April 26th marked the end of a public comment period on Article 103-1, also known as the “Uber Clause,” put forth by Taiwan’s Ministry of Transportation and Communications (MOTC).

As Uber’s fate hangs in the balance, thousands demonstrated before the Presidential Building. MOTC advocates a multipurpose taxi program; why are scholars decrying it as doomed to fail? As taxi and Uber drivers take to the streets in turn, how will Taiwan’s democracy protect the greater good?

The public comment period on the “Uber Clause” put forth by Taiwan’s MOTC ended this week. Uber’s fate hangs in the balance. Already, it feels as if the end has come.

On April 21st, Uber temporarily suspended service for six hours. The Platform Driver Alliance (網路叫車平台駕駛自救會), made up mostly of Uber drivers, rallied 5,000 vehicles and 10,000 protestors to march on Ketagalan Boulevard before the Presidential Building. An online petition asking the MOTC to revoke the “Uber Clause” was signed by 300,000 drivers and passengers of web-based ride-hailing services.

Former Transportation Minister Ho Chen Tan: MOTC’s Current Bill Unlikely to Pass

Moments before the demonstration, Former Transportation Minister Ho Chen Tan (賀陳旦) responded to questions from CommonWealth Magazine. He says the Uber debate has been deadlocked because it upsets the complex structure of the transportation industry, and there is no miracle cure.

“The current bill aims to create market segments based on trip distance. On the surface, it seems to give both sides something to work with. But the transportation industry is a public affair. Any law that is too costly to enforce is unlikely to succeed.”

The segmentation mentioned by Ho is the crux of the ongoing controversy. This is Article 103-1 of the Transportation Management Regulations (汽車運輸業管理規則), also called the “Uber Clause.” The MOTC amended its laws to divvy up the market between conventional taxis and rental vehicles, which now includes Uber. Rental services are required to charge for a minimum of a one-hour rental regardless of distance. At the end of each trip, the driver must return to the office before they can pick up the next customer.

Even supporters of the bill are highly critical of these minute regulations, which set very rigid guidelines for how drivers may operate.

Ho puts it bluntly: “In the age of the internet, no government can hope to use unilateral laws to stifle innovative services like Uber.”

In April of 2017, Uber made a triumphant return to Taiwan after being blocked from the island for two months. Uber did this by teaming up with vehicle rental services. Uber paid Cross-Border e-Commerce taxes and signed on hundreds of rental agencies, using them to act as legal entities which can purchase insurance and manage the drivers. Two years later, Uber has over ten thousand drivers and three million users in Taiwan.

Uber Taiwan General Manager Willy Wu (吳罡) has repeatedly stated, “We’ve complied with government regulations these couple of years, but two months ago, the MOTC changed their rules without explanation.” But in truth, Uber holds all the power in their dealings with vehicle rental services. They are responsible for recruiting drivers, matching rental agencies with vehicles, dispatching drivers, and offering discounts to passengers. They put on the airs of a car rental company while taking business from taxi companies. It was only a matter of time before the MOTC took action.

Taxi Policies That Made No One Happy

More than two years ago, in an attempt to resolve the Uber controversy, Taiwan’s digital minister Audrey Tang spearheaded the effort to create a multipurpose taxi program. “If Uber really leaves Taiwan, I will drive a multipurpose taxi,” said a young Uber driver we spoke to. From the passenger seat, he retrieves a dogeared copy of common exam questions for getting a “Taxi Driver Vocational License” (計程車駕駛人執業登記證). He’s just signed up for this exam. It is the requirement for operating a multipurpose taxi, but only 30% of applicants are accepted.

A multipurpose taxi is defined as a ride service in which the driver is not legally required to use a yellow taxi. They measure fare with a meter, but cannot pick up passengers on the street—the customer must use an app to contact them.

The low fare and limited market of passengers who use their app meant that those services were only viable in the busiest parts of Taiwan, such as the greater Taipei area and Kaohsiung. Only a little more than a thousand multipurpose taxis are in business. “Even yellow taxis don’t want this business, why should we do it?” Platform Driver Alliance spokesman Well Lee (李威爾) asks rhetorically.

Photo by Chien-Ying Chiu

Ironically, the multipurpose taxi program caused division within the ranks of conventional taxi drivers.

These drivers rely on fleet dispatchers to find passengers. The fleet takes a fixed cut of 10 Taiwan dollars per dispatch from conventional taxi drivers. But multipurpose taxis share a percentage of the total fare with the fleet, and so they are assigned the more lucrative, long-distance jobs, such as taking passengers to the airport. Needlessly to say, taxi drivers are not thrilled.

“Taxi drivers are upset, multipurpose taxi drivers are upset, and Uber drivers are upset. Every finger is pointed at the government. This could have been predicted three years ago,” says Samuel Hou (侯勝宗), Director of the Graduate Institute of Public Affairs and Social Innovation at Feng Chia University. He points out that the government has been dragging their feet on the Uber issue for almost three years now.

Three years of passing the buck has brought angry citizens back onto the streets of Taipei. Nothing was solved. Hou says the problem is the government has not learned to think about Uber in relation to the supply and demand of the national taxi economy, and from the consumers’ point of view.

Is There a Solution to the Uber Controversy?

Hou explains that in other parts of the world, licenses are issued per vehicle, so the number of licenses restrict the number of taxis. This helps to keep the supply side in check. Such systems are used in major cities such as New York and Tokyo.

Taiwan ostensibly has a limit of 100,000 taxi licenses. But in an effort to protect workers’ rights, the government allows well-behaved operators with no violations on record for six straight years to apply for personal licenses that are not bound by taxi license restrictions. This fundamentally unbalanced the market’s supply and demand.

According to the MOTC, in 2017, 120,000 taxi licenses were issued nationwide, but only around 87,000 taxis were in operation. Among these, 30% were operated by drivers with personal licenses. The policy to control licenses had become effectively meaningless.

As Uber and mass rapid transit become more popular, demand for taxi services has decreased, to the detriment of taxi drivers. Ubers are clean and convenient. A better experience for the passenger is their selling point. Car rental services want in on the Uber action, and so they recruit more and more drivers. As supply goes up, the salaries of individual drivers go down, and so discontent and conflict become the new norm.

Whether they drive taxis or Uber, these people are all fighting to keep their jobs. Hou says the only way to solve the Uber controversy once and for all is to elevate the discussion.

Taxi and Uber drivers belong to the same category of “professional drivers.” Without exception, such professionals should be required to undergo training, assigned to different price tiers, and allowed to withdraw from the market at their discretion.

“The MOTC is used to the conventional definition of the transportation industry, so they have a hard time pigeonholing Uber into the taxi or rental categories. Digital technology is evolving these two industries to the next level. This is a golden opportunity to approach this from a service industry’s perspective and remove bad practices from twenty or thirty years ago.”

“By putting the driver first, it’s a chance to elevate the profession, instead of making them fight each other for a chance to make a living,” Hou says.

Former Transportation Minister Ho Chen Tan adds that the government can regulate Uber through its taxes. The DMV will have complete overview of the drivers and their vehicles. Conventional taxi drivers may also be freed from the restriction of having to sign up with a fleet, giving them a better cut of the profit. “The two systems become one intertwined safety net for both sides.”

By focusing on people and having a clear view of the end goal, the crisis may still be resolved. In the end, passengers don’t care if the car they ride is called a taxi or Uber, they just want good service. A well-managed system relies on more than restrictions; it needs to create a positive feedback loop and encourage healthy competition. Only then can a compromise be reached for the greater good.

Have you read? More on Transportation policies in Taiwan:

♦ The Dawn of ‘Taiwan Taxi Drivers+’

♦ EasyCard – Your Ticket to a Cashless Life and Unlimited Travel

♦ Why Are Foreign Visitors Still Getting Lost on Taipei’s MRT System?

Translated by Jack C.

Edited by Sharon Tseng