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Opinion

Southeast Asia must find the right balance in ride-hailing regulation

States should support free market and technology, not hinder innovation

The ride-hailing sector will continue to evolve.    © AP

Emerging technologies are transforming our economies in profound ways. However, regulating these quickly evolving business models and services can pose a challenge for governments.

On the one hand, imposing fewer restrictions on technology companies unleashes innovative models and synergies. This increases nations' global competitiveness and encourages innovation that enhances services and products for their citizens.

On the other hand, guarding public interests such as safety and ensuring a level playing field continues to be a crucial priority.

In the case of ride-hailing, regulators across the world are adopting different approaches, often guided by local context. Their success is linked to their agility in incorporating innovative business models and adapting to changing consumer demand. Failure to do so disrupts the free market's equilibrium and frustrates citizens.

Across regulators' diverse approaches, there are common aspects of best practice. First, focus on the consumers. This means creating a regulatory environment that allows consumers to gain access to more choices and enabling a free-market environment which can quickly respond to consumer needs.

Second, ensure a level playing field so that all players across traditional and ride-hailing models can have equal opportunities to access a powerful source of income.

Finally, allow space for innovation to flourish. The ride-hailing sector will continue to evolve in the years to come. Given the dynamic nature of this industry, adopting a "sandbox" approach, where regulators take as light a touch as possible regarding regulating new digital business models, allows regulators to learn and adapt in a controlled manner.

Singapore is a good example of a country finding the right balance between consumer protection and giving innovation room to breathe. With the initial entry of ride-hailing companies, the government decided -- as a testing phase -- to allow passengers to summon a private-hire car service through an app.

Once the ride-hailing industry had matured within the market, the government implemented more permanent regulations such as vocational licensing -- requiring training and tests for private-hire drivers -- and a sticker displayed on the windscreens of registered private-hire cars to allow for easier identification by authorities.

Again, after allowing sufficient time and space for industry developments to play out, the authorities then moved subsequently to harmonize regulations across both taxi and private hire car sectors with the recent Point-to-Point, or P2P, Passenger Transport bill.

Singapore is a example of a country finding the right balance between consumer protection and giving innovation room to breathe.   © Singapore Press/AP

Singapore's P2P Passenger Transport bill also takes a public-centered approach, by focusing on desired outcomes for passengers and drivers, instead of regulating specific features like fare structures.

The bill advocates for fare transparency, yet allows operators sufficient flexibility to determine fares based on free-market dynamics of demand and supply which aim to balance the needs of passengers and drivers.

It also serves to level the playing field for all players by prohibiting operators from making their drivers sign up to arrangements that would prevent them from driving for other services.

A gradual, stepwise approach to regulations like these has helped Singapore protect public interests with appropriate regulatory safeguards while not stymieing innovation from companies. Overall, this type of approach to regulation has helped the nation become the most economically competitive country in the world, according to the IMD World Competitiveness Ranking.

In Grab's home of Southeast Asia, markets such as Vietnam and Thailand have also started to define regulations around ride-hailing services. These countries are recognizing the benefits that ride-hailing can bring to their economies and citizens.

Having clear and defined regulations serves to give citizens as well as visitors to the country greater peace of mind when booking ride-hailing services, while drivers who depend on ride-hailing for their livelihoods are also empowered with greater financial security.

This motivates countries to take important steps in developing regulatory frameworks that will support their larger journey toward becoming digital economies, and signaling to the world that they are ready for even more innovation and digital businesses.

Platforms like Grab represent one of the biggest technology innovators in the region, and our technology can be deployed to help governments solve public problems.

Here is one example. This year, Grab partnered with urban planners and data scientists at UN Pulse Lab in Jakarta to analyze traffic patterns inferred from anonymized GPS ride data. This helped them to gain insights on how to better support national development goals by improving access to public and private transport services, particularly for those underserved populations.

There will continue to be challenges ahead. As the new business models of ride-hailing services look to coexist with traditional taxi businesses, it may be tempting to regulate both in a similar manner.

Traditional taxi drivers are in fact one of Grab's most critical partners, who have been using ride-hail jobs to supplement their street-hail income. However, a one-size-fits-all approach across traditional taxi and ride-hailing services will limit growth, community benefits and innovation for all stakeholders in the long term.

Regulations can ensure that all players integrate in a seamless public transport network geared toward serving the public's critical transportation needs.

Protecting public interests while still fostering a pro-business, pro-innovation environment, will require continued discussion. There are no easy or well-established regulatory answers, and we will have to adapt and innovate along the way. But for those countries that achieve the balance, the reward will be immense and transformative to their communities.

Lim Yew Heng is Regional Head of Public Affairs at Grab.

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