Mind the Gap | Hong Kong’s taxi monopoly deserves a shake up

The Hong Kong government is struggling to embrace the inevitable and allow Uber, and other ride-sharing apps, to operate legally on roads. It is important to remove the barriers against the industry- and, more importantly respond to ongoing public support for more (and better) transport alternatives.

The solution for every city facing Uber has mostly been the same - establish a new licensing category for app-based services, clarify the insurance and inspection requirements for ride-sharing vehicles. There is no good reason why those strategies can’t be applied here, too.

At some point this government must make a decision. There is no way around the fact that it will upset one of two groups: the public or the taxi industry.

I am sympathetic to the taxi industry’s position and their concerns about public safety and the need to ensure that Uber is properly regulated. But, regulation doesn’t mean regulating them out of existence. If Hong Kong’s taxi companies want to continue attacking Uber, they should compete with them on the road with improved service to meet customer needs.

By providing improved service and better meeting the needs of their customers they’ll be able to carve out a profitable portion of the overall market. But business as usual- Hong Kong style in which the supply of taxi plates is artificially constrained and competition blocked from entering the market, should no longer be an option.

Without a doubt this will be very bad news for taxi companies and license owners. The value in their taxi licenses will be decimated by any decision to allow Uber to operate legally. But they were never entitled to their business model like some inexorable universal rule. Taxi regulations should exist to protect public safety, not private interests. And even if the government could protect taxi licenses, their value will descend to zero in the long run.

The government ought to live up to its commitment to supporting new technology by overturning entrenched interests and adapting to disintermediation. Hong Kong business people love rent collecting through their sanctioned monopolies whether they are taxi licences or supermarkets. It’s a belief system perniciously rooted in self-entitlement, unapologetic selfishness and economic Darwinism. And although monopolies built Hong Kong, they have outlived their usefulness.