Can eased taxi regulations reverse market decline?

Singapore extends taxi lifespan to 10 years and limits the frequency of inspections.

A DECADE ago, Singapore’s taxi fleet was double its current size. To curb their shrinking numbers, the government eased regulations, extending the statutory lifespan of vehicles from eight years to ten and reducing mandatory inspections to once a year.

However, an expert told Singapore Business Review that these changes are insufficient — it is likely to halt the exit of existing taxi drivers, and not attract new transport service contractors.

“The main problem is that we cannot find enough Singaporeans who want to be a taxi driver and this is a cultural problem,” said Associate Professor Raymond Ong from the Department of Civil and Environmental Engineering at the National University of Singapore (NUS) College of Design and Engineering.

Whilst getting foreign workers to do the job is an option, Ong cited how the city state also subscribes to a quota system that limits the number of foreigners allowed in the labour workforce.

“We still need to have a substantial amount of local taxi drivers, but in this industry, unfortunately, it’s a tall call because there are so many better opportunities, especially for our younger population,” he said. “There’s also a perception-based issue of having our younger population move into the taxi industry as a driver.”

Ong emphasised that whilst extending the statutory lifespan of taxis and easing vehicle inspection frequency will help reduce costs for drivers and potentially retain them, current drivers may still choose to leave the industry, either because they no longer find it profitable, or for older drivers, they might prefer to retire rather than adapt to new adjustments.

Ong added that the measures are “unlikely” to drastically increase taxi driver numbers in Singapore.

Saving street-hail services

In the short-term, however, the easing of the regulatory regime will help the current situation, since it is stemming the outflow of drivers, said Ong.

In the long term, transitioning to an autonomous fleet will help revitalise the dwindling taxi market.

What will be challenging, as per the NUS expert, is the medium-term transition, as Singapore might struggle to attract enough drivers whilst not fully transitioning to an autonomous taxi industry.

“[We have to] carefully deal with [the issue] in the medium term. The next three to seven years will be extremely critical,” he said.

“This is a very fluid phase that we need to be very carefully working on. Even if, let’s say, pay taxi drivers a very competitive salary, this will still become a business cost to the taxi operators and the cost will eventually be transferred to the consumer because the taxi industry is not like the public bus or railway industry, where the government subsidise all the infrastructures,” he added.

The NUS expert said a fundamental re-examination of operating systems is necessary to attract younger drivers, as offering competitive salaries may not suffice.

He said that if driver salaries or incurred rates were the real problem of the lack of supply, they would have been solved many years ago.

“It is likely a perception issue, which is the main problem we need to tackle. If this issue cannot be resolved, autonomous taxis will eventually have to take over because no one wants to be a driver,” Ong said.

The professor underscored that Singapore needs to save its taxi industry.
 
“The reality is that in many situations, we will still have a segment of the population that will still need to have street hailing services, despite many of the population are already using apps. What kind of population are we talking about? Mainly the elderly,” Ong said.

“The elderly may not be able to be as tech-savvy as the younger generations, and they may have a fear of technology. So, think of it like when we implement a new technology, our grandparents may not be very comfortable with it, and they’ll just say, ‘Hey, why not I just flag or I just go to a drop-off point and wait for a taxi.’ This service is important because there are always cases that we'll still need [it],” Ong explained.

The Land Transport Authority (LTA) underscored this point when it announced regulatory changes for taxis, stating that street-hail taxi services remain crucial for ensuring Point-to-Point (P2P) service accessibility, particularly for seniors unfamiliar with ride-hailing apps, tourists, and commuters at high-demand locations such as airports, ferry terminals, and large events.

Data from the Public Transport Council (PTC) also showed that taxi services had a higher mean satisfaction score of 8.3 than PHC services at 8.1 in 2023.

In comparison to 2022, taxi services saw a rise in mean satisfaction scores, with six out of eight service attributes — amongst them waiting time, ease of booking and taxi stand accessibility — registering an improvement.

The end of taxis?

With taxis being an essential part of Singapore’s transportation system, Ong believes the industry will persist but will face changes.

“Eventually the taxi industry will have to decide whether they proactively transform or they will be forced to transform,” Ong said.

“If we look at the whole technological advancement — eventually, change will come. The question is, [whether] we embrace the change or we resist the change. But change will come.”