Written Reply by Minister for Transport Khaw Boon Wan to Parliamentary Question on Structure of Rental Contracts for Taxis, Private Hire Cars and Limousines

Assoc Prof Walter Theseira asked the Minister for Transport

a.     whether the Ministry has studied the structure of rental contracts for taxis, private-hire cars and limousines, in particular (i) the duration of such contracts (ii) rental fees charged and (iii) penalties for early termination; 

b.     whether rental contracts expose hirers to excessive business risk in the event of sustained reductions in demand such as that from the COVID-19 situation; and 

c.     whether the industry can be restructured to ensure hirers have more flexible rental arrangements and risk is distributed more equitably.

Reply by Minister for Transport Khaw Boon Wan:

1.     There is a wide range of rental contracts among more than a thousand fleet owners in the point-to-point passenger transport (P2P) rental market. This provides drivers with a range of choices, with varying durations, rates and conditions that they can choose from based on their needs. Some prefer short-term contracts with higher rental rates so that they can exit the market quickly, others prefer longer-term contracts to enjoy lower rental rates and loyalty bonuses, but which come with penalties for early termination. Some drivers are employed by P2P operators. 

2.     The current situation caused by COVID-19 is unprecedented. Drivers face a sudden and significant reduction in their takings, and those who have committed to the P2P industry for the long term will be especially concerned about their livelihoods. That is why the Government has introduced the Special Relief Fund (SRF) and the Self-Employed Person Income Relief Scheme (SIRS). Under the SRF, active drivers will receive the Government's contribution of $300 per month per vehicle for 7.5 months, on top of the additional contributions from taxi and PHC operators. Under the SIRS, eligible drivers will receive payouts of $1,000 per month for a period of 9 months. 

3.     The financial status of taxi operators and car rental companies have also been severely affected by the pandemic. Despite these challenges, the companies have initiated significant rental reductions to help defray drivers' costs and sustain their livelihoods. They have also exercised flexibility in addressing rental arrears or the premature return of vehicles. 

4.     Even as we address the immediate challenges, it is important that we continue to take a long-term view that allows the rental market for P2P vehicles to remain competitive and responsive to drivers' needs