Get taxi-drivers out of low-income trap

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From Y.S. Chan, via email

Taxi drivers who quit the rental-purchase agreements, often described as the pajak model, are to be granted RM5,000 each for the purchase of new taxis. The RM60 million allocated allows 12,000 taxi drivers to benefit from this scheme. Similarly, Socso will provide a safety net for those eligible.

Those receiving benefits will no doubt be happy initially, but others not entitled will be left bitter, including large numbers of self-employed people like petty traders and hawkers.

Giving handouts have more ramifications than one can possibly imagine.

For example, very few people are aware that 57 per cent of all taxi permits in peninsular Malaysia are owned by individuals, and many of these permits are given out for rent, some together with the vehicle.

Drivers who rent such permits or taxis without a rental-purchase agreement would have difficulty showing evidence to qualify for the RM5,000 grant.

On the other hand, taxi companies and cooperatives have allowed thousands of people unable to obtain permits, or who do not qualify for one, to drive taxis.

Similarly, they have also provided vehicle financing to drivers with individual permits who are unable to obtain or qualify for bank loans.

The risks for financing taxis are much higher than private cars, as the third party cover preferred by nearly all taxi drivers does not insure the vehicle for accidental damage or theft.

Should the taxi be wrecked or stolen, the driver would only lose whatever deposit and installments paid. The rest would have to be borne by the taxi company.

A daily rate is used to calculate the monthly installments, which include the permit rental of RM500-RM600 a month and repayment for the loan with high interest.

Simple-minded taxi drivers would complain about the high ‘daily rental’ they are paying, without taking into account that it includes repayment for the loan as they get to own the vehicle.

They are customers of taxi companies, just like private car owners are for banks that provide hire-purchase financing.

Some have the audacity to demand EPF and SOCSO benefits from taxi companies and must be the only group of self-employed people to do so.

While the self-employed may voluntarily contribute to EPF, it remains to be seen how Socso can be extended to taxi drivers. What about the many other self-employed in the country?

It would be wiser to help taxi drivers get out, than remain, in a low-income trap. Intervention is needed to get them to change their ways. Many are too used to waiting and idling, which would get worse once services provided through ride-hailing apps are allowed to operate.

Although the majority may be too indisciplined to be employable, many could be trained to become bus or truck drivers and earn higher and more stable income. The road transport industry is acutely short of good drivers, and those professionally trained to operate expensive buses and trucks are highly paid.

However, those who drive taxis for side income, pocket money or pass time should be allowed to continue, as they serve a section of the population that does not bother to book a taxi.

Most passengers using their smartphones would choose ride-hailing than the dozen taxi apps available locally, simply because the former is cheaper than regulated taxi fares.

Yet we continue to hear ministers telling taxi drivers to switch to technology, and the public calling on cabbies to be competitive by improving their service.

The reality is that ride-hailing apps would always be more popular as long as their rates are lower, and drivers would automatically be at their best behaviour when passengers use mobile apps.

The same person operating a food stall at a fixed location and driving taxis part time can be a Jekyll and Hyde. Anyone who believes that training can make taxi drivers better would have to assume all our trained enforcement personnel have integrity.

The authorities and the public should stop expecting taxi drivers to behave when trained officers sometimes cannot. If technology could rein in taxi drivers effectively, it should also be used to monitor enforcement operations.

If an agency is sincere, the standard operating procedure should not allow unrecorded one-to-one interaction between enforcement officer and motorist.

Compelling private car drivers to obtain a public service vehicle licence or driver’s card is necessary to regulate ride-hailing services. Controlling the number of part-timers would be welcomed by those doing it fulltime, and by taxi drivers.

This is critical as altercations are likely to occur when more and more private car drivers are taking passengers away. Many taxi drivers are in a dilemma whether to make the switch.

Y.S. Chan is an FMT reader.

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