Uber-Heated Battle as Mobile Apps Rattle Southeast Asia’s Taxis

Jakarta Globe, Bhavan Jaipragas, Oct 13, 2014

A smartphone displaying the Uber app of the timing and availability of taxis within
the area at Raffles place financial district in Singapore. (AFP Photo/Roslan Rahman)

Singapore. Southeast Asia’s notorious taxi market is undergoing a shakeout as Uber and homegrown mobile booking applications gain popularity in a region that has long endured inefficient cartels and price-gouging drivers.

San Francisco-based Uber, which allows customers to hail taxis or private vehicles via smartphones and pay with a credit card, is expanding rapidly in the region while fending off legal and regulatory challenges in various markets across the world.

Founded in 2009 and backed by Google Ventures, the investment arm of the Internet giant, Uber now operates in Malaysia, Indonesia, Thailand, the Philippines and Vietnam after first entering Southeast Asia in Singapore last year.

The firm, whose valuation was placed at $18.2 billion after an investment drive in June, employs smartphone and satellite technology to match taxi supply and demand.

A list of the world’s 10 worst cities to hail a taxi compiled by industry website tourism-review.com in March included Jakarta, Kuala Lumpur, Manila, Phnom Penh and Bangkok.

In Singapore, locals grumbled in pre-Uber days about vanishing taxis during peak periods, with cabbies refusing to pick up roadside passengers while waiting to earn extra fees from reservations made via antiquated phone-in booking systems.

In some cities, it was not uncommon for cabbies to demand exorbitant fares before taking passengers at peak periods, during heavy rain and floods, or at times of day when taxis are scarce.

Regulatory tangles

Uber executives say they welcome competition and are more than ready to go head to head with the likes of Malaysia-based GrabTaxi, Indonesia’s Blue Bird, and Easy Taxi, a regional player backed by German startup incubator Rocket Internet.

“As long as people are giving people options, that’s a good thing,” Michael Brown, Uber’s Southeast Asia general manager, told AFP in an interview.

“What makes Uber bristle is when special interests try to protect monopolies and keep new entrants and new competitors out,” said Brown, who is based in Singapore.

Despite threats to have it banned in Jakarta and Kuala Lumpur, Uber continues to operate there.

The firm is also facing legal threats in San Francisco and other major cities including New York and Frankfurt.

It is has also run into opposition in Seoul, where officials believe it should follow South Korean laws regulating taxi or rental car companies.

“Uber insists that it is acting as an online broker connecting drivers and customers rather than acting as a rental car company,” a Seoul city official told AFP.

“We do not agree with their characterization of their business.”

Authorities in Kuala Lumpur and Jakarta also say its car-hailing service makes use of private vehicles that do not comply with strict regulations that traditional taxi operators come under.

Uber has vehemently denied the accusations.

The firm does not own its own limousine or taxi fleet. Instead, its app allows customers to summon cars in its network, usually from a private car company.

It takes a cut of the total fare from the driver, which is paid electronically. Other taxi app players allow their members to take cash.

“Up to this day our principle remains that this taxi service is illegal,” Muhammad Akbar, head of Jakarta’s transport authority, told AFP.

In Malaysia, authorities say they began a crackdown on private cars using Uber on Oct. 1, fining drivers up to 10,000 ringgit ($3,070).

Giving people options

Commuters and market analysts say unyielding bureaucrats are not seeing how taxi apps like Uber have the potential to significantly improve the standard of living of city dwellers.

Jakarta resident Winda Rezita said the arrival of Uber in the Indonesian capital was a relief.

“When I am too lazy to drive in Jakarta’s heavy traffic jams or when there’s a long taxi queue at the mall, I just switch on the app,” the e-commerce business founder told AFP. “It’s so much better than waiting outside a building or standing in a long queue.”

Daphne Kasriel-Alexander, a consumer trends consultant at research firm Euromonitor International, said “inadequate and overburdened public transport systems” coupled with the emergence of more middle-class consumers have boosted the usage of taxi-hailing apps in Southeast Asia.

Expansion plans

GrabTaxi, which first launched in Malaysia in 2012 and has since expanded to Singapore, the Philippines, Indonesia, Vietnam and Thailand, is aiming for further growth.

Unlike Uber, the firm, backed by Singapore state investment firm Temasek Holdings, has so far avoided regulatory difficulties.

Its app mainly matches customers with registered taxis. A recently launched function called GrabCar allows for booking of private vehicles just like Uber, but so far it has not been flagged by authorities.

“We’re the leading taxi booking app in Southeast Asia including Singapore, and we are well-positioned to extend our lead,” Lim Kell Jay, GrabTaxi’s general manager in Singapore, told AFP.

The firm says it gets one taxi booking every two seconds in the whole region, with more than 300,000 people using it at least once a month.

Taxi drivers say they hope the intense rivalry between the apps will continue.

A Singaporean taxi driver who only wanted to be known as Tan said his revenue has increased by 20 to 30 percent since he signed up with UberTaxi last month.

The service connects Uber users to registered taxis, just like rival GrabTaxi.

“With the apps like Uber, it’s like a win-win. You (passengers) wait around less, and we drivers don’t have to roam around hunting for passengers, saving time and petrol,” he told AFP.

Agence France Presse

Related Article:

Four Uberpop taxi drivers arrested, face fines of up to €4,200