Malaysia’s strict e-hailing rules come into effect today, price hikes and longer waiting time anticipated

July 12 is the deadline after which actions would be taken against those who fail to comply.

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As of today, all ride-hailing drivers in Malaysia must meet the requirements set by the country’s transport ministry.

In order to qualify as an e-hailing driver in Malaysia, in addition to the regular background check and medical screening, individuals now also need to have a Public Service Vehicle (PSV) licence, passenger insurance, a visible sticker on the vehicle indicating that it’s being used for ride-hailing, and an e-hailing permit (EVP) from the Land Public Transport Agency (APAD).

While the transport ministry and Road Transport Department (JPJ) lifted two ride-hailing rules in May, the industry remains heavily regulated. For example, the vehicle in use must be less than three years old with older cars needing to pass a technical inspection.

The country’s dominant ride-hailing operator, Grab released a statement earlier this week warning users that there might be longer waiting time as the new e-hailing regulations come into effect from July 12.

Problems obtaining the Public Service Vehicle license 

The major requirement of the e-hailing regulations is for all drivers to obtain a PSV license. The transport ministry implemented this regulation in a bid to level the playing field for traditional taxi drivers in Malaysia, but the move was not well-received in the ride-hailing industry.

The regulation resulted in backlash from drivers, many of whom lodged complaints with the Malaysia E-Hailaing Drivers Association (MeHDA) hoping that the Transport Ministry would not enforce it.

The estimated cost required to obtain the license is MYR 750 (USD 182), which includes MYR 110 for the EVP, MYR 220 for the mandatory training course, MYR 20 for the standard health checkup, as well as MYR 400 for the annual insurance charge. Car owners whose vehicles are older than three years need to send their cars for inspection, which costs additional MYR 70.

Grab said it has plans to subsidized 70% of the total driver regulatory compliance cost.

According to an estimate worked out by local online media Mygadgets.my, individuals still have to pay MYR 690 but that more subsidies might bring down that price.

It’s not just the costs–drivers also have to commit significant amounts of time.

In order to obtain the PSV license, drivers need to undergo a six-hour training course at selected driving institutes and centers, after which drivers have to take a test. Only those who successfully pass the test will be given the license. Applications began on April 1 this year.

However, obtaining the license is difficult mainly due to inefficiencies and disorganization. The training course and the test were only available in Bahasa Melayu making the language barrier one main problem for non-native speaking drivers. Aside from that, some drivers also revealed that they were presented with questions that were irrelevant to the e-hailing industry.

In order to expedite the process and make it easier for drivers to attend the training course, the transport ministry gave the ride-hailing operators the green light in May to conduct the PSV training sessions online.

Grab said that online training sessions allowed almost 20% of its active drivers to complete the training course.

A statement from the company said, “Many are currently either awaiting eagerly for their examination results in order to obtain the license, or are awaiting their opportunity to go through the examinations.” It also revealed that only 10% of its active driver-partners had thus far successfully obtained their PSV license.

MyCar, the second-largest e-hailing operator in Malaysia with 15% market share said only 400 of its 30,000 active drivers had obtained the PSV license.

Another obstacle drivers faced in obtaining the license was simply the inability to complete the process within the timeframe while juggling a full-time job.

In a separate interview with KrASIA, Denise Tan, the founder of Riding Pink a niche ride-hailing app, revealed that its drivers tend to be stay-at-home moms or woking women. Having other full-time duties may make it immensely difficult for these drivers to attend the mandatory training course whether offline or online. As a result, Riding Pink told the New Straits Times that it received dozens of requests to quit from drivers shortly after the government implemented the PSV regulation in March.

Transport Minister, Anthony Loke said on Tuesday that only 16,338 out of the approximately 167,000 ride-hailing drivers in Malaysia have signed up for the PSV test ahead of the July 12 deadline. Only 62% (10,151) of those who signed up qualified for the license.

What happens after July 12?

Starting from July 12, drivers operating without a PSV license face a fine of not more than MYR 2,000 or not more than six months jail upon conviction, JPJ’s director-general Shaharuddin Khalid said yesterday.

Those who fail to display the e-hailing sticker on their vehicle or whose vehicles were found to have technical problems would also face the same penalty.

Grab said it serves about 1 million rides each day and passengers could normally expect to get a ride within six minutes. With the strict enforcement of the new regulations, riders may experience longer waiting times due to drivers dropping out of the industry.

“We anticipate a reduction in driver-partners active on the roads. With fewer driver-partners on the roads … consumers will feel the pinch of longer waiting times, especially during peak hours and rainy days,” Grab said in a statement.

The ride-hailing company advised passengers to either book their rides earlier or ride during non-peak hours to circumvent the lower supply of drivers on the road.

With fewer ride-hailing drivers legally allowed to drive, price hikes are also anticipated with  MeHDA predicting the hikes to be as high as 50%. Ride-hailing companies are also expected to apply surcharges to deal with the reduced supply.

“We hope that this imbalance in supply and demand will be transient. We are committed to continue to work closely with the authorities to clear the obstacles for our driver-partners, so that many more can continue to earn an income via ride-hailing and serve the daily commuting needs of everyone,” a Grab spokesperson said.

Grab previously predicted half of its drivers would quit the industry in Malaysia. It did not reveal the percentage of drivers who have passed and obtained the PSV license as of July 12.