The help taxi drivers need

I REFER to the report “We will give cabbies all the help” (The Star, Aug 31) on Transport Minister Anthony Loke’s statement about the government’s bid to assist cabbies to obtain loans to buy their own taxis.

Taxi drivers do deserve help but it would be counterproductive if the assistance given lures more drivers into the low-income trap. It would be better to show them how to earn higher income, and to do this, it is necessary to look at past failures to work out the help taxi drivers really need.

When the Land Public Transport Commission (SPAD) became operational in 2011, it decided not to issue new taxi permits as the market was flooded with taxis and there were too many drivers chasing too few passengers.

Earlier, the Commercial Vehicles Licensing Board had issued too many permits to both taxi companies and drivers. In 2009, taxi fares were raised and many new cab drivers paid several thousand ringgit each as deposit for taking delivery of a new vehicle from the taxi companies. They signed the rental purchase agreements without understanding the contract and commitment. A simple method of calculating the monthly instalments based on daily rates further added to the confusion.

Rental purchase is similar to hire purchase loans, with the rental of taxi permits, cost of third-party motor insurance and miscellaneous costs demanded as “benefits” by drivers embedded in them.

Interest charged for rental purchase is much higher compared to hire purchase loans from banks. This is to commensurate for the risks, such as no insurance cover for damage or loss of the taxi, late or defaulting on instalment payments, committing licensing offences for which taxi companies are jointly liable, or surrendering the taxis and walking away.

Unlike banks that may take loan defaulters to court, taxi companies use their resources to find other drivers willing to take over the used taxi at lower charges.

In April 2013, SPAD introduced Teksi 1Malaysia (TEKS1M) featuring the Proton Exora and later distributed 1,000 TEKS1M permits to individual drivers in the Klang Valley (697), Johor (251) and Penang (52).

However, the total number of taxi permits did not go up as the 1,000 TEKS1M permits were converted from those surrendered by taxi companies which had many unused permits and vehicles.

Taxi drivers and companies suffered when Uber was introduced here in 2014. MyTeksi app users swiftly switched to Uber, which offered a starting fare of RM1.50, RM0.55 per km and RM12 per hour while budget taxis were RM3, RM0.87 per km and RM17.14 per hour.

MyTeksi morphed into Grab and took Uber by the horns, offering similar or better benefits for both passengers and drivers. This culminated in Uber exiting from the South-East Asian operations in March this year.

In 2016, SPAD unveiled the Taxi Industry Transformation Programme (TITP) with 11 measures, which included granting individual permits to drivers exiting their rental purchase agreements, plus a RM5,000 cash grant each to help them purchase a new vehicle.

In the past, many taxi drivers with their own permits who did not qualify for hire purchase loans turned to taxi companies for financing. These rental purchase agreements did not include the cost of permit rental at around RM20 per day.

With more individual taxi permits being issued, many successful applicants were unable to obtain hire purchase loans to buy the vehicles and have appealed to the Transport Minister for help. However, helping drivers to buy new vehicles could be sentencing them to years of misery. Hence, it would be better for the Land Public Transport Agency (APAD) to conduct briefings on the estimated total monthly fares and costs of operating a taxi for those applying for taxi permits or hire purchase loans, or before signing rental purchase agreements with taxi companies.

A comparison should also be made with operating private vehicles using e-hailing apps, of which there are about 10 companies now. With many e-hailing apps using private vehicles competing fiercely with each other, taxi drivers will not stand a chance as their regulated fares are higher and street-hailing for taxis continue to decline.

The briefing for existing taxi drivers and wannabes should also talk about switching to driving buses and lorries, which provides a stable job and much higher income for those who are prepared to work as employees. There is an acute shortage of heavy commercial vehicle drivers, and taxi drivers who switch to driving these could easily earn between RM5,000 and RM8,000 per month, which is more than fresh graduates earn.