Ride-hailing taxi services welcome new regulations

Ride-hailing taxi services welcome new regulations

Passing of draft law that legalises the use of private vehicles as cabs will bring much-needed investment and improve customer experience

Vehicles that are currently registered as personal cars can double as taxis according to the new legislation.
Vehicles that are currently registered as personal cars can double as taxis according to the new legislation.

The government's approval of a draft ministerial regulation that allows the use of personal cars for ride-hailing taxi services via apps has highlighted the country's readiness for the sharing economy as the move is expected to trigger investment and competition in the segment.

The legislation, which is expected to be implemented in July, will likely increase competition in the ride-hailing business, which has been reeling in the wake of the pandemic.

Besides foreign players like Grab, Line Man and Estonia's Bolt, Thailand-based True Corp has also joined the foray with the True Ryde app.

The new regulation allows vehicles equipped with up to seven seats currently registered as personal cars to double as taxis.

OPEN FOR COMPETITION

Vehicles that are currently registered as personal cars can double as taxis according to the new legislation.

"This is the first legislation that legalises a sharing economy segment in Thailand, which is an important signal to invite more competition and investment from new players," said Suthikorn Kingkaew, a project leader at Thammasat University Research and Consultancy Institute.

"This is a good move and can be a sandbox for a new mindset for problem-solving. Work can be fine-tuned in line with the real ground situation."

According to Mr Suthikorn, rideshare fares should be flexible as this is a key benefit of the business where fares are based on supply and demand.

"This model will help us increase the supply of vehicles on rainy days and amid heavy traffic as people can use their personal cars to provide services to cater to increases in demand," he said.

However, he disagreed with the quota for drivers, which the government was earlier considering, saying that if the number of drivers becomes excessive, it would be unlikely that they get bookings and hence would refrain from providing services in line with market forces.

Under the legislation, personal cars registered as taxis for ride-hailing services are divided into small vehicles such as the Nissan March, Toyota Vios and Honda City, medium-sized vehicles such as the Toyota Altis and Honda Civic, and large vehicles including the Honda Accord and Toyota Fortuner.

Fares for rides provided by small and mid-sized vehicles are different from those of big vehicles.

For small and mid-sized vehicles, the service charge must not be more than 50 baht for the first two kilometres. For large vehicles, the fare is capped at 200 baht for the first two kilometres.

Mr Suthikorn said there should be three fare ranges based on vehicle size -- small, middle and large vehicles rather than just two.

"The important question is how to make the ride-hailing model sustainable," said Mr Suthikorn.

"At present, big players are investing in marketing campaigns with subsidies to attract customers. However, in the near future, they may choose reward programmes or subscription models to drive customer loyalty to their platform."

Mr Suthikorn said around 100,000 drivers are working both part-time and full time on different ride-hailing platforms. Meanwhile, more than half of almost 70,000 metred taxis are also using the apps to provide services.

CUSTOMER BENEFITS

Pawoot Pongvitayapanu, a tech pioneer and founder of e-marketplace Tarad.com, said the legislation will attract investment as this shows Thailand is open to the digital economy and the usage of digital payments is already strong in the country.

The move comes quite late as the market is now dominated by Grab and people are familiar with its ecosystem, he said.

Line Man's taxi service is a mid-sized player and Bolt is a newcomer.

According to Mr Pawoot, the legalisation of ride-hailing services would be a boon for consumers who can rest assured that only qualified drivers who have applied for a driving licence are registered after having their credentials verified.

Sumet Ongkittikul, research director for transportation and logistics policy at the Thailand Development Research Institute, said the government should give time for ride-hailing drivers to apply for public licences as the pandemic requires social distancing.

The fares for ride-hailing services must also match with traditional taxis, he added.

WELCOMING THE MOVE

The user interface of ride-hailing app Bolt.

Ireoluwa Obatoki, regional manager of Bolt, said the company "welcomes" the new regulation and is optimistic about the future of its services in the country.

"We're looking forward to making convenient and affordable urban transport available to more people in Thailand," he said.

"Bolt is a responsible company and we always strive to be compliant with local regulations. We're open to working with local authorities to help develop solutions that embrace competition and serve customers as well as the drivers."

Alejandro Osorio, country head of Grab Thailand, said his company would like to "thank" the transport ministry for pushing the policy forward.

"Such a service will not only benefit the public in terms of convenience, transparency in price upfront, and safety standards but also provide opportunities for Thais to earn extra income from existing assets such as a personal vehicle," he said.

He said the company is willing to cooperate with authorities in sharing learning, practices and information on ride-hailing services and experiences from other countries in which Grab operates.

"The company hopes that the price caps in the ride-hailing segment will allow room for dynamic pricing and surge pricing," Mr Osorio said.

"This is a key feature of ride-hailing services to be able to provide service for passengers as increasing the ride cost attracts more drivers to meet the high demand."

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