AIT Deems Taiwan 'Unfriendly for Innovators' Due to Uber Controversy

AIT Deems Taiwan 'Unfriendly for Innovators' Due to Uber Controversy
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The American Institute in Taiwan penned a strongly worded letter opposing government plans to institute new rules which would affect Uber services in Taiwan.

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The controversial “Uber Clause” has not only sparked multiple driver protests, including a rally outside the Presidential Palace on Sunday, but has also attracted heavy criticism from the American Institute of Taiwan (AIT), the country’s de facto United States representative office.

Calling for stricter regulations on the operations of ride-hailing companies in Taiwan, the Ministry of Transportation and Communications (MOTC) had proposed a draft amendment to Article 103-1 of the Automobile Transportation Management Regulations in February 2019.

The potential amendment requires Uber to charge its customers for a minimum of a one-hour rental regardless of distance. For every completed trip, the driver would have to return his or her vehicle to the rental shop before taking the next customer. Uber Taiwan says these measures would significantly increase fares and wait times, as well as air pollutant emissions.

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Credit: Daphne K. Lee
Uber drivers parked on Taipei's Ketagalan Boulevard during a rally against Article 103-1 held on April 21, 2019.

In response to the “Uber Clause,” the AIT submitted a letter of comments warning against the proposed regulations that would make Taiwan “an unfriendly environment for innovators and a risky place for foreign companies to invest.”

In the letter, the AIT referred to a U.S. ride-sharing company offering app-based transportation service at “a significant scale in Taiwan” but declined to mention Uber, the lone company fitting that description, by name. After Uber’s brief exit in 2017, the company has continued to invest in Taiwan based on the belief that it had fully complied with government regulations. The MOTC’s draft amendments will, however, jeopardize such investments and consumer benefits, the AIT wrote.

“By turning away innovative services to protect existing industries, Taiwan risks missing out on the economic growth and consumer benefits that come from digital innovation,” the AIT stated in its letter.

In response to the letter, Kolas Yotaka, the Executive Yuan’s spokeswoman, thanked the AIT for submitting its comments in adherence to the legislative process.

Friday, April 26 marked the last day of the 60-day consultation period for the amendments on Article 103-1. Amid the controversy, the MOTC reiterated that the regulations would still need to go through at least two months of legal procedures before enactment.

The upcoming legal readings will be critical as to whether Uber can still operate legally and profitably within Taiwan. Emilie Potvin, Uber’s head of public policy for North Asia, is now in Taipei attempting to negotiate with Taiwan authorities.

“We have been disappointed with the consultation process, which has excluded key stakeholders including drivers, rental car companies, customers, and even Uber,” Potvin told The News Lens. “We call on the government to invite all parties to participate in open and constructive dialogue so we can find a solution that’s good for everyone.”

Although Uber has operated in regulatory compliance since 2017, the MOTC recently found the service to be illegal as Uber operates like a taxi company.

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Credit: VOA / Public Domain
Lin Chia-lung, Taiwan's minister of transport and communications.

During a media meeting on Tuesday, Lin Chia-lung (林佳龍), the MOTC minister, had urged Uber to register as a taxi service company and establish its own fleet to maintain legal compliance under the multipurpose taxi program. Uber’s existing 10,000 drivers can also transition into being regular taxi drivers, Lin suggested.

In a media statement, Uber Taiwan responded that the MOTC has yet to provide clear guidance on how the existing Uber drivers and the rental car companies could make the expected transition.

“Under the current multi-purpose taxi regulations, they do not allow for dynamic and upfront pricing, or a flexible working model… Uber is a technology company, we do not operate anywhere in the world as a taxi company or a dispatcher,” Uber stated.

Taiwan is not the only battleground for Uber as the ride-sharing company regularly faces scandals and controversies around the world. However, Uber never failed to make a profit even if it had to exit a market. The tech giant’s recent IPO filing revealed a total of US$12.5 billion in assets in China, Russia, and Southeast Asia, where the company had “failed” to sustain its operations.

For Taiwan’s conflict with Uber, the underlying concern is the country’s lack of urgency for technological innovation. Several international tech companies have exited Taiwan because of their frustration with what they perceived as inflexible regulations and a conservative business environment.

PayPal, for example, withdrew from Taiwan in 2017 due to what it saw as cumbersome regulations. Most of the legislators had no experience with any form of online payment platform, and they might be the same authorities making regulatory decisions today.

William Foreman, president of the American Chamber of Commerce in Taipei, told The News Lens: “It’s important for Taiwan to attract foreign investment and strengthen its regulatory transparency.”

How Taiwan resolves the current regulatory conflict with Uber will certainly have future implications on the country’s general attitude towards attracting foreign investors and talents.

Read Next: Taiwan's Uber Drivers Protest Against Plan to Tighten Regulations

Editor: Nick Aspinwall@TheNewsLens

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