Why cabbies can’t settle debts to taxi firms

PETALING JAYA: In 2008, Kamarudin Mohd Hussain decided to upgrade his taxi and took a loan from Mara to buy a multi-purpose vehicle.

He’s still finding it hard to settle the debt.

Kamarudin, who heads a coalition of taxi and limousine drivers’ associations, estimates that more than half of the 80,000 cab drivers nationwide are in debt.

Taxi associations and a transport industry expert say it’s a problem associated with a financing structure that can see a driver bonded to a taxi company for up to a decade. The emergence of e-hailing services, they add, has made matters worse because it has resulted in the reduction of cabbies’ income.

The problem isn’t peculiar to Malaysia. The New York Times recently reported that some taxi drivers in New York were so overwhelmed by debt that they had been driven to suicide. Nearly a thousand cabbies in the city have filed for bankruptcy.

According to transport expert Goh Bok Yen, taxi companies often impose harsh terms when they give loans to drivers. Typically, a company will keep the ownership of the taxi licence and charge a driver an exorbitant daily rate on their loans. The charge can be as much as RM110 a day, some drivers say.

Goh said: “First, they have to recoup the amount. Then they will have to pay for fuel as well as maintenance. The remaining sum is their salary.”

He reckons that this means an indebted driver would have to collect at least RM300 worth of fares per day.

Kamarudin called such companies “bloodsuckers”, saying they would repossess taxis if drivers were to default on payments for a week, whereas banks would do so only if no payment were made in two months and 14 days.

Drivers whose cars were repossessed by taxi companies would be blacklisted and could not apply for new loans, he added.

But he holds the government responsible for “wrecking the industry” by allowing companies to do as they please.

KL Selangor Taxi Association secretary S Balakrishnan said the RM110-per-day repayment was typical.

He compared this to bank rates, noting that a bank would charge a monthly repayment rate of RM1,100 for a Proton car, which works out to less than RM40 a day.

Big Blue Taxi Facilities Sdn Bhd adviser Shamsubahrin Ismail said cab drivers should blame their bad financial management for their debt burdens.

“Whatever money they earn, they spend on the same day,” he told FMT.

Shamsubahrin defended the lending terms of cab companies, saying they were “very fair” and that a driver needed only to provide a guarantor to qualify for a loan.

He said the companies would suffer when taxi drivers defaulted on loan payments.

“Taxi companies are piling up liabilities,” he said, adding that Big Blue had yet to collect RM2 million in arrears.

Worse, he said, the cab companies could not take legal action “because they know the drivers cannot pay up.”