Grab is destroying the definition of a “taxi” and I am so glad

Apr 29, 2017 09.00AM |
 

by Daniel Yap

UBER and Grab are going to ruin commuting for Singapore, says The Straits Times. I have to wonder who put that idea in its head. The paper points to the astronomical growth of market share, the growth across vertical businesses, and the desire to “make money” (oh, please) as reasons why commuters may be “taken for a ride”.

But wait, why do these things make one cry foul? Why warn of a dire future? All’s fair in love and war and business. If there’s a legal and ethical way to upset the status quo then, incumbent or newcomer, it is there for anyone to exploit.

Taxi companies – outmoded, complacent, inflexible – failed to capitalize. Someone else did. Uber began in the United States in 2010, and came to Singapore in 2013. Three years is plenty of time to realise that the taxi industry is being shaken up worldwide. Yet the incumbents did nothing.

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Where previously fleet size was the ultimate proxy for market share, it is now no longer as big a factor as it once was. The new measure of “who is the biggest” is efficiency – efficiency that attracts customers, drivers, and investors.

We, the customers, feel served, so we patronise. We, the drivers, feel adequately rewarded, so we keep driving.

Perhaps it is a familiar struggle for the print news industry – new technology redefines the hows and whens of a business, incumbents struggle to adapt, and new powers come to the fore. There is plenty of empathy, even from me. But empathy is not a defence for a poor argument.

Grab’s profits (although it currently appears to have none) would be taxed in Singapore. Temasek is a major investor. Why should we be afraid that it is a Malaysian company? And it is not even unusual that foreign companies that repatriate profits are welcomed to Singapore with open arms and set up multi-billion-dollar operations here with special concessions.

Singapore is an open, globally-connected economy. Perhaps we should ask why our large, local companies do not innovate, and do not then export that innovation abroad to repatriate profits. Instead many of our local companies sit at home, comfortable on a cushion of profits and market dominance that holds them back from innovation. Until it is too late and the rug is pulled.

And perhaps the day will come when Uber and Grab become the new incumbents like Comfort and SMRT, and lose sight of making customers or drivers happy, and focus too much on making investors happy. But I am confident that even if that day should come, and fares go up unnecessarily, and customers are not well-served, that day another company will come up and pull the rug from under their feet. Grab and Uber are proof of that.

 

Featured image from Grab’s Facebook page.

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