Taxi issues: It’s not so straightforward

By YS Chan

I refer to “How to make cabbies happy” (FMT, Apr 14). The writer may have more than 30 years’ experience in the transport industry and may have managed more than 100 consultancy projects, but the taxi trade is a different kettle of fish.

According to him, taxi problems are rooted in one issue: the taxi licensing system executed by the government through the Land Public Transport Commission (SPAD). Those confounded by the complexity of the taxi business should not perpetuate this misconception.

In 2009, I wrote “Giving permits to taxi drivers can’t solve major problems” in response to a piece written by the late Soo Ewe Jin, who inspired many with his indomitable spirit through his weekly column which ran from 2008 to 2016.

My first article, “Revise taxi fares to benefit all”, was published in 2007. The following year, I made a presentation to the Malaysia Productivity Centre on “Taxi Issues and Proposals”. From 2000 onwards, I drove premier and then budget taxis, and by 2009 had clocked over 500,000km.

At that point, I explained that it was true that many budget taxi drivers paid up to RM50 per day, but that was mainly for the car loan, under a “rental-purchase” agreement commonly known as the “pajak” system. Once the loan is settled, say after three years, the rate is reduced to RM18 per day, which I was paying in 2009.

With some incentives, payment dropped to an average of RM16.62 per day for the taxi permit rental and third-party insurance. Therefore, taxi drivers with their own permits saved less than RM18 per day plus lower interest charges for hire-purchase loans from banks.

In subsequent years, I pointed out that more than half of all taxi permits in Peninsular Malaysia were individually owned but many of which rented out to other drivers. In 2008, the Commercial Vehicle Licensing Board (CVLB) started to issue large numbers of permits to taxi companies and individuals, flooding the market by 2009.

Many taxi drivers I knew obtained permits for executive taxis as the metered rate was RM2 per km, compared to only 66 sen for budget taxis. But most of them could not obtain bank loans and had to pay high interest for financing from taxi companies.

Cabbies without their own permits only have themselves to blame. They either did not bother to apply, were underqualified or were latecomers. But no one was ever forced to pay several thousand ringgit as a downpayment to take delivery of a taxi or agreed to pay instalments over a few years.

Their complaints of high daily rental should not be taken at face value as many taxi drivers are a confused lot. I should know, having conducted training for over a thousand of them in Penang, Pangkor, Kuala Lumpur and Johor Bahru, including Teksi Wanita, Teksi 1Malaysia (TEKS1M) and hire car drivers.

In 2007, I proposed that the starting fare for budget taxis be increased from RM2 to RM3, 66 sen per km to RM1, and RM8 per hour to RM12. In 2009, the fare was revised to RM3, 87 sen per km and RM17.14 per hour respectively by CVLB.

In 2013, I proposed a 44% increase from 87 sen per km to RM1.25, and 40% increase from RM17.14 to RM24 per hour. In 2015, SPAD increased the rates to RM1.25 per km and RM25 per hour, and higher for TEKS1M and in Penang.

Interestingly, almost all taxi drivers were aware that the meter clocked 10 sen for every 115m or 21 seconds, but had no idea that the rates worked out to 87 sen per km or RM17.14 per hour. Few believed my proposal that SPAD could increase the rates by over 40% in 2015.

Some taxi drivers were deluded to the extent of asking for EPF and Socso benefits from taxi companies, forgetting they are customers and not employees.

Many taxi drivers are chatty, whether among themselves or with passengers. They used to wield great influence in the old days when information was scarce but today, people are mainly connected by social media, and the public has long treated taxi drivers with scorn.

But politicians from both sides continue to use them as pawns. Stoking the emotions of taxi drivers by calling the “pajak” system a form of “modern-day slavery” raised expectations and fuelled protests in recent years, and made some cabbies behave as if the world owes them a living.

In 2009, I would not have recommended that anyone who wished to raise a family drive a taxi. But it was great for retired people to keep active. In 2011, SPAD became operational and got it right from the start by freezing taxi permits as there were too many taxis and too few trips.

It managed to get a few taxi companies to surrender some of their un-utilised permits, which were converted and issued to the first batch of 1,000 lucky TEKS1M drivers who also received RM5,000 cash grant each for deposits on new Proton Exora taxis in 2014.

Before the advent of e-hailing apps in 2014, I recommended the SPAD conduct briefings for drivers who wished to drive taxis for a living, so that they were clear on what they were in for before paying the deposit to take delivery of a taxi.

In recent years, I pointed out the shortage of bus and lorry drivers, and recommended that young men drive trailers, as they could easily earn between RM3,000 and RM7,000 per month, far more than fresh graduates.

Taxi drivers could have seized the opportunities offered under the MyLesen Goods Driving Licence (GDL) programme conducted by the Road Transport Department, driving institutes and Association of Malaysia Hauliers.

But many taxi drivers are stubborn or prefer to hang on to their unrestricted lifestyle, even though the days are long gone when they used to enjoy a monopoly at taxi stands and train stations.

Those who were prepared to change and work hard have long since switched to driving Uber and Grab, while others moved on to other jobs and trades. Although there are 67,000 taxi drivers currently registered with SPAD, the actual number operating is much smaller.

Issuing taxi permits to individuals is not the solution as it would lure more people into a low-income trap. As far back as 2009, transport companies with foresight started to wind down their taxi businesses while others accumulated permits by obtaining them directly from CVLB and mopping up the market. The bigger they were, the more losses they are suffering now.

Uber’s entry to Malaysia in 2014 sounded the death knell of the once flourishing taxi business. Thousands of taxis have been returned, with drivers walking away and little that taxi companies can do.

But if private vehicles were returned or repossessed by banks, registered owners with outstanding loans would be hauled to court and declared bankrupt if the amount exceeded RM50,000.

Taxi companies are not all villains. They actually provide opportunities for those unable to obtain taxi permits or bank loans to earn a living driving taxis. Extrapolating the plight of ungrateful taxi drivers only leads to the wrong conclusion.

It was incorrect to state that “these taxi companies control the market via an operating system based on a ‘pajak’ system, under which honest and hardworking taxi drivers have to pay a high deposit and a daily rental for the taxis they drive, but which they do not own”.

The so-called daily rental is just a simple method to calculate monthly instalments. While driving a budget taxi from 2004 to 2010, I went to the taxi company 72 times to pay monthly instalments, and chose to sell my six-year old Iswara taxi to the same company for RM9,000.

YS Chan is an FMT reader.

The views expressed are those of the author and do not necessarily reflect those of FMT.

How to make cabbies happy