Why government regulation of Uber and GrabCar will not help us

Additionally, it’s not clear to me whether allowing cash transactions differentiates GrabCar to a significant enough degree from its competitor. Ride-sharing services are always going to be upper- and middle-class-only solutions in the developing world, in the same way that Starbucks is a luxury available only to the top two brackets of our population. The people who can afford to spend 300 pesos a day on transportation tend to come from the same 3–5% of the population who are most likely to have credit cards and mobile data plans. No one in the C, D, and E economic brackets can afford to spend over 30% of their household income on transportation  – that’s over 90% of the country.

The effect of this economic gap is interesting when you compare it to the ride-sharing situation in San Francisco. According to my ride history, I took over 3 dozen Ubers while visiting the Bay Area, and in most cases, the driver owned their vehicle. In the Philippines, the majority of Uber and GrabCar drivers are employees of the car’s owners, many of whom are subject to the same “boundary” agreements as regular taxi drivers.

One of my recent GrabCar drivers related a very familiar set of daily requirements from his employer: Once the car had accrued 2,500 pesos in earnings for the day, the driver would earn 90 pesos for each booking above that. In practice, he would make about 500–800 pesos per day over a 10-hour, 18-trip shift. If the 2500-peso minimum isn’t reached however, the driver makes nothing.

As the government-imposed deadline for Uber’s licensing in the Philippines looms, my transportation situation and the livelihoods of thousands of car owners and drivers hang in the balance. On August 11, the LTFRB has declared that all Uber and GrabCar cars will be apprehended on the road if the service and the operators aren’t properly licensed. (READ: LTFRB to start unregistered Uber, GrabCar clampdown)

I am reminded of the oft-repeated joke that “licensing” is what it’s called when a government “takes away your right to do something and then sells it back to you.” Admittedly it’s a reductive way to look at the situation, but it’s hard to beat such a colourful soundbite.

Under the new licensing plan, platforms like Uber and GrabCar will need to apply to be Transport Network Companies (TNCs), and their individual vehicle operators will have to apply to be franchisees. Both the networks and the individual operators will need to register their businesses with the BIR. Accompanying these announcements was some rhetoric about the government’s continued commitment to public commuter safety, buses-falling-off-skyways and MRTs-crashing-through-barriers notwithstanding. (READ: LTFRB to Uber: No one is above the law

Uber’s legal status has been questioned a number of times in the 59 countries it currently operates in. In May 2015, Italy banned the UberPop service as being “unfairly competitive.” In June 2015, police arrested the Uber country directors for France and charged them with “enabling taxi-driving by nonprofessional drivers, among other crimes of entrepreneurship.”

The $50B company seems more than capable of defending itself however, as their recent campaign and resulting victory against New York Mayor Bill de Blasio indicates.

On the west coast, meanwhile, there’s an ongoing debate about whether Uber drivers are in fact employees of the company and thus entitled to health insurance and other benefits. To your average Filipino, the notion seems almost quaint — the regular taxi fleet operators here aren’t exactly renowned for giving their drivers any employee benefits.

At the heart of all this is the notion that traditional industry is being disrupted by technology, and regulation is racing to keep up with innovation. The same thing happened to information and entertainment in the late 90's and early 2000’s respectively, and is currently happening in the finance sector with the cryptocurrency revolution. There’s no question that ride-sharing solutions are providing compelling alternatives that are both environmentally-friendly and cost-effective, and it’s not clear whether these additional licensing requirements will make our respective Uber or GrabCar rides any safer than they already are. (READ: #CommuterWatch: 'Choosy' taxi drivers and other transport woes')

I don’t relish the idea of going back to driving myself through heavy traffic again every day, even if it were financially viable. Regulating the innovators only serves to equalize the playing field for the incumbents, and does nothing to improve the situation for citizens.

In the absence of ride-sharing options, should we all just go back to bribing cab drivers again? - Rappler.com 

Luis Buenaventura is a cofounder at Rebit.ph, a startup providing a cheaper money-transfer solution for the $27B Philippine remittance industry. His writing on Bitcoin and its impact on remittances and mobile money has been featured on Techcrunch, The Next Web, and Tech in Asia.

This piece is originally posted in the author's blog and was published with permission from the author.