Fare hike too sudden, steep, says think tank

A taxi driver adjusting the MyTeksi sticker on the windshield while waiting for passengers in George Town, Penang. Independent think tank Institut Rakyat believes the hike in budget taxi and express bus fares will be a double blow to Malaysians already burdened by the goods and services tax, both of which will be implemented on the same day. – The Malaysian Insider pic, March 19, 2015. 

The hike in budget taxi and express bus fares to be implemented on April 1 will be a double blow to consumers who will also be hit with the goods and services tax (GST) that will be implemented on the same day, said independent think tank Institut Rakyat.

Its executive director, Yin Shao Loong, said the 43% fare hike for taxis and 23% hike for express buses announced by the Land Public Transport Commission (SPAD) earlier today  is a sudden and sharp hike.

He said this steep increase represented a regulatory failure on SPAD's part, as the agency was supposed to conduct fare reviews every two years with focus on small and manageable increments of 10%.

"Having failed to conduct a fare review for the last six years, SPAD has now opted for a sharp and sudden increase," Yin said in a statement.

"While taxi and bus operators may enjoy a sudden boost in income to offset the increased costs with the GST, their customers will suffer a 30% or more, increase in their transportation budget come April 1."

Yin admitted that the various problems raised by taxi passengers, including haggling over the fare and unmetered rides, were due to inadequate economic incentives provided by the existing fare structure.

But he said that SPAD should also consider the interest of consumers, who are also struggling to make ends meet.

Yin said SPAD should have considered a gradual increase in fares to balance both consumer and business interests, which would help promote the use of public transport in the country.

He said a gradual phase-in of the overdue fare increase, at 10% at regular intervals over a period of one to two years, would be fairer than making up for six years in one fell swoop.

Yin said the Selangor and Federal Territory Taxi and Car Rental Services Association had also expressed its disappointment with the timing and scale of fare increases, as they are concerned customers would be scared off.

"As it stands, an 8km taxi journey today would cost RM10. With the new rates effective April 1, consumers will be paying RM13.10 for the same distance (flagfall remains unchanged at RM3)."

He said it was possible that some consumers would shy away from public transport or opt for alternative services such as Uber following the hike in fares.

"When even the beneficiaries are complaining, something has clearly gone amiss with SPAD’s regulatory approach. If so, this represents a mission failure for SPAD.

"Fairness is a cornerstone for every regulatory agency. While it is important to be fair to the taxi drivers and bus operators, it is also crucial to be fair to the consumers who depend on their services, and who in turn the public transport providers depend on," he said.

Under new rates announced by SPAD today, fares for budget taxis in Kuala Lumpur will increase to 25 sen per 200m, Bernama reported. Previously, the fare was 10 sen per 115m.

The Star Online also reported that the flag-down rate for cabs remained at RM3, according to a fact sheet from SPAD. Express bus fares will rise to 11.4 sen per km, from the current 9.3 sen per km.

This means a bus ride from Ipoh to Kuala Lumpur will be RM25.30 from April 1 from the current RM20.60.

- TMI