KUALA LUMPUR – The speedy expansion of the gig economy warrants the construction and implementation of detailed regulatory measures aimed at protecting employee welfare while protecting consumers.
Global Asia Consulting senior consultant Samirul Ariff Othman said issues within the sector, particularly involving the e-hailing and p-hailing industry, need to be properly addressed through regulations set by the government based on its assessments.
“The gig economy has undoubtedly made significant contributions to the economy by providing flexible employment opportunities and convenient services to consumers,” he told Scoop.
“But, like any rapidly growing industry, it also poses challenges which require careful regulatory oversight to ensure fair competition, worker protection and consumer safety.
“A lack of comprehensive regulations can lead to various issues, including labour exploitation, inadequate insurance coverage, unfair competition and safety concerns,” said Samirul, who is formerly a senior researcher with the Malaysian Institute of Economic Research.
Based on Grab’s filing with the US Securities and Exchange Commission, the Southeast Asian-centric company recorded a revenue of US$673 million (about RM3.1 billion) from its Malaysian operations in 2023.
The figure is a steady increase from its revenue of US$509 million (RM2.3 billion) and US$108 million (RM508 million) in 2022 and 2021, respectively.
As the leading e-hailing and p-hailing platform in the country with an approximately 70% share of the gig economy’s local market, it is estimated that Grab is valued at about RM3.7 billion with approximately 130,000 drivers under its employment and over 20 million registered users.
Noting that the gig economy has expanded the labour market by offering opportunities for individuals to monetise their assets and skills on a flexible basis, Samirul pointed out that those seeking a supplementary income or flexible working arrangement have benefited from the industry.
“E-hailing and p-hailing services have improved transportation accessibility, reduced congestion and provided affordable alternatives to traditional taxi services in many areas, thus contributing to economic efficiency,” the economist said.
“To address challenges (within the gig economy) without stifling innovation and economic growth, governments need to implement balanced regulations that protect workers and consumers without excessively stifling the innovative nature of businesses.
“By implementing thoughtful and flexible regulations, governments can harness the potential of the gig economy while mitigating its risks and drawbacks.”
Emphasising how achieving the right balance of regulations in the gig economy requires a nuanced approach that considers all stakeholders’ interests while promoting economic growth, innovation and social welfare, Samirul posited several considerations for policymakers.
One of his suggestions includes how regulations should prioritise the safety and wellbeing of consumers by enforcing quality standards, background checks for drivers, vehicle inspections and data privacy measures.
“This helps build trust in the services and protects users from potential harm,” he said, adding that regulations should also promote a level playing field by preventing anti-competitive practices such as price-fixing or monopolistic behaviour.
He also said since regulations should be adaptable to the evolving nature of the gig economy consisting of technology-driven business models, “overly prescriptive” rules that could potentially stifle innovation or impede platforms’ abilities to adapt to changing market dynamics should be avoided.
“Continuous monitoring and evaluation of the regulatory frameworks are essential to assess its effectiveness, identify emerging issues and make necessary adjustments.
“Regular reviews can help ensure regulations remain relevant and achieve their intended objectives without unduly burdening businesses or hindering economic activity.”
On the flip side, Geoffrey Williams, an economist and Williams Business Consultancy Sdn Bhd founder and director, said Grab and other online platforms part of the sharing economy within the gig economy will not stand to gain from heavier regulations.
Speaking to Scoop, he said existing regulations and legislations are sufficient to cover basic health and safety as well as consumer protection concerns.
“In our research for Malaysia Digital Economy Corp, we estimate that the sharing economy will be worth RM313 billion and employ 4.3 million people by 2030, so it’s a hugely important sector.
“The sharing economy has never benefited from government interference, nor did it arise from government policy (as) it is organic and driven by free markets, innovation and creativity.
“There must be a completely separate system of social protection available for everyone which does not interfere with business creativity and employment creation,” he added, noting that to do otherwise would incur higher costs and involve more complicated systems.
In 2017, Malaysia became the first country to legalise e-hailing services, with the provision to monitor the service made possible following the passing of the Land Public Transport (Amendment) Bill 2017 and the Commercial Vehicles Licensing Board (Amendment) Bill 2017.
Under the legislation, e-hailing drivers in Peninsular Malaysia are subject to the jurisdiction of the Land Public Transport Commission (now Agency) while the Commercial Vehicles Licensing Board regulates drivers in Sabah and Sarawak.
New regulations, which were supposed to come into effect the following year, include requiring e-hailing drivers, who will be checked to determine whether they have a criminal background, to comply with existing Public Service Vehicle licence conditions.
Besides drivers having to take a six-hour course for RM200 before they can pick up passengers, insurance coverage is also required for drivers, passengers, vehicles and third parties.
A maximum 10% commission can also be charged for e-hailing services provided by taxi drivers while commission of up to 20% can be taken from e-hailing drivers who use their own private vehicles.
In an explainer on its website, Grab said while the intention to implement the e-hailing regulations was announced in 2018, the “actual process” only started in April 2019, leading to an eventual enforcement date of October 12, 2019.
It added that the regulations are intended to create a legal framework, ensure consistent standards and safety as well as to level the playing field with the taxi industry. – June 5, 2024