Should Thailand legalise ride-hailing?

Thailand is the last major country in Southeast Asia where ride-hailing remains illegal, and that might change very soon.

The optimism amongst the ride-hailing players was evident since campaigning for this year’s election started late last year. Many of the parties, directly and indirectly, sent out the message that they were pro-legalisation of ride-hailing apps. Bhumjaithai even made it explicit in its campaign pledges. 

Before the elections, a veteran VC friend in Bangkok told me that whoever wins, and especially if the incumbent government wins, the legalisation of ride-hailing and pot seems inevitable. 

Winning more than 10% of the seats in the parliament, Bhumjaithai joined the coalition government and obtained the portfolio of Ministry of Transport for its secretary general Saksiam Chidchob. 

Perhaps expecting this to happen anyway, some major Thai businesses are already investing in or working with ride-hailing players. Last year, Kasikorn Bank (or KBank), one of the biggest in Thailand, invested U$50 million into Grab; and recently Siam Commercial Bank made an investment of undisclosed amount into GoJek. 

A few movements happened the last couple of weeks since Chidchob assumed office. First, he was fully briefed about the key subjects and projects, including the legal status of ride-hailing; second, about 30 taxi drivers staged a protest in front of the land transportation department. 

A touchy subject, but unavoidable outcome 

When some of our team members were working at Easy Taxi, Thailand used to be one of the top markets, for the simple fact that the demand is huge and many did not trust the taxi drivers. Our colleagues used to have lengthy discussions with the regulators as the subject of legalisation was apparently not easy. 

Since both Easy Taxi and Uber threw in the towel, Grab, which has been operating since 2013, is undoubtedly the dominant player there. Line and GoJek’s Get are two other contenders for the super app in Thailand. 

The legalisation has indeed been a touchy subject – as many representatives of the 100,000 regular taxi drivers are against it, while much of the city’s population already use ride-hailing apps on a daily basis and enjoy their convenience. 

However, it is almost inevitable that legalisation will happen. Dr Surachet Pravinvongvuth, the former Assistant Professor in transportation engineering at Thailand’s Asian Institute of Technology who has now joined the Parliament, agrees, “legalisation of ride-hailing will come eventually, and sooner rather than later”.

In the early days of this sector, when things were not exactly clear, it was OK to wait and see. However, we are not in the early days of the sector anymore. It is a relatively mature industry impacting millions and with a considerable amount of money exchanging hands. 

Excluding something that is so prevalent in the country’s daily life from its legal framework creates problems, and leaves the drivers and passengers unprotected. And even though the services remain technically illegal, enforcing is impossible. In addition, Professor Surachet Pravinvongvuth mentions that the government is pushing for huge investment into transportation infrastructures but many of them are redundant and the ridership is way over-estimated. It is too costly but that is what the government wants to spend tax money.

Especially when all the major countries have already legalised ride-hailing, with many advancing on the legal framework that accommodates both taxi and ride-hailing services. 

It won’t be perfect from day one

However, the issue is not binary – legal or illegal. Many details would need to be worked out, including the regulatory framework, the logistics for licensing and inspection, etc. These will probably be carried out in phases – as it has been in many countries, including Singapore. 

At the same time, the plight of the taxi drivers whose livelihoods have been impacted should not be ignored as well. The issues include competition, price control and many more. For example, the taxi fare in Bangkok has not been reviewed for decades, resulting in many drivers taking cheating means to earn more income. 

A compromise could and should be found – and the irony is, legalising ride-hailing makes it easier for the authorities to find a way to level the playing field.