HONG KONG -- Ride-sharing giant Uber Technologies is reversing a plan to move its Asian-Pacific headquarters to Hong Kong because of the lack of government support.
Instead, Uber will keep Singapore as its regional hub "for the medium term."
The company had said in May it was ready to make Hong Kong its new regional hub on condition that it saw progress on local ride-sharing regulations. "Since then, we have seen strong public support for reform, but not the level of certainty from the government that we need," Uber said in a statement on Thursday, two months after the initial announcement.
While about 2 million people have used Uber in Hong Kong, ride-sharing remains in a legal gray area with little progress made in regulatory policy.
Over the past six years since Uber entered the city, dozens of its drivers have been arrested and prosecuted for driving passengers without a car-hire permit. The Hong Kong government insists a "valid hire car permit" -- usually referring to a taxi permit -- is needed for a private car to carry passengers.
Such permits cost 5 million Hong Kong dollars ($645,157) each in open auction, as the government has not issued new permits since 1998 to reduce traffic congestion and air pollution. Taxi drivers have long lobbied against Uber's service, because its "permit-free" model would give Uber drivers unfair advantages over local cabbies.
Despite the regulatory hurdles, Hong Kong is a strategically important market to Uber.
Uber sold its Southeast Asian operations to Grab in 2018. Moving to Hong Kong would allow it to be closer to its core markets including Japan and Taiwan. The city also saw the fastest recovery from the pandemic among Uber's Asian markets.
Uber has tried to engage the Hong Kong government in improving the regulatory framework in its favor for years but little progress has been made. Uber had hoped that by announcing its intention to move regional headquarters to Hong Kong and promising jobs and investments, local authorities would be enticed to legalize its share-riding services.
However, no change has been made to local regulations over the past months.
It is not clear if any formal dialogue has been held between Uber and the government. In a response to Nikkei Asian Review's inquiry on June 18, an Uber spokesperson said: "We are committed to working with the government and stakeholders here, so first and foremost we'll need to establish that conversation so we can find a solution together."
Additional reporting by Kentaro Iwamoto in Singapore.