Taiwan's Uber Saga Casts Doubt on Readiness for Digital Future

Despite a flurry of speculation earlier this month in Taiwan and internationally that U.S.-based ride sharing service Uber would be kicked out of Taiwan, the Taiwanese government continues to work on measures that will allow it to operate legally.

A spokesperson from the Executive Yuan (EY) told The News Lens International (TNLI) yesterday that until those “measures” are in place, Uber will continue to be fined. The company is understood to have already copped penalties totaling US$1.5 million for license violations because its drivers use personal vehicles for commercial use – and an even heftier sales tax bill also looms.

Uber’s ongoing battle to operate legally has revealed that Taiwan is not ready for the likely influx of Internet-based disruptive services and companies across sectors like finance and healthcare, a Kuomingtang (KMT) legislator says.

“It is not just about Uber,” Jason Hsu (許毓仁) told TNLI. “The taxi industry was the first to get hit. The government needs to look at the overall situation in terms of how it can help open the door for businesses.”

Hsu agrees there are now steps that Uber needs to take. The fact that so many different government agencies are now involved – including the EY, National Development Council (NDC), the Investment Commission and the Ministry of Transportation and Communications (MOTC) among others – shows a more proactive, coordinated approach is urgently needed.

“The government has no centralized unit for dealing with disruptive businesses,” Hsu says.

He is urging the government to create a new taskforce or commission to “synergistically” work across government agencies to allow new technologies and business models to seamlessly enter the local market.

Hsu, who is one of the KMT’s youngest legislators, worked in start-ups in Silicon Valley and founded TEDxTaipei before entering the Legislative Yuan this year.

He says the government’s approach to Uber “sends a signal” to the international technology and investment community about Taiwan’s preparedness to deal with disruptive technologies.

“We should be careful,” he says.

Uber saga continues

In response to questions from TNLI, the NDC says it is working to make the laws related to the digital economy in Taiwan “friendlier.”

However, it is understood there is currently no plan to create a centralized organization in the model proposed by Hsu.

NDC says it is encouraging the production of innovative products, services and business models by adjusting the regulations around e-commerce, financial technology, sharing economy, and information and communications security services. It is adjusting financial regulations around business establishment and management, including thorough amendments to the Taiwan Companies Act, and is simplifying procedures for foreign companies to invest in Taiwan.

In the hope of creating a "start-up friendly” environment it is also loosening regulations for schools, teachers, and students to take part in business ventures, analyzing the potential for new tax incentives for angel investors, as well as encouraging public offices to purchase innovative products.

In March, the NDC said that 29 Taiwanese start-ups in 2015 had received investments of more than US$450 million in total, up from US$160 million a year earlier. Some of the start-ups to receive funding in recent years include, Pinkoi, VMFive, BoniO, MoBagel, TutorABC and Gogoro. In addition to major overseas funders, like venture capitalists Sequia and GIC, Taiwanese corporations, including Foxconn, MediaTek and Quanta Computer, have all invested in Taiwanese start-ups.

Notwithstanding the growth in Taiwan’s start-up industry, there continues to be a range of complaints, including about cumbersome laws stemming the flows of capital in and out of the country, and the difficulty for companies to employ foreigners. Some of the restrictions on foreign labor have been lifted recently, and new entrepreneurial visas have been introduced, although some commentators believe the changes have not gone far enough.

The MOTC is responsible for drafting the new regulations or rules that should mean Uber can operate in Taiwan without breaking the law.

A spokesperson from the MOTC told TNLI that while it supports new technologies and companies in the technology sector, Uber cannot simply claim being part of the new “shared economy” as a way to circumvent existing laws.

It says that as Uber operates a public transport service there are passenger safety issues the government has to consider. It also says that even in China ride-sharing services have been required to have valid licenses.

In response to growing unrest and public protests from the traditional taxi industry, the ministry plans to loosen restrictions on taxi vehicle types, among a range of other measures.

First Editor: Olivia Yang
Second Editor: J. Michael Cole