LETTER | Are you wondering whether to apply for taxi licence?

LETTER | Last week, Transport Minister Wee Ka Siong announced that new taxi and rental car licences which have been frozen since 2016 will be reopened for application to individuals under sole proprietorship or partnership from April 18 to June 30.

In Peninsular Malaysia, those interested may submit their applications to the Land Public Transport Agency (APAD). Sabah and Sarawak each have their own independent Commercial Vehicle Licensing Board (CVLB) to handle road transport licensing matters within the state.

Previously, applicants must have one to three years’ experience driving a taxi or rental car as stipulated in the Taxi Industry Transformation Programme (TITP). This requirement has now been waived by APAD to allow new players to venture into taxi service, albeit a sunset industry.

A quota of 1,000 new licences has been set for this year and more would be considered if the number of eligible applications is higher. But with more taxis on the road, it is bound to hurt existing cabbies even more. For newcomers, will it turn out to be a great opportunity or a misstep?

I drove premier taxis from 2000 to 2003, and a budget taxi from 2004 to 2010. As there was no increase in rates for metered fares, I wrote “Revise taxi fares to benefit all” in 2007. Later, taxi fares were increased in August 2009 and May 2015.

Around 2009, the then CVLB for Peninsular Malaysia issued thousands of taxi permits to both taxi companies and individuals, flooding the market and resulting in taxis running empty most of the time. In 2011, the Land Public Transport Commission (SPAD) took over from CVLB.

SPAD immediately froze the issuance of new taxi permits. In 2014, permits surrendered by taxi companies to SPAD were converted into Teksi 1Malaysia (TEKS1M) permits. They were used on brand new Proton Exora. Eventually, 1,000 TEKS1M were distributed to individuals.

But it came at a time when passengers were migrating from taxis to much cheaper private cars that were easily available through e-hailing. Even so, many cabbies continued to fix fares and choose trips while e-hailing drivers had to be in their best behaviour to avoid getting complaints.

Many hardworking taxi drivers, particularly those that have been renting permits, switched to driving private cars, got to run more trips through e-hailing and earned a higher income. Another nail in the coffin for taxis was the pandemic that has lasted more than two years and counting.

So, if you are wondering whether to apply for a taxi permit or licence, here is a step-by-step guide to help you make an informed decision, as the whole matter is not as straightforward as many people might think. For the uninitiated, it could well be navigating through a quagmire.

Which licence?

First off, you may be stumped by which licence to apply for - taxi or rental car? This depends on which area you choose to operate. If it is within the Klang Valley, Penang Island or Johor Bahru, then taxis are allowed to operate. Elsewhere, it would be limited to rental or hired cars.

Taxis are also known as taxi cabs or metered taxis and fares are automatically calculated by an electronic meter measuring the distance travelled or time spent in heavy traffic or while stationary. Rental cars could be shared with other passengers and fares may be fixed.

Taxi types

There are three types of metered taxis – TEKS1M, budget and executive. Although their fare rates vary, the vehicle model could be the same. When executive taxis were introduced in 2007, their fare rates were tripled that of budget taxis and were mainly stationed at large hotels.

More than four years ago, I wrote “Half-a-century of chaotic taxi services”. For example, a Toyota Innova may be licensed as a TEKS1M, budget or executive taxi. Although different passengers may ride on the same vehicle model, the metered fares can vary greatly.

In the 2015 taxi fare revision, budget taxi fare rates were increased from 87 sen per km to RM1.25 and RM17.14 per hour to RM25. TEKS1M fares were raised to RM1.50 per km and RM30 per hour in Klang Valley. In Penang, it went up to RM1.75 per km and RM35 per hour.

But ironically, the higher the fares, the lower the income for these taxi drivers as most passengers, including foreign tourists, would opt for cheaper budget taxis. Globally, most passengers prefer e-hailing over street hailing, not just to pay less but also for better security.

Other taxis

Apart from rental or hired cars which may be shared by other passengers, especially for long outstation trips, there are also other types of taxis. They include luxury taxis (limousine taxis) that are normally based at luxury hotels and airport taxis authorised for a specific airport.

There is also “kereta sewa dan pandu” or “hire and drive vehicle” operated by car rental companies. Although licensed to be driven by customers, these vehicles are also used for chauffeur-driven service. Since 2017, the e-hailing service has been incorporated under the TITP.

Excise duty

Taxis have long been exempted from excise duty and rental cars since 1983. Limousine taxis were exempted once in 1990 in conjunction with the first Visit Malaysia Year. Then. many tour operators got to drive Mercedes saloons licensed as limousine taxis for private use.

For expensive cars, more so for imported models, exemption from excise duty is a huge saving. Many Malaysians would salivate at the cheap luxury car prices on Langkawi Island, but these duty-free vehicles are not allowed to be used on the mainland for more than 90 days in a year.

So, if you are not afraid to be laughed at for driving an expensive car licensed and painted like a taxi or rental car, go ahead. But before you proceed, there are several other factors you would need to consider, otherwise, they can be a real pain later.

Vehicle inspections

After registration, the vehicle needs to be inspected at Puspakom as part of licensing procedure before road tax can be paid and the taxi on the road. In subsequent years, the taxi must undergo routine inspections but visits to Puspakom may well be one of the most dreadful experiences.

One is often greeted by a long horrendous queue upon reaching one of these inspection centres. Although taxis normally pass vehicle inspections for roadworthiness, they can sometimes fail when the brakes were tested to be less effective or front wheels are slightly out of alignment.

Motor insurance

Annual premiums for motor insurance are higher than for private vehicles. Taxi companies always insure their budget taxis under third party cover so that rental payments are more affordable. For the majority of cabbies, this arrangement had worked out well and was worth taking the risk.

But if you have taken a hire-purchase loan for your taxi, your bank is likely to insist that the vehicle is insured under comprehensive coverage until the loan is fully settled. Road tax may be cheaper for taxis, but this amount is insignificant compared to other costs or savings.

Fuel choice

Diesel engines are more reliable and give better fuel economy than petrol but at times, there may be a shortage of diesel available at fuel stations. The situation was particularly dire in 2013 due to poor distribution and made worse by the smuggling of subsidised diesel out of the country.

Natural gas for vehicles (NGV) was introduced in 1998 and the number of fuel stations offering NGV increased rapidly in the first few years but ran out of steam later. In 2016, I wrote “Empty promises as taxi drivers left to fend for themselves” as the number of NGV stations dropped.

With limited NGV refuelling stations and time spent on queuing to refuel, it is probably not worth spending on an expensive NGV conversion kit as it will take a long time to recoup your investment. Moreover, the bulky gas cylinder takes up space in the boot.

Although much cheaper than petrol, NGV generates less power per litre and combusts at a higher temperature. Many cabbies dumped the initial batch of Proton Exora taxis back to taxi companies after the exhaust valves kept burning and the engine had to be repaired repeatedly.

Cheaper toll

Toll rates for taxis are cheaper than for private cars and this benefits the driver when the taxi is running empty as passengers are required to bear the cost of tolls. Staff manning toll booths at taxi lanes will switch to cheaper rates upon seeing a taxi or rental car approaching to pay the toll.

Apart from recognisable body colours, the number plates of taxis and rental cars are in reverse colour with black lettering on white background. For all other vehicles, the letterings are white and the background black.

Although luxury taxis are indistinguishable from private cars, including vehicle registration numbers, starting without H in front and should use standard type number plates, many are fitted with number plates meant for normal taxis just to qualify for cheaper tolls.

Taxi operations

For those bent on operating a taxi to earn a living, especially to raise a family, it would be the worst career decision one can ever make. The golden years for driving taxis were from 1998 to 2002, particularly those driving premier taxis.

Although metered rates were only RM1 per km and RM16 per hour, most premier taxi drivers were able to collect more than RM10,000 in fares every month until the severe acute respiratory syndrome (SARS) hit the region in 2003 and international travel came to almost a standstill.

Those who enjoy sitting behind the wheel and wish to make driving an occupation should drive trailers and easily earn up to RM7,000 per month. Whereas those who insist on driving taxis now may not earn enough to repay the hire-purchase loan, much less bring food to the table.

In the old days, taxi drivers only have to wait at strategic spots before getting passengers. Those days are long gone. In recent years, e-hailing drivers have been busy accepting and running more trips, as their fares will always be lower, and hence their service is more popular than taxis.

Safety & security

Being cooped up inside a car with different people every day runs a much higher risk of being infected by a communicable disease or coronavirus than any other job with better ventilation. The same air keeps circulating within the car without any high-efficiency particulate air filter.

The premier taxi I used to drive two decades ago was the Enviro 2000 model custom-built from Renault Espace chassis. It was fitted with a transparent plastic partition separating the driver from the passengers and I could unlock the passengers’ doors without unlocking the front doors.

I picked up passengers freely, including foreign workers, and did not choose trips. Budget taxi drivers had to choose passengers and trips, lest they get robbed or even killed. Unlike e-hailing booked through apps, anyone could flag down a passing taxi or approach a waiting cabbie.

Taxis were the favourite target of robbers. They would choose a remote area as the destination and upon reaching there would rob, assault and tie up the taxi driver, who may eventually die if not found. Then the taxi will be used to rob other passengers or commit other robberies or crimes.

Even e-hailing is not totally safe. Who would have thought that a 16-year-old girl from Tangkak, Johor, would slash the throat of an e-hailing driver upon reaching Jalan Kovil Hilir in Kuala Lumpur when she could not pay the RM400 fare as agreed earlier for the 164 km trip?

The more expensive the car, the more savings on excise duty. But motor insurance premiums would be higher and routine vehicle inspections a hassle. Also, you need to apply and renew a public service vehicle (PSV) licence to drive a taxi on top of a competent driving licence (CDL).

However, you enjoy lower toll and get to pick up fare-paying passengers whenever you wish to earn some pocket money. You may get to meet some interesting or nasty people, but most passengers would be like ships that pass in the night.

Newcomers may get to earn as much as those that have driven taxis for more than 20 years. This means that it is a job without any career advancement or development. Since 2010, I have written hundreds of published letters regarding taxis, cabbies and e-hailing services.

Awarding licences to young men or women to operate taxis or rental cars may boost the local taxi industry, but it could also be leading them into a low-income trap. Just like it is better to sell handphones than cameras, providing e-hailing service is better than operating taxis.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.