Over the past week, the Department of Land Transport (DLT) has toughened its stance against major cab-hailing services, Uber and Grab Taxi, undertaking a series of "sting operations" to crack down on their drivers in the northern city of Chiang Mai and Bangkok.
As a result, authorities have nabbed drivers of the "unauthorised" services and slapped them with a fine of 2,000 baht each.
Transport Minister Arkhom Termpittayapaisith insisted mobile application use for hailing taxis is not the problem. The illegality is about the use of the wrong type of vehicle -- personal cars which are unauthorised to be used as taxis. The cab-hailing operators need to comply with laws in Thailand to ensure sufficient protection for passengers, especially in case of accidents, he said.
Mr Arkhom also brushed aside the use of Section 44 of the 2014 interim constitution to put a halt to Uber and Grab Taxi's services.
The use of mobile application-based cab-hailing services has become more common in the country where traditional taxi drivers have either priced themselves out of the market or provided poor service, ranging from a refusal to take customers to abusive behaviour. The unsatisfactory service and lack of technology-based convenience and safety of traditional taxi services have created a niche for the likes of Uber and Grab Taxi.
Today, the ride-hailing services have taken Thai cities by storm as they enable potential passengers to book a taxi via an application and estimate its arrival time and then sit without any hassle with the driver prior to reaching their destination without a glitch, most of the time. Passengers are more than satisfied with the quality of the service. For example, a tool that tracks their journey and lets them share it with friends makes them feel safe.
These businesses also help drivers, who take it on as a second job, to earn additional income, thus helping to increase economic activity.
The DLT can look at what other countries have pushed the likes of Uber to undertake. Uber has tried to get itself legalised in many cities including Hong Kong where it announced last month that it has signed a contract to provide third-party insurance coverage worth up to HK$100 million per occurrence of injury or death, the minimum required by law.
There are also other ways that ride-hailing operators such as Uber and Grab Taxi can legalise their operations. They can follow the practice of Airbnb, an online hospitality service, who has opted to cooperate with local authorities to pay taxes in order to be allowed to operate in certain countries. That decision was made after a few years of battling many local authorities in its attempts to legalise its business.
Cab-hailing operators like Uber and Grab have managed to make the lives of many commuters in Thailand easier, but their operations have also been skirting local laws. They need to seek solutions with the DLT on how to legalise their drivers' private cars and obtain permits for the drivers. Meanwhile, they can come up with measures that let themselves and their drivers pay corporate and personal income taxes.
As the dependence on technology rises, and traditional businesses are disrupted, the best way for any startup to try to survive is to comply with the local laws of the country in which they operate.
Meanwhile, governments of these countries including the Thai administration must not try to put an end to the growth potential that is being ushered in from the rise of these technologies. Instead, they need to find ways to promote and accommodate the potential growth of technology-based enterprises.