At present the private taxi services that are available to Pakistani citizens are of five different varieties – black taxis with yellow tops, yellow cabs, radio-cabs Limofied, those belonging to ‘rent-a-car’ companies, and two types of the so-called ‘private taxis’ services. The operational model of these private taxis is based on real time assistive and location services powered by ICT based apps being used on a smartphone. One of these last two taxi service was termed “illegal” because of the fact that their cars are registered as private cars, but whereas are being used as private taxis.
These new assisted private taxi-service were recently added by two management companies “Uber” (2009) and “Careem” (2012), already offering similar services in several other countries. Uber, which is a US based company, is operating in over 500 cities in various countries. Careem service is in 12 countries and 50 cities (mainly in Middle East). Hundreds of people willing to join these services participate on daily basis for trainings arranged by the two companies. The two Taxi services can be summoned through smart mobile phones with the help of freely downloadable Applications (Apps). This new service has filled a big void and attracted many new segments of citizens who had inhibitions against traveling on conventional Taxi services, for various reasons.
The concept of shared economy in service sector is becoming increasingly popular. The ICTs enhance efficiency and profitability through the aid of ‘Apps’ thereby enhancing productivity and job diversity across new Eco-System of society. Shared economy has unlimited diverse impacts and ICT Taxi service is just one sub-segment. The concept of shared economy is fast expanding and it is expected to be rising to about 5% of service economy in a few years. This particular type of service is one of the major components of shared economy.
However, due to absence of specific precedences/regulations for the Apps-based service, the services were started in a non-regulated way through privately registered cars managed by the companies in a sharing mode. Thus ICT based services became an easy target, partly because of opponents of new model whose own businesses were getting disrupted. Issue of violations of law, have been raised by administrative departments of Punjab and Sindh governments because of certain section of 1965 Law which states that both the driver’s license and car should be registered solely for the purpose for which it is intended i.e. taxi service. However it is felt that this law is lacking in some aspects, and needs to be addressed in line with international trends, where such services are operative.
User segments of new service
The Apps provide several positives like real-time route mapping, security checks and controls, and many new features, as well as possibility of either cash or online payments.
Concept of Apps-based taxi service is based on robust user friendly partnership model that ensures users’ trust, for reasons of safety and security, through fool-proof e-trails, fair charge, and software based fully documented transparent transaction system.
The need assessment has been done considering all user segments who can be better served by ICT based system, benefitting from GPS and its location based features. The eco system is robust and takes care of all users, drivers (called ‘captains’), investors, through platforms owned and operated by the management companies. The model brings together individuals who own vehicles and are willing to earn through them and users who want a secure, reliable and user friendly service. Beneficiary base includes professionals, woman-folk, older citizens, students and ever increasing digital savvy segments of society. These companies are fully equipped to undertake end-to-end management of their Taxi service with efficient oversight.
However in this model the registration of the vehicle under an individual’s name is an issue and is fundamental in nature keeping in view the existing law. Once, a private car is registered as a commercial Taxi, it impacts its resale value significantly, irrespective of how well maintained the vehicle is. Therefore vehicle owners, if forced to register their cars as taxis, may disengage and pull out from this service.
Perspective of Service
Perspective of ICT based Taxi services is quite clearly drawn, considering need assessment, options, pros and cons of Apps-based services, including robust Eco-system and interests of stakeholders. All stakeholders, users/riders, drivers/captains, Owner/Investors and Management Companies are confident on new system that includes continuity of conventional systems and evolving migration path towards the new system. The ICT based Taxi software is designed in a manner that ensures little human intervention.
Their own SoPs help and facilitate civil authority requirements and other perquisites. For instance they provide reliable transaction transparency for all stakeholders. If needed a complete perspective can be explained to the government bodies and other stakeholders. With little amendment in Legislation a Win-Win situation can be easily ensured.
Issues raised by Sindh, Punjab Administrations and others
While at apex levels Punjab and Sindh governments are positive on ICT based Taxi services, however, administrative authorities have observations, pointing to bottle-necks with regard to Legislation (refer Annex 1).
There is need to introduce and insert few over-riding Sections/Sub-sections catering for ICT based Taxi service e.g. adding a new category in line with Laws and Regulations in other countries. The amended Legislation needs to clearly mention this Category of private Apps-based Taxi service. Conventional Taxis (yellow Cab, Radio-Cab etc.) as well as the new Apps-based Taxis, if needed, be also added in definition part. Amended sections need to explicitly cover new App-based Taxi service and migration path for old existing Taxi Cabs specifying criteria and context as well.
Administrative Issues, Control and Governance
As regards Control, compared to conventional Taxi models, the mechanism in new Apps-based model is more comprehensive and superior. Apps-based services demonstratively address all needs to the satisfaction of stakeholders. There is no space for unnecessary bargaining of rates . Narratives of benefits of all stakeholders, ease of oversight, control in Apps-based mechanism, are adequately explained. Hence governance and regulation is already much better to start with.
Major weaknesses of quality in conventional taxi service, e.g.: no metering devices, attitude issues, bargaining of rates etc., stand resolved in the new model. Provincial leadership and administrations departments will better appreciate how new service is filling voids, as fully documented in this Report. Review of service in countries where this service is operating in a liberal mode is a testimony that can be referred from respective web sites.
Certain safety and security risks are much better addressed in the ICT apps-based model. Users can give ratings and opinions on services and behaviour of the driver. This is a major hall-mark. Ratings are not only by users, but also given by the drivers. Inhibitions stand addressed and service convenience, availability, affordability are regularly reviewed. Ease of availability, competitiveness and popularity of service is evident from ever-increasing demand. Study of ratings given by users is a testimony of their liking for the service.
Since growing societal comforts for the new service speak out, so no inhibitions or concerns are left (addressed within framework of service), except that it’s relatively costly compared to the traditional Rickshaw/Taxi services. Although not necessarily so if viewed from value-for-money perspective and the fact that the demand is growing thus implying that people are willing to pay the extra cost for convenience and better quality. Analytic view on various options, predicting needs/growth (i.e.: popularity and exponential growth on evolutionary path), favour new service in the emerging ICT age.
Sustainable / Viable Management
The ICT apps based service is still on an evolutionary path in Pakistan, yet it looks to be a better and a more favourable model. Coherent partnership of multiple stakeholders i.e. investor, driver, management companies and a structured approach raises confidence level of diverse stakeholders. Affordable business model meets need of various niches as quality of service is acceptable to major segments of society. This service is showing fast growth and expected to expand even faster in the next 2-3 years. Conventional taxi services will exist side-by-side and may be influenced to improve, migrate, or reshape due to competitive pressures..
E-documented transactions and inclusiveness
The business model is transparent and ensures full compliance of sharing collaborative income with features, meeting parameters of documented economy. New services provide cash payment (commonly used option in Pakistan) as well as online payment via Credit/Debit-card. Hopefully soon payment through mobile wallet will also become reality. Service framework facilitates access to transaction details, being inbuilt in software features of service with complete details to users and investors.
Features of Apps-based service enable user access to e-information of travel trip and satisfies him/her with transaction alerts. E-features ensure efficacy, effectiveness and convenience for users. Documented income and share distribution amongst stakeholders appears to be above-board.
Safety, Security, Monitoring/Surveillance
By nature of this service, journey is fully monitored and tracked. The driver is under scrutiny during the trip through mobile internet. If a rider/user perceives him to be unreliable or a potential risk, he/she can rate/report him appropriately. Company’s own system also address attitude aspects, and penalises delinquents. Service features help to improve casual or unreliable drivers through system trails. Service safety can be further enhanced by deeply analysing rating inputs and trail-monitoring. Use of credit/debit cards and mobile payment will grow faster against cash over course of time.
Online, GPS based tracking of each vehicle and trip is in-built in the service.. Monitoring facility can also help civil administration in surveillance.
Above mentioned societal aspects of users, drivers, investors and oversight by authorities address almost all needs of a safe and secure journey.
Economy, efficiency and Entrepreneur development
The services are already operating in three cities (Karachi, Lahore and Islamabad) and under test in 3 other cities, which will take off in phase II (Hyderabad, Faisalabad and Peshawar).
This service is going to create teams of young entrepreneurs, well versed with ICT Apps features and solid business acumen and a stream of trained ICT-based cab drivers, besides regular work force within Careem and Uber. Framework will have positive impacts on overall economy.
In the ICT based model valuable information related to governmental authorities can be made available from day one. The managing companies if given confidence, would help add to tax and better tax collection. Conventional taxis are registered under ‘commercial registered’ category, but the ICT-based cabs have to be allowed as ‘private cars’ as owned/run by small entrepreneur/owners under the management company framework. Car registration as ‘private’ is the key for success of the model. The two private management companies can ensure that registered private cars with them will be efficiently managed by these companies.
In addition, both, or any other such new companies, should be registered with SECP (if not done as yet) and be made liable to register and follow the tax regime in a period of 3-4 months.
The investors should be preferably mandated to be the holders of active NTN, as normal, with their income subject to tax within FBR tax regime. Fully documented Tax system will definitely add to tax payers list, enhancing collection of tax-revenues of Federal and Provincial Governments under applicable tax systems.
Initial study and data gathering confirms that Apps based services prove beneficial to society, economy, and citizens, as briefly given below:
- It is assessed that about 200,000 Apps based taxis are operational in major cities (Karachi, Lahore and Rawalpindi/Islamabad). Similarly expansion is already in the pipeline with additional 3 cities already been surveyed with an expectation of services in these cities may be operational in 2017-18
- Average monthly revenue generated by each Apps-based taxi is about Rs.180,000/-
- Each taxi is used for 2 shifts thus having two captains. This means that around 400,000 captains are required which translates into similar number of employment. Even if a lower average of 1.5 per taxi is taken that would still mean that at least 300,000 drivers are employed.
- On average of 4 taxis per investor means about 50,000 small entrepreneurs are engaged.
- Each Taxi makes average of 20 daily trips, meaning about 400,000 family trips a day.
- Number of ancillary jobs within management companies, and investors, may total to about 50,000.
- Availability of taxis on customer’s request takes 5-10 minutes after e-booking., contributing to enormous time saving when aggregated over the number of users and thus creating efficiency.
Recommendation and Future Strategy
- Create awareness through facilitative policy, accepting private Car ownership and registration within company frame work.
- Outline guiding policy principles, legislating new category in separate Sections of the Act, and apply same across all four provinces.
- Create equitable rational regulations all over the country achieving consensus.
- Migration path be worked out for conventional Taxi service, subject to Apps framework of management companies.
- Points raised in Annex 1, are proposed to address by adding new Section/Sub-Sections through amendments.
- Management Companies be mandated to register with SECP, active NTN for entrepreneurs be a pre -condition (within 3-6 months starting as grace period).
- Provision for migration of conventional Taxi into ICT Apps Taxi be included in amendment subject to Management frame work.
Voluntary ICT support service offer by ICT Forum Pakistan
As facilitator of dialogue and to build consensus, independent neutral body “ICT Forum Pakistan”, is ready to make presentations to Provincial Governments and relevant authorities, and even organize a workshop of stakeholders, in the interest of societal satisfaction, job creation and growth for the economy.
ICT Forum Pakistan would be available to help in study and write up of amendments keeping in mind existing legislations in provinces. The Forum has studied and noted concerns of stakeholders laid out in news articles and other publications that have appeared in various print and electronic media.
Motor Vehicle Acts of 1965 in all four provinces Administration applied sections below:
Section 3 and 5 of the Balochistan, N.W.F.P., Punjab, Sindh Motor Vehicles Ordinance 1965, which is the same as West Pakistan Ordinance XIX of 1965 states:
Chapter II Licensing of drivers of Motor Vehicles
Section 3. Prohibition of driving without licence.
(1) No person shall drive a Motor Vehicle in any public place unless he holds an effective licence authorizing him to drive the vehicle; and no person shall so drive a Motor Vehicle as paid employee or shall so drive a public service vehicle unless his license specially entitles him so to do.
Section 5. Owners of Motor Vehicles not to permit contravention of a section 3 of or section 4. No owner or person in charge of a Motor Vehicle shall cause or permit any person who does not satisfy the provisions of section 3 or section 4 to drive the vehicle.
Cars used to provide cab services are also non-compliant with the Taxicab Permit:
None of the cars that are being used to provide the cab services using Uber or Careem apps are compliant with the law to provide the taxicab services. To provide a taxicab service, a Certificate of Fitness of the transport vehicle and a Permit to operate that transport vehicle as a taxicab are needed. The permit is issued by the Provincial Transport Authority and also contains the route permit for the desired region.
Section 39 and 44 of the Balochistan, N.W.F.P., Punjab, Sindh Motor Vehicles Ordinance 1965, which is the same as West Pakistan Ordinance XIX of 1965 states:
Section 39. Certificate of fitness of transport vehicle.
(1) Subject to the provisions of section 40, a transport vehicle shall not be deemed to be validly registered for the purposes of section 23, unless it carries a certificate of fitness in Form 1 as set forth in the First Schedule, issued by the prescribed authority, to the effect that the vehicle complies for the time being with all the requirements of Chapter VI and the rules made thereunder; and where the prescribed authority refuses to issue such certificate it shall supply the owner of the vehicle with its reasons in writing for such refusal.
Section 44. Transport vehicles not be used or driven without permit:
(1) No owner of a transport vehicle shall use or permit the use of, and no driver of a transport vehicle shall drive or cause or permit to be driven, the vehicle in any public place, save in accordance with the conditions of a permit authorizing the use or driving of the vehicle in such place granted or countersigned by a Regional or Provincial Transport Authority.
Please click here to Download in PDF: ICTFP- ICT Apps based Taxi Services, 04May17