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Ken Ip

What do you get when you mix outdated regulation, asset bubbles and an on-demand economy? In Hong Kong’s case, a taxi system on life support – clinging to the hope of million-dollar medallions (taxi licences) while app-based ride-hailing services quietly reshape the market.
The government has finally committed to regulating these ride-hailing platforms, promising a legal framework within the year. It has also launched a premium taxi fleet scheme, granting permission for a handful of operators to modernise and professionalise the industry. These are welcome steps.
But looming over the debate is a question no official wants to face head-on: what should Hong Kong do about its taxi licences – some of which were sold for more than HK$7 million (US$891,800) but are worth much less now?
Unsurprisingly, some licence holders are calling for a government buy-back. Proposals in the past have included rebuying taxi licences at auction prices, but there are more ambitious demands, and one estimate puts the cost of buying back all 18,000 licences at tens of billions of Hong Kong dollars. One recent proposal is for the government to repurchase the licences at HK$5 million each, despite market resale prices having fallen below HK$2 million.
The answer? Absolutely not.
Let’s be clear – a taxi licence is not a government bond nor a retirement plan. It’s a business permit. Somewhere along the line, speculation hijacked what should have been a regulatory instrument. What was meant to certify public service providers became a prized asset class for investors. That might sting for some, but markets rise and fall. No one bails out a corner shop because a mall opens nearby. Why should it be different for taxi licences?


Calls for a government buy-back rest on the myth that the state owes taxi owners a painless exit. It doesn’t. The risk was baked into the cake the moment people treated taxi plates as property assets rather than regulatory instruments.
Similar challenges have unfolded elsewhere, where taxi licence prices had soared before the authorities legalised ride-hailing platforms and plummeted afterwards. Many owners recovered only a fraction of their original investment. There were no government bailouts – nor should there have been.
On the other hand, passengers have voted with their thumbs. Alternative platforms – typically app-based and cashless – have grown in popularity. People like being able to rate their rides, track their drivers and pay by card. That doesn’t mean traditional taxis are obsolete. But it does mean the bar has shifted.
The government knows this, which makes the premium taxi initiative so critical. The plan aims to overhaul a fragmented, outdated system by introducing centralised operations, clear performance standards, technological integration and transparency. The goal is to help taxis compete with ride-hailing apps not just on price but on customer experience and convenience.
One approved fleet was launched earlier this year and the other four approved operators are racing to launch by midyear, though logistical challenges have already emerged.

Meanwhile, the ride-hailing platforms have shown a willingness to engage constructively. They have avoided pushing for taxi licence buyouts, recognising that trying to “buy legitimacy” would be counterproductive. Instead, they propose models used in places like Singapore and Australia, where ride-hailing platforms pay a per-trip levy and the funds help support taxi drivers. This kind of pragmatic, dynamic regulation that balances innovation with incumbent interests is worth exploring.
The so-called rivalry between taxis and ride-hailing cars is increasingly a false dichotomy. Many taxi drivers accept bookings through ride-hailing apps or run their own versions of pre-booking services. The market is no longer a winner-takes-all scenario.
At its heart, this conflict reflects two world views. One sees transport as a tightly regulated utility, with limited licences maintaining order and quality. The other embraces mobility as a digital marketplace where users and drivers interact freely and adapt rapidly. Hong Kong is trying to have both – and it might just work if nostalgia doesn’t stand in the way.
For decades, taxi licences in Hong Kong were a form of currency. But their high entry cost created perverse incentives: operators cut corners to protect margins; leasing fees soared, leaving many drivers earning less than the minimum wage; and service standards slipped. These are structural problems, not ones that can be fixed simply by adjusting fare tables or tweaking meters.




The government’s best move is clear: push forward decisively. Create a fair and transparent regulatory regime for all ride-hailing services. Let competition drive innovation and service quality. At the same time, empower taxi operators to modernise by providing subsidies for technology upgrades and fleet renewal – but do not bail out speculative licence holders.
If some investors lose money on their plates, so be it. That is capitalism. What matters is not the price of a medallion, but whether passengers can reliably get from Causeway Bay to Kowloon Tong without hassle or being overcharged. The future of transport in a global city like Hong Kong depends on user experience, safety and efficiency – not on preserving the inflated paper values of yesterday’s assets.
Ultimately, public transport exists for the public. The city deserves a system reflecting how people get around today – not how they did 20 years ago. Hong Kong has a chance to get this right. But only if it stops protecting the past and starts building the future.


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No way should Hong Kong bail out taxi licence holders

Taxis queue up to pick up passengers at Hong Kong International Airport in Chek Lap Kok on February 19. Photo: Sun Yeung

The taxi platform Joie, the first of the premium fleets to launch in Hong Kong, had a rocky start. Photo: SCMP Picture

Hong Kong needs route for taxis, ride-hailing firms to co-exist: lawmakers

The number of taxi licences has remained constant at 18,138 since the government stopped issuing them in 1994.  Photo: Jelly Tse

The taxi trade has been calling for a crackdown on unregulated ride-hailing services. Photo: Edmond So

Chief Executive John Lee has dismissed the idea of the government buying back taxi licences. Photo: Dickson Lee

Hong Kong taxi drivers should learn from negative feedback: John Lee

More than 30 disgruntled taxi drivers held a demonstration on May 9 outside government headquarters and petitioned for tougher action against illegal ride-hailing services. Photo: Edmond So

Chief Executive John Lee has emphasised the government’s determination to legalise and regulate ride-hailing services in the city. Photo: Sun Yeung

Hong Kong can support taxi sector by using levies to create fund: Uber executive

An Uber taxi waits for passengers in Tsim Sha Tsui. Uber’s Andrew Byrne said Hong Kong could learn from Australia’s A$1.2 levy on ride-hailing and taxi services to compensate cabbies. Photo: Jelly Tse

Andrew Byrne, Uber’s global head of public policy, has that Uber and the city’s taxis can not only coexist but work together on the same online platform under the coming regulatory regime. Photo: Jonathan Wong

Hong Kong passes bill to launch electronic driving licences in September

Lawmakers have urged authorities to allow drivers time to adapt to the new system. Photo: Edmond So

Secretary for Transport and Logistics Mable Chan has said electronic driving licences will be launched in mid-September. Photo: Sun Yeung

Hong Kong leader rejects taxi licence buy-back amid ‘irreversible’ ride-hailing trend

Taxi industry leaders earlier proposed that the government repurchase licences that have depreciated due to competition from online ride-hailing services. Photo: May Tse

Chief Executive John Lee has cited the “exclusive privileges” of taxi licences in response to criticism from industry leaders regarding its depreciation in recent months. Photo: Dickson Lee

Opinion

Hong Kong Opinion

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Hong Kong

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Society

Their cause was lost the moment they treated a public transport permit as a tradeable asset. Government is right to focus on public interest


Their cause was lost the moment they treated a public transport permit as a tradeable asset. Government is right to focus on public interest.


Hong Kong transport

Hong Kong taxis

Uber

Future of transport

Singapore

Australia

Regulation

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Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


No way should Hong Kong bail out taxi licence holders

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Their cause was lost the moment they treated a public transport permit as a tradeable asset. Government is right to focus on public interest

Their cause was lost the moment they treated a public transport permit as a tradeable asset. Government is right to focus on public interest