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Japan-Update

Uber runs smack into Japan's wall of red tape

US ride-hailing juggernaut out in the middle of nowhere

A driver for Uber's limited service in Kyoto.

TOKYO -- A year since Uber Technologies began limited service in a sparsely populated area of Kyoto, locals rave even as regulatory barriers render a national rollout only a distant prospect.

"I felt bad about asking my daughter and relatives to drive me around," an 85-year-old in Tango, Kyoto Prefecture, said.

She had little choice but to rely on them since 2008, when the taxi company abandoned the town of roughly 5,400. This all changed with Uber's arrival. The woman and her husband use a service from Uber and a partner twice a month to go to the doctor in a neighboring town.

Uber's Tango offering differs markedly from the ride-hailing service that has made the American company famous around the world. Uber's dispatching system sends out drivers from a local nonprofit organization in their own cars. The drivers charge around half as much as a taxi, with Uber taking a cut as a commission.

The service was used an average more than 60 times a month in its first year, according to Uber and the nonprofit. The total distance driven reached 6,754km.

"We were not sure how the service would be used, but we have learned a lot," Masami Takahashi, president of Uber's Japanese arm, said on the anniversary Friday.

With more than 40% of Tango's residents aged 65 or older, rides can be booked by phone. And cash is accepted, since this demographic generally does not use credit cards.

"We have received inquiries from other municipalities," Takahashi said. Uber began a pilot project last August in Nakatonbetsu in the northernmost Japanese prefecture of Hokkaido.

But a year since the launch of the service in Tango, red tape still holds the company back from going national. A fare-charging driver must hold a professional driver's license under Japanese law, for example. Uber has been able to offer ride service using nonprofessional drivers only in Tango and Nakatonbetsu under a special dispensation from the Ministry of Land, Infrastructure, Transport and Tourism.

Amid the worldwide rise of the sharing economy, Japan has been slow to get with the program. A report submitted Tuesday to Prime Minister Shinzo Abe by the Regulatory Reform Promotion Council offered a host of recommendations -- but not on how to deregulate ride-hailing.

For now, Uber's operations in Japan are restricted to the two rural pilot projects, along with meal delivery and car service in limited areas. Broad availability of its mainline ride-hailing service will likely have to wait.

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