would help it better assist its drivers in seeking recourse.

Ryde said it will enable drivers to collect what is due to them and deter riders from evading fares. The firm, however, urged PTC to do more to look into “predatory pricing behaviour” by operators intent on wiping out competition and monopolising the industry in the long run.

Grab said it supported the intent of the new laws and was heartened operators would be barred from offering exclusive arrangements. But the company reiterated its call for the LTA to deal with an “inconsistency” as soon as possible, where taxi firms can restrict drivers from doing fixed-fare jobs on other platforms. This would ensure drivers have “real freedom of choice”, Grab said.

To Singapore’s largest taxi operator, ComfortDelGro, the new regulatory regime was a step in the right direction.

“(It) protects commuters by subjecting ride-hailing operators to the same strict guidelines that have been in place for taxi operators for many years… It levels the playing field a bit more and creates a more sustainable competing environment,” said its spokesperson, Ms Tammy Tan.

Additional reporting by Wong Pei Ting