Regulatory Matrix – Ridesharing services in major cities across the globe
The article will give an glimpse about the Ridesharing (also called Ride-hailing / E-hailing / On-demand application) in different countries around the globe. Valoriser Consultants did an policy analysis of legal framework adopted in different cities or countries to create “Regulatory Matrix”.
The matrix clubbed group of countries based on the policy framework to regulate taxi and ridesharing services.
Innovators were the first one to come out with the policy framework to regulate ridesharing (aka ride-hailing) services. These countries recognized that ride-hailing services are beneficial to the society. These countries are also home to the biggest companies like Uber, Lyft, Didi, Grab etc.
Adapters were countries like China, Malaysia etc. which tried to copy regulation and tried to catch up with these countries. These countries witnessed the strong growth of ride-hailing companies. Adapters does not mean that they only copy paste (like Philippines copied from US regulation) but they also try to accept these services after initial resistance. Adapters also adopted new framework to regulate the services.
Regulators were mainly consisted of group of countries which did not create any new laws to regulate new mobility services. At the same time, they did not stopped or ban these new players. These countries tried to create some special regulations to control these companies. For example, some Latin American countries introduced surcharge on per kms / trip. Similarly, TfL evolved some conditions for private-hire vehicles used by ride-hailing companies.
Protectors were the countries which are trying to enact regulation to protect the local taxi industry. It does not mean that ride-hailing services are not operating in these countries but the market is dominated by local players like KakaoTaxi in South Korea and working with traditional taxis.
Lets see the different regulations enacted in different countries:
Australia
Australian Capital Territory (ACT) legalized ride-hailing services in October 2015 and issued new regulation, which include background checks, vehicle inspections and insurance requirements for drivers
New South Wales legalized ride-hailing services in December 2015. The law requires criminal and car-safety checks. The authority established A$250 million “industry adjustment package” to compensate taxi drivers
South Australia legalized Uber like services in July 2016. Ride-selling apps requires to follow safety standards prescribed in Passenger Transport Act. Taxi services were offered compensation including A$30,000 per licence and all metro taxi trips will have a A$1 levy to fund this assistance
Queensland legalized ride-booking services in September 2016. Initially, there will be no license requirement for the operator. However, the authority will introduce new license system in 2017. As part of the regulatory changes, there will be a A$100 million assistance package for the taxi industry, which includes A$20,000 one-off payments for taxi licence holders and A$10,000 per limousine licence
Western Australia is looking to overhaul and deregulate taxi industry. The plan includes a A$27.5 million “transition assistance package“, including compensation payments of A$20,000 for taxi plate owners
New Zealand
The Ministry of Transport issued guidelines for Small Passenger Services (SPS) Regulations. The revised bill proposed to bring taxis, private hire services such as limousines, shuttles, ride-hailing, and dial-a-driver services into a single category
Taxis will continue to be defined as a SPS and will operate in much the same way as they were doing earlier. A technology or app based operator is also defined as a SPS, and therefore will be required to become an approved transport operator (ATO)
The bill proposes many concession for ride-hailing companies including allowing drivers to get the required background and compliance checks easily, as well as, not required to pass area knowledge and English language tests. Further, it scrapped safety requirements such as in-taxi cameras for ride-hailing services
The bill requires ride-hailing companies to present vehicles for inspection “at a moment’s notice”, and to keep fuel receipts and collect logbooks from its drivers
Philippines
Philippines was the first country in South-east Asia to legalize ride-hailing companies (also called as Transport Network Companies) in May 2015
Department of Transportation and Communications (DOTC) created new categories of Transportation Network Vehicle Service (TNVS) to allow app-based services offered by Transportation Network Companies (TNC) to exist within our regulatory framework
Under the new classification, a TNC is defined as an organization that provides pre-arranged transportation services for compensation using an internet-based technology application or a digital platform technology to connect passengers with drivers using their personal vehicles. TNCs will provide the public with online-enabled transportation services known as a TNVS, which will connect drivers with ride-seekers through an app
Singapore
One of the first country to introduce regulation for Ride-hailing companies. The law “Third Party Taxi Booking Service Providers Act“ was introduced in 2015. September 2015. All third party taxi service providers with more than 20 participating taxis are required to be registered with LTA in order to operate the booking service.
The authority issued a new license framework for Private-hire Car Driver Vocational License in February 2017. This requires background screening for drivers, a training course that is periodically repeated, and mandatory registration with the LTA.
In 2019, LTA Singapore announced the new regulation for P2P (Point-to-Point) service, merging both taxi and ride-hailing services under one category.
LTA will be introducing a common licensing regime for all P2P operators. Operator-level regulations by service rather than vehicle type
• Street-hail vs Ride-hail operator rather than Taxi vs PHC operator
• More appropriately structure regulations based on service provided.
Future-proofing of regulations to licence future business models (e.g. AVs, MaaS operators) if required.
• As a start, it will focus on larger operators (>800 vehicles) as they have sizeable market impact
The application process will be initiated in March 2020
China
The Chinese government released the Interim Measures for the Administration of Online Car-hailing Operations and Services in July 2016. The policy was released by the Ministry of Transport and six other ministries jointly*. This is the first national measures that legitimize online car-hailing service. The new regulations became effective on 1 November 2016.
As per the guidelines, transport authorities under the State Council is responsible for guiding the national network about car management. Some of the key parameters are:
• Requirement of a Business Certificate from relevant provincial authority
• Vehicle should be capacity of less than 7 passengers and should be fitted with GPS device
• Car with commercial license, no use of private cars
• Driver should have minimum 3 years of experience and no violent criminal record
• Drivers have the legal qualification for running the taxi services and may sign labour contracts with the drivers depending on the working hours and frequency of service
• Fare should be determined in line with relevant state regulation and not impede fair competition or dominate market by fixing price at below cost price
• Store and use business data collected in China-based servers
• Fine of RMB 10,000 to 30,000 to operate service without legal permission
Some of big cities are proposing some stringent laws for online ride-hailing services
Malaysia
SPAD had issued Taxi Industry Transformation Programme (TITP) to reform taxi industry, including legalizing e-hailing operators (Uber / Grab)
TITP had 4 key principles: leverage on technology, improve taxi drivers’ income and welfare; improve taxi drivers’ service quality and conduct and rationalise taxi fares
SPAD planned start the registration of individual taxi licenses under the metered taxi class and hire cars (kereta sewa). Further, the department will give a cash grant of RM5000 to help taxi drivers exiting the rental (pajak) model to purchase new cars
10 points programme of TITP covered:
i. Regulating e-hailing as an intermediary service under the Akta Pengangkutan Awam Darat 2010
ii. Issuance of Individual Licenses and Government Cash Grant for drivers exiting Pajak System
iii. Liberalise Vehicle Model for Taxis
iv. Standardise Taxi Rental Contracts With Statutory Contractual Terms
v. Introduce Mandatory KPIs for Taxi Operators
vi. Impose stringent pre-screening processes
vii. Increase Service Standards using Merit and Demerit System
viii. Rationalise zonal fare
ix. Dynamic Fare for Metered taxi providing e-hailing services
x. Establish taxi driver’s improvement program
India
MoRTH issued the new policy for taxis on 15 December 2016 and circulated the same to all cities / states. However, the policy was not implemented at the state level.
The ministry is planning to release the new guidelines for ride-hailing companies in December 2019. Some of the key regulations are:
– Capping of commission (10%)
– Surge pricing up to two times the base fare for only 10%
– Facial or biometric verification of the drivers
Each state has drafted its own policies for regulation of ride-hailing services. In most of the states, ride-hailing services are in grey area but the authority allows these companies to operate.
Some of the key conditions are:
– License for the company
– Driver police verification
– Reporting of all incidents to police
– Installation of panic button in the car and in the app
Indonesia
The Ministry of Transportation (MoT) officially issued rules for transport services-based applications in April 2016 (regulation no 32/2016). Under the regulation, ride-sharing companies will have to partner with transportation companies licensed by the ministry or register for their own transportation company license. Further, cars with 1,000 cc engines can be part of a ride-hailing service’s fleet (earlier it was 1,300 cc)
Drivers of ride-sharing companies should either be employees of partner transportation companies, or part of a co-operative of drivers. The companies are required to comply with the rule by April 1, 2017
In March 2017, the government has proposed to set a fare cap on transport services-based application. Also, the government will also impose some tax on new companies
South Africa
South Africa’s National Land Transport Act (NLTA) only recognizes six (6) categories of private transport services: buses, minibus taxis, metered-taxis, chartered vehicles, lift clubs and tuk-tuks (motorized rickshaws)
South Africa has no regulations governing e-hailing services. The government amended NLTA and included a sub-category to accommodate e-hailing services. As per the amendment, e-hailing service operators are classified as metered taxi operators. The drivers require to have metered licences as part of the law
The legislation allows the use of a smartphone in lieu of a taximeter, and requires the operators to estimate distance and fare in advance, as well as, provides driver details
National Land Transport Amendment Bill 2016: Amendment of section 1 of Act 5 of 2009
Canada
Ride-sharing services are available in 14 cities in Canada – Calgary, Edmonton, Toronto/GTA, Ottawa, Montreal, Quebec City, London, Guelph, Waterloo, Kitchener, Niagara, Windsor, Hamilton, Kingston, covering 50% population of the country
Edmonton became the first city to legalize Private Transport Providers and has passed bylaw. From March 1, 2016 PTP must have provincially approved insurance, annual vehicle inspection, criminal record check and charge a minimum of $3.25 per ride, but there is no price cap. Only taxis are permitted to pick up street hails or use taxi stands
Hamilton passed a bylaws in January 2017 which requires ride-hailing companies, with more than 100 vehicles, to pay $50,000 annual fee plus six cents per trip. Drivers are not allowed to pick up roadside clients
Brazil
The federal government is working on national guidelines for ride-selling app
In Sao Paulo, the mayor passed the regulation to allow the use of ride-selling apps. As per the regulation, the city shall charge an average fee of 10 centavos ($0.03) a kilometer for drivers working with TNCs. The fund are collected into a municipal fund
Mayor of Rio de Janeiro signed a law forbidding private cars to transport passengers in November 2016. Only registered taxis are allowed in the city. However, this not impact Uber operation as federal guidelines are awaited
Mexico
In Mexico city, the city council issue regulation for taxi companies, which includes a 1.5% ride levy on the cost of each trips, an annual permit fee and the establishment of a minimum value for each vehicle. The levy is deposited into a new fund for Taxis, Transportation and Pedestrians and will be used for investments in better mobility options for the city
The city council of Tijuana declared legal in July 2016. The operators will require to pay 1.5% of gross annual turnover. Further, vehicles must not be longer than six years old and a minimum value of US$8,000, having insurance for US$ 150,000 to cover damage to third parties and passengers
UAE
Dubai become the first city to regulate ride-hailing services by entering into agreement with Careem and Uber. Ride-hailing apps will offer luxurious transport services (limousines) via online and smart Apps channels. All cars used by them must belong to accredited companies. The laws requires that ride-hailing apps must charge at least 30% higher fares than taxi fares
Both Careem and Uber stopped service in Abu Dhabi in August 2016 owing to regulatory issues. However, Careem has resumed service in February 2017 under the regulations for limo services. The authority will issue new guidelines for the ride-hailing apps
Russia
There is a federal law which is very liberal and permissive for taxis. Actually any person or company can become a taxi driver or operator. There is no restriction at all except the age of the driver (min 21 years old), no test, no medical control, no criminal record, no licence fee, no restriction on the type or age of the car, no obligation to have a taxi meter, no regulation of fares, etc.
Anyone can make a request online and will get the license. There is no ceiling on the numbers of taxis in the city. The only condition is to paint the car in yellow and put a taxi sign. Currently, 72% of taxis are yellow colours
The drivers have to pay a tax equal to 6% of their theoretical revenue to the department of transport
Taxi-hailing apps can only work with license drivers and require to share data with the authorities
In July 2016, the government has imposed 8% value-added tax on electronic goods and services provided by global internet giants including Uber starting in 2017
− Foreign companies have no obligation to create a legal entity in Russia and can pay the tax via local partners
− Uber has directed its Russian drivers be registered as legal entities or individual entrepreneurs, and that the responsibility for the settlement of the tax be specified in their contract with Uber N.V., which is registered in the Netherlands
Europe
Vietnam
In April 2014, the government released the guidelines for ride-selling application. As per the guidelines, technology companies required to sign contracts exclusively with local commercial transport companies that comply with regulations such as identifying cars with official registrations and logos, and equipping them with tracking devices
However, the implementation of the rules are still pending. The government is considering to revamp the policy
Japan
There is no separate regulation for ride-hailing companies in Japan. The operators need to follow the same rules and regulations, applicable for conventional taxis
Taiwan
As per Taiwanese Laws, taxi companies must be domestically owned and operated. The government has refused to propose a separate act for technology firms. Uber is facing lots of problem in Taiwan since the commencement of operation in 2013
Uber is registered in Taiwan as an information management company as it allows an foreign company to operate in Taiwan, but the government sees it as a transportation services company. The company stopped the operation in February 2017
South Korea
In Seoul, the government banned Uber and other App based companies. Seoul Metropolitan Government launched its own taxi app for registered cabs. It has currently allow KakaoTaxi to provide taxi booking service
Conclusion
The article is providing the glimpse of regulation around the globe. It does not want to convey if any regulation is good or bad. All authorities around the globe enacted different laws based on local conditions. Valoriser Consultants can help the city or authority or operators for policy advocacy work.