The creative destruction that Uber and Grab have unleashed on the ride-hailing industry worldwide since it started just four years ago invokes images of galactic events.

In Malaysia too, the entire ride-hailing ecosystem, ranging from cab drivers to taxi companies to regulators and consumers, is being convulsed by the sensational scale and speed of the market transformation that is taking place.

In many ways, the phenomenal ways in which the digital economy is turning lives inside out can be seen in the disruption that is going on in the taxi industry, providing clues about how to cope with the disintegration of old institutions and offering lessons on how to thrive in this age of innovation-fuelled uncertainty.

A prominent feature of this flux is the collapse of monopolistic income models such as the taxi licen-

sing system that artificially restricts competition for transport services and allows taxi operators to fix prices in a regulated environment.

What tends to make the news is the aggressive opposition that often arises to meet the collapse of archaic revenue models, such as the recurring reports of assaults on ride-hailing drivers by cabbies, or when their protests bring city traffic to a standstill.

But it is not just the small guy who is being swept aside by the tidal wave of change.

Until recently, taxi licences were a lucrative source of revenue for companies that rented their cars out to drivers. In some countries, this made them attractive as a political tool for rewarding loyal supporters.

In Malaysia, the award of taxi licences has been an important aspect of the government’s bumiputera economic empowerment programme since the 1980s.

Along the way, it came to be associated with a rentier system where politically connected persons controlled large numbers of taxi permits that were hired out to drivers on oppressive terms, known as the pajak (rent) system.

Drivers who sign up for these taxis have to bear not only the costs of maintaining the vehicles, fuel, licensing fee and half-yearly inspection and associated costs, they also have to pay a daily rental of RM50 to RM80 to the taxi company.

Due to these exploitative terms, an honest cabbie has to put in extremely long hours only to earn a meagre income. Small wonder that many turn to gouging their customers, refusing short trips and are aggressive on the road, earning their colleagues and the country a bad name in the process.

The advent of ride-hailing apps changes all that.

Like so many disruptive innovations that are changing our lives, Uber and its clones have torn down the monopolistic barriers that used to prevent competition from equalising the supply and demand equation in the car-for-hire market.

Today, the collapse of the taxi industry seems to be taking its inevitable course despite the sweeping reforms that the Land Public Transport Commission, known by its Malay acronym SPAD, is putting in place.

For the oppressed cabbies who have seen their precarious incomes evaporate before their eyes, it is cold comfort to be offered the chance to have an individual taxi licence and be finally freed of the pajak system under the Taxi Industry Transformation Programme when the ride-hailing revolution has flattened the legacy industry to the ground.

Under the programme announced in August, unfreezing the issuance of individual taxi licences is among 11 initiatives aimed at levelling the playing field between the new entrants in the car-for-hire market and the conventional taximen.

In the meantime, reports are emerging of the impending collapse of the taxi industry. Thousands of taxis lie idle in the yards of cab companies as drivers bail out of a lost cause.

More efforts to bring order to this chaos are in the works as legislation will be changed in the current sitting of Parliament to deregulate taxi services and bring e-hailing within the ambit of the law.

Although these measures appear to be in line with a logical regulatory response, the stark reality is that they reflect the mindset of a generation that is unable to cope with the game-changing forces that are playing out in this era.

For the growing pool of cabbies who are finding themselves trapped in a losing proposition, it may be more helpful to assist their transition into other income-earning streams instead of pitting them against a vast catchment of motorists who are willing to share a ride with a paying passenger.

As for the beneficiaries of the taxi licensing programme that derived their political financing from the pajak system, their rentier instincts will help them to seek out the next trick in the bag of opportunities that comes with political power.

To move beyond this model of labour exploitation, it is not sufficient for disruptive innovations to explode old systems, as disenfranchised groups will tend to fall prey to newly empowered interest groups.

In this new age, society must wake up to the immense good as well as bad that each successful innovation can bring into our lives.

For that, we must rediscover the central place that our human values have in ensuring that all our fellow beings can lead rewarding and fulfilled lives.

R B Bhattacharjee is associate editor at The Edge Malaysia

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