Opinion | How Asia’s gig economy can become a driver of economic innovation

The gig economy has the potential to transform lives across Asia, but only if regulators, insurers and platforms rise to the moment

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Delivery drivers sit on electric scooters in Beijing on September 14, 2024. Photo: EPA-EFE

Published: 5:30am, 15 Jan 2025Updated: 5:43am, 15 Jan 2025

In the crowded streets of Jakarta, Kuala Lumpur and Manila, ride-hailing drivers navigate relentless traffic, carrying passengers and parcels that fuel Asia’s gig economy. These drivers, who are central to ride-hailing platforms, are emblematic of the sector’s promise of flexibility and opportunity.

Yet, beneath the surface lies a troubling reality. Stringent regulation, restrictive tax policies and insurance structures are weighing on the potential of this transformative industry. For the ride-hailing sector to thrive, policymakers must rethink outdated frameworks that cloud its future.

Take Nepal as a case in point. The current legal framework imposes a 70:30 ownership rule, requiring foreign entities to enter partnerships with Nepali stakeholders. This is done with the aim of safeguarding local interests, but it also stifles growth in the ride-hailing industry.

Foreign platforms face delays and obstacles in identifying suitable partners, which can derail investment. Bureaucratic hurdles also create uncertainty and discourage innovation. As neighbouring countries modernise investor-friendly policies, Nepal risks falling behind.

To remain competitive, Nepal must adopt regulatory reforms that are more in line with the needs of global investors. Policies promoting collaboration between international platforms and local businesses could stimulate economic growth and technological advancement.

Tax policies across Asia can be burdensome for gig workers. In India, drivers must pay both goods and services tax and income tax on their earnings, effectively double-taxing their already modest incomes. In some Southeast Asian countries, workers are taxed on gross earnings, ignoring essential costs such as fuel, maintenance and insurance. This erodes take-home pay and can push some drivers out of the industry altogether.