If the CPI was taken as indicator and pro-rata annual rate of 2.5% assumed, cost of living may have gone up in the last 5 years at a compounded rate of 13-15%. Fuel up, maintenance of car up, and tyres and spare parts up but taxi fare remain the same for the poor cab drivers.
They are faced with the cut throat hire purchase repayment of RM55 a day or RM120 a day for airport taxi to be paid to the oligopoly of taxi companies. These companies use the hundreds or thousands of operating license available to them to top up over the interest rate Banks charged them.
Operating license are issued to companies or individuals but to secure an individual operating license, the waiting list could take years, requirement stringent and high level connection needed. Most operate under companies.
As a regular taxi user, we emphatise with cab drivers. Half the time, they had to first work to pay the companies before making the money to feed their family. Adding to their woes, there are too many cabs in the city, encroachment into their area of business, rent seekers and syndicate and gangsterism arising from poor enforcement.
Most taxi drivers are basically living within the poverty level. So When Malay Mail Online leaked the news of possible cab fare increase on Tuesday [read here], we agree. Its long over due.
It is only a matter of how much. Too much and it will beyond public affordability. Consumer could change their transportation mode. Too little, it is uneconomical.
The newsbreak claimed the increase will be as much as 40% and taxi driver association had responded to say it is fair [read MMO here]. It could be them leaking the information since SPAD official said fare review is still ongoing and no final decision made [read The Star here].
Anyway, The Star yesterday published a supportive letter from a reader, YS Chan. It has few facts worthy of public consideration and we reproduce the letter below:
Published: Wednesday March 18, 2015 MYT 12:00:00 AMThe popularity game can only be expected. When the discussion of cab fare increase surface [read Sin Chew in January here], Rafizi was believed to express disagreement and asked the government to think about the consumers.
Updated: Wednesday March 18, 2015 MYT 8:14:53 AM
SPAD must not delay taxi fare hike
IN the last quarter of 2013, the Land Public Transport Commission (SPAD) held 15 sessions to review taxi fares in Kuala Lumpur, Penang, Johor Baru and Kuala Terengganu.
During the launch on Oct 18, SPAD chairman Tan Sri Syed Hamid Albar was hopeful that new fares would be announced in the first quarter of 2014.
A 38-page bookletntitled “Taxi Fare Review – Interaction Paper” was distributed. It was clear that a comprehensive study had been conducted and SPAD was finetuning it.
SPAD chief executive officer Mohd Nur Ismal Mohamed Kamal said:“Since 2009, fuel expenses have gone up by 17%, maintenance by 20% to 25%, tyres by 25% to 30%, and battery by 30% to 35%. Also, cost of living has gone up by around 2.5% each year until now.”
In April 2014, SPAD announced that budget and executive taxis with permits expiring from May can continue operations until October.
The plan was to have 2,404 old taxis migrated to TEKS1M by the end of 2014, joining the 1,000 introduced earlier under a one-off scheme where 697 were allocated for the Klang Valley, 251 in Johor and 52 in Penang.
But the freeze in fare hike has impacted the taxi industry as the number of TEKS1M seems to be dwindling instead of increasing.
Many TEKS1Ms were repossessed when drivers defaulted in hire-purchase loans and taxi companies had stocked up on non-Exora models before the deadline as cabbies preferred cheaper models.
The higher costs in operating TEKS1Ms has taken a toll. Some drivers gave up even though they no longer have to rent the permit from a taxi company or another individual.
As there will never be a perfect time to announce fare increase, it might as well be sooner than later, and always better to tackle inherent problems early than allowing them to fester.
SPAD is certainly in an unenviable position as it will be damned if it does and damned if it doesn’t.
And one of the biggest critics of a fare hike will come from the cabbies themselves as they are certain to suffer a loss of income when locals shun using taxis for a while.
However, a fare increase is the much-needed shot in the arm for the ailing taxi industry to move forward.
Under the Government Transformation Plan (GTP), the milestone for 2015 is to have 7,500 “Asean best in class taxi” on the road.
It would be a reality had everything gone according to plan, such as announcing the fare increase a year ago. No doubt, consumer associations are duty bound to protest any increase in prices but those in the focus group session agreed that fares cannot be below cost but wish to see taxi services improved.
The man in the street is likely to insist that quality of service be raised first before allowing for a fare increase; a chicken and egg situation that leads nowhere.
In 2007, I had proposed that budget taxi fares be increased from 66 sen per km to RM1 and from RM8 per hour to RM12.
In 2009, the fares were increased to 87 sen per km and RM17.14 per hour, a rise of 30% and 114% respectively.
At a consumer focus group discussion, I proposed that fares be increased to RM1.25 per km and RM24 per hour, a rise of 44% and 40% respectively, to ensure the rates are sustainable over the next few years.
But transforming our taxi industry is not a popularity game and no decision can make all parties happy.
In such a scenario, it takes true leadership to lift the industry out of the quagmire and the first concrete step is to have taxi fares that are fair to both drivers and passengers.
Good that he wants to play politics on everything including cab drivers welfare. In the last general election, Dato Seri Anwar Ibrahim woed and receive support from cab drivers. They were even employed to be Pakatan Rakyat campaigners and propagandist.
The government could now win them over.
Unsustainable low fare
The consumers have to be fair or the phenomenon of defaulting 1TEKSIM owners from unsustainable income will continue and the whole cab system in Kuala Lumpur could collapsed.
As it is, cab drivers are struggling to survive with so many cabs around. This could thwart any attempt to improve and upgrade the cab service in Klang Valley.
Our sample survey of cab drivers in the city puts their average income at RM2,000 a month. These drivers have to work an average of 10 hours a day without rest day to achieve such an income. It means they qualify for BR1M.
The nationwide average could be as low as RM800 when rural kereta sewa between towns are taken into account.
SPAD may deny such claim regularly made by ca drivers. Their official stance is that there had not been any new operating licenses issued for quite sometime. When PM launched the 1TEKSIM program before, it was the renewal and reassigning the operating licenses of a particular cab company.
It is believed that there are more than 35,000 cab operators in Klang Valley today. THy represent the bulk of 60,000 cab operators nationwide. It wasn't too long ago that cab drivers were saying the figure for Klang Valley was around 20,000.
Not only that, cab drivers are facing encroachment into their traditional area of business. Cabs are being pushed to operate around train stations as city centre are too congested and trains are becoming a more popular mode of public transportation.
Train has a bigger capacity and is a faster mode of public transportation and the future plan will be for more trains. Road system cannot cope with the increase in congestions even in neighbourhood. Time will only get tougher for cab drivers.
There is also the competition from new variety of cab licenses like limousine services, blue executive taxi and upcoming uber cab.
In places like KL Sentral, express bus stations, hotels, KL bird park, etc., cabs are not allowed to pick passengers unless they accept payments in the form of tickets issued by them. Cab drivers will submit the ticket a day or two later for payment.
The purpose is to kill off ticket touts but it is rent seeking and taking a ride on cabs as tickets are issued at 20 to 30% higher than metered rate.
In places like Bukit Bintang and KLCC, there are taxi driver syndicates that controls the area to prey on unsuspecting tourist. They do not abide to the regulation to use the meter and charge exorbitant fix rates. Other taxi picking up passengers there are roughed up or get their car smashed.
It is only in major urban areas like Klang Valley, Penang, and Johor Baru could flag down cab service operate.
In the rural area, the old kereta sewa service at taxi stands are no more popular. Express bus system and inter-town bus service are more frequent thus it is hard to fill up their cab with passengers.
Consumers are expected to question the public transportation to warrant such increases. The service level, extensiveness, consumer options, safety, enforcement and other issues on public transportion will take centre stage in the media.
SPAD have often been saying that the low fare is not sustainable and it is unfair to be tough on the cab drivers. For cab fare to be raised, SPAD must have something up their sleeve to implement or enforce immediately.
Public is at a highly sensitive mode when it comes to any form of price increase. They will not tolerate fare increase without any increase in quality of service and enforcement.
The plan to increase cab fare was supposed to be done last year but believed to be postphoned due to sensitivity to the Kelantan flood disaster. Unfortunately it is now too close to the commencement of GST.
As Chairman, Tan Sri Syed Hamid will have to face to the public on this.
When reminded of his days as Foreign Minister, Defense Minister and Law Minister, public relation was never his strength. He could get into the most politically incorrect situation when faced with a barrage of attack.
Those critics disagreeing with too many Ministerial status accorded to political retirees would raise this issue if he fails to handle it.
By the way, is he Chairman or CEO? Just asking ...