Philippines weighs options for regulating Uber after public outcry against crackdown

On November 24, the Uber saga in the Philippines takes a new turn as the government begins public consultations to solve a pressing issue at hand: how to regulate the company’s operations.

The government has been under pressure from taxi operators calling for a crackdown on what they consider illegal, unlicensed services from Uber that they fear will eat into their profit margins.

But after a sting operation against an Uber vehicle sparked public outrage last month, regulators have taken a soft stance on the car-booking service.

Transportation regulators, led by the Land Transportation Franchising and Regulatory Board (LTFRB), acknowledge that innovations like Uber are attractive alternatives for commuters who have relentlessly complained about the worsening state of the taxi industry in the country.

The LTFRB met with Uber executives in Manila and both parties agreed to look for ways to accommodate Uber’s service within the bounds of law. How this compromise will affect the company remains to be seen.

Government oversight needed


Much of the dilemma in regulating Uber lies in the uniqueness of its service: Uber is a technology company that connects passengers and vehicles through its app. It doesn’t own the vehicles, but only partners with the owners. Passengers pay for the rides using their credit cards registered on the app. The fares are split between Uber and the vehicle owners.

Authorities are convinced that because Uber caters to the public, there has to be some oversight. Someone has to make sure that the drivers are adequately screened, passengers are insured, and prices are fair. There should also be a system for imposing fines in case of violations such as overcharging.

The usual argument is that Uber isn’t subject to the regulation of the LTFRB since it doesn’t own the vehicles. It is the duty of the vehicle owners themselves to get permits from the transportation regulatory board.

But Uber, as the entity that mobilizes the vehicles, has to make sure it partners only with vehicles that are compliant, otherwise it’ll be accused of aiding and abetting in the violation of the law.

Uber’s case is different than that of close counterparts like GrabTaxi and EasyTaxi, which have both been able to do their business smoothly as they make use of existing taxi fleets duly registered with the LTFRB.

With all considerations in mind, it’s no longer a question of whether or not Uber should be subject to regulations. What government needs to figure out is how to regulate Uber in such a way that neither Uber nor the incumbent taxi industry suffers unfairly.

The appeal of Uber comes from the fact that its partner vehicles are new, and – since they are private – give passengers the feeling of prestige. Ordering a car is easy and quick, payment is seamless, and drivers are courteous. Prices are not fixed – they may go lower or higher than taxi rates depending on demand. Passengers feel much safer as the location of the vehicles can be tracked and shared, and they can send instant feedback about their trips by rating them.

There’s no doubt Uber will give Filipino taxi operators a run for their money. Taxis in the Philippines are highly regulated. They must secure a franchise from the LTFRB and pay the necessary fees. Fares and paint schemes are fixed, and the number of vehicles is limited.

This controlled environment has essentially given them little or no incentive to improve their services. Taxis in Manila are known for being old and dirty. And regulators are swamped with passenger complaints about tampered meters, overcharging, hostile drivers, and the prevalence of crimes perpetrated in taxis. Even though there’s an abundance of taxis in the capital, Uber’s safety and high quality of service give it more than a fighting chance.

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What regulation in the Philippines means for Uber


The LTFRB is studying a number of options to accommodate Uber. At present, it looks like these options will slow down Uber’s operations, or at least require changes in the way it does business.

One option is to require Uber to partner with existing taxi fleets, not private vehicles. This will limit Uber’s model in the Philippines to that of GrabTaxi and EasyTaxi, and what’s known as UberTaxi in markets where the company joins hands with taxi companies.

Another option is to continue with the initial ruling of the LTFRB, which will require each of the private vehicle owners Uber partnered with to get a franchise – a process that’s tedious and hard to regulate. Vehicles with no franchise will be impounded accordingly. While this is the setup at the moment, it’s uncertain if all Uber vehicles have already secured permits from the LTFRB and if the regulator is hunting down violators.

Uber vehicles may also be classified as “vehicles for hire.” This will require amending the definition of vehicles-for-hire in the country as this kind of service is allowed for tourist purposes only.

In the end, however, it may be best for Philippine regulators to look at how Uber is regulated in markets that have accepted the service.

In some areas in the US, like San Francisco or Chicago, for example, Uber is classified as a “transportation network company.” Partner vehicles no longer need to get taxi franchises, but are required to bear commercial liability insurance policy. Extensive training and background review of drivers are also mandated, while prices remain uncontrolled.

In Asia, Singapore recently issued regulations on taxi-booking apps following public consultations. It’s requiring Uber, Grab Taxi, and EasyTaxi to register with transportation regulators and dispatch only licensed taxis. Fares cannot be higher than those charged by taxi operators, and passengers won’t be required to specify their destinations before they can make bookings to prevent drivers from picking. However, these regulations will not affect the UberExec and UberX tiers, for which the company partners with already licensed limousine and rental car companies.

Whether the Philippines will take a liberal or conservative approach to regulating Uber is something that the public will closely watch.

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