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Opening Speech by Senior Minister of State for Transport Dr Janil Puthucheary on Second Reading of Point-to-Point Passenger Transport Industry Bill 2019

06 Aug 2019 In Parliament

1.     Mr Speaker, on behalf of the Minister for Transport, I beg to move, “That the Bill be now read a second time”.

2.     A few months ago, the Land Transport Authority (LTA) launched the latest Land Transport Masterplan (LTMP) outlining our vision for a well-connected and convenient land transport network by 2040. Taxis and private hire cars (PHCs) are very much part of this vision and complement our bus and MRT networks. Today, about 6% of all journeys are completed on taxis or PHCs, which make up the Point-to-Point Sector (or P2P sector for short).

Evolution of the P2P Sector

3.     In many other cities the introduction of PHC booking service operators has led to disruptions, to strikes, and protests by taxi drivers. Here in Singapore, the Government, operators and the driver associations have worked closely together to address the challenges that came about as a result of technological disruption and the emergence of new players. The regulatory framework has evolved gradually and smoothly, in partnership with our Tripartite colleagues. Today, we enjoy a P2P sector that is able to meet the needs of commuters and drivers, as well as our broader transport objectives, while also allowing innovation to thrive. This healthy balance is only possible with responsible operators, sensible commuters and safe drivers. And in addition, the active involvement of our colleagues from the Government Parliamentary Committee (GPC), led by Mr Sitoh Yih Pin and his deputy, Mr Ang Hin Kee.

4.     Prior to the entry of the ride-hail platforms into Singapore in 2013, P2P services were primarily delivered by 28,000 taxis. Taxi drivers would mostly cruise around or queue at taxi stands to look for and pick up passengers. These are what we call “street-hail trips”. This is in contrast to what we label “ride-hail trips”, where the ride is booked in advance. Prior to 2013 this booking was usually done by a phone call or a text message, and accounted for only a small proportion of rides. Long wait times and a lack of available taxis, especially during peak hours, were common complaints.

5.     The commuter experience has significantly improved. Today, there are about 20,000 taxis and 45,000 PHCs, providing many more P2P options and improved service standards.

a.     With the convenience and popularity of ride-hail applications, commuters have benefited. Today, more than two-thirds of all P2P trips are ride-hail trips, and 30% are carried out by taxis.

b.     The matching of demand and supply has also been enhanced through these ride-hail apps. As a result, commuters now enjoy shorter waiting times for both street-hail and ride-hail trips. For example, the waiting time for a taxi booking has fallen by about 2 minutes from 2016 to just under 7 minutes in 2018. Dynamic fares have also allowed better matching of supply and demand – with higher prices during peak hours, and also lower prices during off peak hours. This allows commuters to have a range of options at different price points.

c.     Commuters have also benefited as operators innovate to attract passengers, through pricing strategies, trip incentives and value-added services. There are even specialised services to meet different commuter needs – from families with young children to commuters with pets.

d.     Street-hail services will continue to have an important role, and  LTA’s data shows that commuters prefer street-hail services in areas with a higher concentration of commuters and taxis, such as the central areas and around Changi. Commuters also prefer street-hail services for shorter trips, as it is more efficient, perhaps, to street-hail a taxi than to wait for a booked ride.

e.     Almost all respondents in a recent Customer Satisfaction Survey were satisfied with P2P services.

6.     The increased efficiency of matching drivers with commuters has benefited drivers as well. Drivers have a higher chance of finding commuters and can also reduce the amount of time spent cruising without a passenger.

7.     All this demonstrates how market driven innovation can benefit commuters and drivers. Members can easily appreciate that if there were to be excessive regulations, this may compromise the current environment and the current situation. But it is also important, we believe, to appreciate that these benefits can also easily be lost if there is insufficient regulatory oversight. For example, operators may compromise commuter and driver safety at the expense of profits. Operators might also try to compete by ‘locking in’ drivers using exclusive contracts, which would affect market contestability, which in turn harms commuters by increasing prices.

8.     Mr Speaker, it is timely for us to review the regulatory framework for our P2P sector, to put in place legislation that will help to maintain the current balanced position we enjoy. This Bill has benefitted from extensive consultations with operators, drivers, the National Taxi Association, the National Private Hire Vehicles Association, members of the public, and the GPC. Their feedback, suggestions and active involvement have improved the Bill. The framework aims to protect the safety and interests of commuters and drivers, while facilitating an open and innovative P2P sector.

Overall Approach

9.     Sir, let me now outline our overall approach to regulating the sector.

10.    First, we will licence PHC booking service operators. Currently, LTA already regulates taxi operators under the Road Traffic Act (RTA), and third party taxi booking (TPB) service providers under the Third Party Taxi Booking Service Providers Act (TPB Act). Like taxi operators, PHC booking service operators have an equally important responsibility in ensuring commuter and driver safety in the course of their operations. The Bill will give LTA the necessary regulatory levers to ensure that the PHC booking service operators discharge these responsibilities. With this change, LTA will have regulatory oversight over all major P2P operators in Singapore.

11.    Second, we will regulate P2P operators based on whether they provide street-hail or ride-hail services. Currently, LTA has one set of regulations for taxi operators, which generally provide a mix of street-hail and ride-hail services, and another set of regulations for TPB service providers. However, street-hail and ride-hail services have different characteristics and need to be regulated differently. This will ensure that our regulations are fit for purpose. Given the growing proportion of ride-hail trips, it makes better sense to have one set of regulations for all street-hail services and a different set of regulations for all ride-hail services, regardless of the type of vehicle used. This means that taxi operators will be required under our new regulatory framework to hold separate licences for their street-hail and ride-hail services. PHC booking service operators and TPB service providers will be licensed as ride-hail service operators, and LTA will also be able to issue different sub-classes of street-hail and ride-hail service licences, such as for operators offering different types of services.

12.    So, if I may clarify, today, we already regulate the drivers through the TDVL and PDVL licence process; we already regulate the vehicles – there’s a taxi vehicle regulatory regime, a private hire car regulatory regime; and what this Bill sets out to do is now regulate the operators. But in regulating the operators, we are regulating them on the basis of a service that is provided, not on who the operator is.

P2P Operator Licensing Framework 

13.    Mr Speaker, let me now elaborate on the three key areas of the proposed licensing regime for operators that carry out P2P services using taxis and PHCs.

Licensing larger P2P service operators

14.    First, our licensing regime focuses on the larger operators, given the wider impact they have on commuters and drivers. This will also manage regulatory costs for smaller ride-hail service operators and will allow small, new and innovative services to emerge. Today, all taxi operators have a minimum fleet size requirement of 800 taxis to ensure that they can provide an adequate level of service to commuters. Moving forward, this requirement will continue to be imposed for street-hail service operators – no change.We will also licence all ride-hail service operators with 800 or more vehicles on their platform.

15.    Ride-hail service operators with less than 800 vehicles will be exempted from the need to obtain a licence. Nevertheless, we will continue to impose basic safety regulations on them to ensure commuter safety. These operators must ensure that their drivers and vehicles are appropriately licensed and insured. LTA will continue to have the powers to issue a suspension order under the Road Traffic Act to prohibit drivers from driving for these exempt ride-hail service operators if their participating drivers fail to meet this requirement. We will also continue to safeguard commuter safety via the separate licensing of drivers and vehicles.

16.    It will be an offence for any person to provide street-hail or ride-hail services without a licence or an exemption. If convicted, they may face a fine of up to $10,000, imprisonment of up to 6 months, or both. A further fine of up to $500 will be imposed for each day that the offence continues after conviction. It will also be an offence to drive for these illegal operators.

17.    The Bill has provisions for LTA to have regulatory oversight over the entire P2P sector. This includes the ability to regulate new business models, or P2P services involving new vehicle types. This will allow LTA to respond quickly and effectively to rapid technological and commercial trends in the sector.

Ensuring commuter safety

18.    Secondly, our licensing regime will require operators to ensure the safety of commuters and drivers. We will extend today’s safety-related regulations for taxi operators to all licensed ride-hail service operators. The need for enhanced safety measures is an area that industry stakeholders and members of the public agree is of critical importance. The Bill will give LTA the powers to set safety requirements on licensed operators.

a.     LTA will track the number of accidents and driver offences that occur when a driver carries out a trip for a particular operator. Operators whose drivers have committed too many accidents or offences can be penalised through regulatory sanctions. This is to ensure that operators play their part to encourage safe driving behaviour and reduce driver offences.

b.     Operators must also ensure that the vehicles used to provide P2P services are able to pass the requisite vehicle inspections and are road-worthy. This ensures that operators play their part to keep the vehicles they deploy well-maintained and serviceable, for the safety of commuters, drivers and other road users.

c.     The Bill also gives LTA powers to issue emergency directives to all P2P operators, including the licence-exempt service operators. For example, LTA will be able to prohibit operators from using vehicle models which are found to be defective, or those that pose safety risks.

An open and innovative market

19.    Thirdly, in regulating the P2P sector, we will keep the market open to support the development of innovative and accessible services. We have benefited from having an open P2P sector, with increased ride availability and improved service standards, and we should continue to allow market forces to drive service delivery and improvement. As the market has evolved, LTA will adopt a light regulatory approach towards service standards and will streamline regulatory requirements where possible. This will help to lower compliance costs.

20.    We do intend to prohibit operators from offering exclusive arrangements to “lock in” drivers that in effect prevent them from driving for other operators. This is because such arrangements make it difficult for new players to enter the market, and naturally favour incumbent operators. This is detrimental to driver and commuter interests. We will however make an exception for operators who directly employ drivers, as full-time employment is inherently exclusive.

Other regulations

21.    In line with our vision for an inclusive transport sector, we will ensure that P2P services continue to remain accessible to all commuters. For now, LTA will continue to require taxi companies to provide call booking services. This ensures that those who may not be comfortable with an online booking or an app, will continue to be able to book trips using a phone call.

22.    The Bill also includes other standard regulatory provisions such as requirements for operators to keep records, and to provide relevant information and data to LTA.

23.    Operators who fail to comply with the regulatory requirements will be liable for financial penalties, suspension or revocation of their licences.

Fare Regulations

24.    Mr Speaker, today, the Public Transport Council (or PTC) has regulations to standardise taxi fare structure, while leaving fare amounts deregulated. However, there are no such regulations for PHC fares. Fare evasion and overcharging for PHC trips are also not prohibited, unlike for taxi trips today. Given the rising proportion of trips by PHCs, we are amending the Public Transport Council Act (PTC Act) to give PTC the powers to extend today’s taxi fare regulatory approach to PHC fares. The amendments will empower PTC to safeguard commuter and driver interests in the area of taxi and PHC fare transparency in the following ways:

a.     First, for street-hail trips, there will be no changes to existing fare regulations. Street-hail service operators will continue to be required to charge metered fares for street-hail taxi trips, in accordance with the fare structure now set by PTC. This allows commuters to compare fares across taxi operators more easily.

b.     Secondly, for ride-hail trips, licensed ride-hail service operators can continue to offer metered fare trips using taxis as is the case today. Licensed ride-hail service operators will also be allowed to independently set flat fares for ride-hail trips using taxis and PHCs. The only requirement is that these flat fares for taxi and PHC bookings by licensed ride-hail service operators must be provided upfront to the commuters.

c.     We will allow licensed operators to adjust both metered and flat fares.

25.    In addition, we will amend the PTC Act such that offences of fare evasion and overcharging extend to PHC trips booked through licensed ride-hail service operators. This is to deter such behaviour to protect commuters and to protect drivers.

Miscellaneous Amendments to other Acts

26.    Lastly, the Bill makes related and consequential amendments to update provisions in certain Acts and to clarify our regulatory intent.

Conclusion

27.    Sir, this Bill sets out a forward looking and flexible regulatory framework for the regulation of P2P services and providers in Singapore. We will open licence applications for street-hail and ride-hail service operators in February 2020, and the new regulatory framework will commence in June 2020. This will help to facilitate an open market to support the development of responsive P2P services, while also providing sufficient regulatory oversight to protect the safety and interests of commuters and drivers. It is a necessary piece in our long term vision for a well-connected and convenient land transport network.

28.    I would like to take this opportunity to thank all the stakeholders who took the time and effort to contribute invaluable feedback during the consultation process – operators, drivers, the National Taxi Association, National Private Hire Vehicles Association, and members of the public. This feedback has allowed us to better understand commuter, driver and industry needs and has helped to shape a better P2P passenger transport industry bill.

29.    Mr Speaker, I beg to move.