The Fair Trading Commission has embarked on a study that will assess the regulatory framework governing ride-sharing services.

The study aims to make recommendations on improving the efficiency of the transport sector and thereby provide a market-oriented solution with the promotion of sustainable development goals.

In its rationale for undertaking the study, the FTC hails the emergence of ride-sharing transportation as an “innovative alternative to the traditional mode of public transportation, providing a convenient platform for operators and passengers to organise short trips”.

“The more popular implementation of this business model is observed in Uber, InDrive and 876 On The Go. It is a useful addition to the suite of transportation options available to passengers. In fact, ride-sharing services offer a convenient way to address some of the issues in the public transportation sector, such as unreliable and inconvenient transportation options, communication gaps in the market, and a shortage of operators on some routes,” it continues.

However, the FTC points out that ride-sharing platforms operate outside the framework of the Transport Authority, which is the primary regulator of the public transportation sector.

As part of its purview, the Transport Authority sets “stipulated minimum standards” for passenger and driver safety, issues licences to operators, and establishes rates for route and hackney carriage operators. 

So, because ride-sharing operators are not guided by these standards, as are the traditional transportation operators, the FTC is calling for the intervention of the Government in the form of the Transport Authority. Such intervention, it said, should be reflected in regulations that result in “realising efficiencies” in the transport sector.

“For some time now, anecdotal evidence has suggested that the regulatory framework is inadequate to bring about the desired level of efficiency. For instance, there are transportation routes with an excess supply (resulting in congestion) while other routes have an excess demand (resulting in protracted waiting time),” the FTC explained.

This inefficiency, the competition watchdog contends, is due, at least in part, to the enforcement of certain regulatory measures as well as to difficulties in enforcing other regulatory measures.

“In particular, the enforcement of price caps and the difficulty of excluding unlicensed operators contribute to the excess supply of operators on the most lucrative routes and the excess demand for public transportation services on the least lucrative ones,” it expounds.

So, while the FTC recognises the potential benefits of ride-sharing platforms, should they continue to operate and expand in the transport sector without regulations, this may result in a more challenging environment for the Transport Authority.