This news report was written on May. 6 by Joshua Lan & me.
The following article was written for a course that my friend Joshua and I take. In the end, this assignment was canceled. However, knowing this would be a great topic to cover, I decided to keep it and further expand on the issue here.
The Never-Ending Tug of War: The Constant Struggles of Uber in Taiwan
By Joshua Lan & Michael Chuang
April 29, 2019
MOTC Redrafts on Regulations, Causing Rising Disputes
After the Ministry of Transportation and Communications (MOTC) announced a draft amendment on Article 13-1 of “Regulations for Automobile Transportation Operators”, which complicates the working dynamic of the drivers of Uber, a United States ride-hailing company, and could potentially force a number of them to quit their job, about 1,000 Uber drivers went on a protest against MOTC’s decision in front of the presidential office, opposing Article 13-1 as well as stating that “no one should be left out.”
“The new regulations aren’t fixing the problem. If the general public prefers to take Uber instead of taxis, it’s the taxi operators who have to review the cause. Taiwan enjoys a free market that should not raise its bar or impose harsh regulations to protect one side from being competed by the other.” Said college freshman Xue Pei-Xuan who often takes Uber around Taipei City when asked about her thoughts towards the newly announced draft amendment.
Changes in the “Uber Clause”
“I don’t agree with the new faring system since it deprives us users of the right to choose. Taxi accidents and controversies keep rising and people are worried. Uber provides a better, safer, and cheaper alternative, and if consumers believe the price and safety are managed in this alternative, then it is unreasonable for the government to restrict this alternative.” Xue added.
Known as the “Uber clause”, the new regulation prohibits Uber drivers to drive around and pick up passengers randomly, pick up passengers without returning to the rental spot (garage) after each ride; or schedule shifts for rides. Besides, under the new law, minimum fares will be charged from 1 hour, instead of the dynamic pricing models in the past.
However, some support the drafted amendment and explained to us why, by doing so, the government is doing the right thing.
“I do agree that ‘rental cars should not drive around and wait for potential customer.’ Isn’t it the operating model of a taxi? So of course I agree with this amendment. However, changing the pricing system from the old flexible way to the minimum 1-hour fare is, in my opinion, intentionally putting Uber in hazard.” Said Wen-Yu Chuang, who often takes Uber to commute. “It’s only natural that the government do what its people want. But this new law requires a much more constructive reason in order to convince the general public [that it is impartial],” he added.
“I agree on the new regulations. Uber in European countries are registered as ‘transporting company’ while Uber Taiwan registered itself as a ‘rental car company’, then operating as a transporting company is, of course, against the law. Also, the minimum duration of renting a car has always been at least one hour in this country. MOTC is only reinforcing the existing law.” Sun Yu, who has been observing this issue since Uber entered Taiwan in 2013, said that the government should make the regulation clearer to the public to prevent unfair competition. He also asked, “Have you ever seen a HLC (和運租車) operator driving towards you in the street, asking if you need a ride? About 91% of the Uber partner operators possesses rental car license, which means the majority of Uber operators are rental car drivers instead of taxi drivers.”
Taxi Operators Express Concerns Towards New Ride-hailing Business Model
In fact, since Uber entered Taiwan in 2013 as a technology company, the new ride-hailing business model has provoked a backlash from the traditional taxi industry. Members from taxi workers alliance concern the lack of current regulations to rule such a new operating model. Taxi drivers also fear that such an impact from a potent business competitor could gravely harm their place in the Taiwanese market where they work on end to make a living.
Years of Negotiation Leads to No Consensus
In response to the controversy towards Uber, the government announced the investigation into the legality of Uber operating in Taiwan in July 2014. In order to legally operate in Taiwan, Uber needs to register as a taxi company, get insurance, and pay tax. Uber reiterated that the core of its business is not a taxi company but rather a technology company, and that they have been actively dealing with insurance and taxing issues, “before even when there were no structures under which we could be taxed”, Uber stated in their blog.
“It’s too apparent that who the government is sided with. Nevertheless, there’s no doubt that there would have been a competition much more severe and unfair between rental car and taxi industry if the government kept being inactive. I think that the government should get it together and categorize Uber as a passenger company (i.e. transportation company in some countries) like what some of the European countries do. [The government should] take those examples as references and sit down with all parties to find a win-win solution.” Yu Xin, a businesswoman who often takes Uber as well as taxis told the editor.
A Twist in the Government’s Decision After Uber’s Return
As the taxi industry’s opposition and complaint continue, and years of trilateral negotiation failing to reach a consensus, MOTC ruled that Uber was illegally operating their business in Taiwan and hence imposed an NT$100 million fine on the company in December 2016. Uber temporarily withdrew from the market and re-entered with a new business strategy the following year to “legally” operate in cooperation with the rental car and taxi agencies. However, this redrafted amendment issued by MOTC in 2019 brought another wave of fierce disputes between ride-hailing companies alike and the government onto the table.
Mixed Reactions from the Public After the New “Uber Clause” Initiated
The new regulations are viewed with mixed reactions by the public. Some who are in defense of Uber, state that the government isn’t keeping up with or embracing technology advancement that enhances living conditions for the people, but is closing the door on an alternative to taking taxis in favor of vested interest holders. Some others for the new regulations argued that Uber as a foreign rental car platform should comply with governmental rules in the first place, and that avoiding responsibilities and relevant regulations by registering as a technology company ought to be condemned.
Uber Will likely to Continue to Operate Under the New Law
Deputy Transportation Minister Wang Kwo-Tsai (王國材) reiterated that the MOTC has already proposed viable ways for Uber and Uber drivers to operate legally. Emilie Potvin, director of public policy at Uber, stated in an interview that they are yet unable to assess the company’s next step in Taiwan due to unclear policies from the Taiwanese government. However, she is pleased to see the government offering an olive branch. After this event, Uber is likely to continue in operation under the new law.