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Uber spat with Taiwan could force exit from market

Withdrawal would mark fresh setback for US ride-hailer in Asia

A street in Taipei. Uber has pulled out of Taiwan once before and faces new fare rules on ride-sharing. (Nikkei montage)

TAIPEI -- Uber Technologies says new regulations proposed by Taiwan could force the company to exit its most successful North Asian market, leaving it with a reduced presence in the region.

"We are seeing the government is changing the rules and we are not sure why," Emilie Potvin, Uber's head of policy for North Asia, told Nikkei Asian Review. "It becomes very difficult for our business to run properly."

The new rules announced in February by Taiwan's Ministry of Transportation and Communications would require Uber to charge hourly or daily fares instead of the current distance-based fare model, and ban Uber drivers from being hailed on the street. The rules are subject to a 60-day public comment period ending April 26.

With around 3 million registered users and more than 10,000 drivers offering most of its signature services, including Uber X, Uber Black, Uber Taxi and Uber Eats, Taiwan is one of the few Asian markets where Uber still operates.

The regulatory spat with Taiwan could also threaten an exchange program with Taiwan's Ministry of Science and Technology that sees local engineers sent to Uber's Silicon Valley headquarters to study the company's artificial intelligence technology. Plans to promote smart cities together with local governments in Taiwan could also be shelved.

"I think now everything is a question mark," Potvin said in a telephone interview on Monday. "If these regulations come into force, we will have to reconsider all these programs,'' Potvin said.

Uber sold its Southeast Asian business to Singapore-based Grab last year, and ceded the Chinese market to local ride-hailing leader Didi Chuxing in 2016. The only foreign ride-hailing company operating in Taiwan, it remains unclear if there would be any potential buyer for Uber's business there.

Uber has only a minor presence in Japan, South Korea and Hong Kong, where Uber has either a small number of users or limited services. In Japan, Uber Taxi operates in only six cities in Japan, and must collaborate with local taxi companies.

"We welcome Uber to operate in Taiwan, and the new rules are definitely not targeting the company," said Chen Wen-juei, chief of the Department of Railways and Highways, a division of the Ministry of Transportation and Communications.

Chen said Uber was free to work with local rental car or traditional taxi companies, but that different rules applied to each options and the government expected Uber to comply.

"Otherwise, it is not fair to taxis, as they are strictly regulated by the government in terms of the total number of vehicles and the charging rates, whereas Uber is not," Chen said.

Local cab drivers say Uber threatens their livelihood and argue that the ride-hailing behemoth should be subject to the same regulations as taxi companies.

Taiwan had 87,604 registered taxis with an average vacancy rate of 29.4% in 2017, according to the latest available Ministry of Transportation statistics. Taiwan's taxi drivers' monthly average income fell 3.3% to 46,045 New Taiwan dollars ($1,493) between 2015 and 2017, while monthly operating expenses increased 1.2% to NT$20,764, the data showed.

"Uber claims itself as a technology service provider, but what it actually does is the same as what taxi companies do in Taiwan, except it does not have to be regulated like us," Cheng Li-chia, president of Taipei Professional Drivers' Union, told Nikkei.

Uber has withdrawn from Taiwan once before, suspending services on the island in February 2017 for two months after the company was slapped with over $10 million in fines. Since returning to the market, Uber has partnered with around 200 local car rental companies instead of working directly with individual drivers.

Uber's struggles in Taiwan come as arch-rival Lyft is set to become the first U.S. ride-sharing company to go public on March 29.

Uber is also set to make an initial public offering in the U.S. this year, but the company declined to comment on details of the plan. The company said on Tuesday that it would spend $3.1 billion to buy Dubai-based rival Careem to help build its presence in the Middle East.

Potvin said she believes Uber can work together with Taiwan's taxi operators by sharing its technology with them rather setting up an "Uber versus taxis" confrontation.

"Uber hopes its voices can be heard by the government, and we want to work with the government,'' Potvin said. "We have to look at it very carefully and we have to make sure that it continues to make sense to be operating in Taiwan."

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