Rangoon Taxis Need Reform

Rangoon has around 70,000 taxis plying the city’s streets, many owned and run by individuals. There are two local pioneering app-based cab service providers—Hello Cabs and Oway Ride—cultivating a culture in which apps are used to hail taxis in the city since 2016. The two are now set to compete with foreign brands: Singapore-based firm Grab launched its beta trial service in March and US-based Uber expanded into Burma in May.

The Irrawaddy spoke with Oway Ride, which operates under Oway Group, whose primary businesses are online travel booking and on-demand ride hailing services, about the challenges faced by local brands as foreign companies enter the market. Ko Nay Aung, chief executive officer (CEO) and founder of Oway Ride, explained how service providers should prepare for healthy competition while providing customers with more choice. Oway Ride currently has a fleet of 4,000 cars and 150,000 app subscribers, more than a year since its operation launch, he told The Irrawaddy.

What were the challenges you faced in the initial phase of operation?
There were some people who started similar services before us but with different concepts, since an app-based service was still difficult at that time. When I started Oway Ride, adopting it was still difficult from both the driver’s side and the consumer’s side. We recruited drivers and trained them how to use the app and how the meter rates worked, and we also had to explain to consumers how things worked.

When Uber and Grab came in recently, a lot of their customers had already been using our service and many drivers were also fairly well trained. They won’t need to train them from the start anymore.

How did you prepare to compete with them when you knew they were coming in?
We had to think about both the short term and long term. What is important are the customers. At the end of the day, it’s all about the customers’ choice. So, we needed to think about how we could be the customers’ first choice. It’s not just about the booking experience anymore. We also need to think about the experience of customers inside our taxis, how we can train our drivers better, how we can establish a better payment system, what kind of cars we use, how we can develop other partnerships, and what kind of new products we can offer.

There are many short-term challenges for us, since competition is very sudden and plentiful. But we plan to focus carefully on the long term.

What kind of challenges have you been facing since international services came in?
There will be more competition concerning driver retention. We have around 4,000 drivers and have thoroughly trained them. Competitors provide them with twice the incentive that we do. I don’t know how long such competition is going to last. We have to do new recruiting, arrange new trainings, and innovate new products in order to re-create an ecosystem. We are offering our customers more incentivized advantages.

The incentive rate for drivers has now become very high in the market. But if we look at any country, we can say such a move is not good for market sustainability, and they know that too. You burn a lot of cash by doing so.

Should locals’ love of international brands be taken into account?
It is very true for consumers in Myanmar. I didn’t think of that before. Something I discovered over the years after I came back is that Myanmar consumers are really crazy about international brands.

Do you need government support to compete with international brands?
We haven’t received any government support yet. Currently, the government has adopted an open market policy and we are doing business according to its policy. I have been here for five years and I have never requested any help from the government. Since the government has its own priorities, for us to be able to succeed, I think we have to stand up on our own. We have to make a market strategy, re-stabilize our operation, and invest in the company to become financially strong, by ourselves. Our own business future depends on ourselves, on customers’ choices, and on our partnering drivers.

If the government wants local champions, and if the local companies will also benefit the government strategically, and if there will be more job creation, they have to look at it for sure. But it depends on the government. They have their own plan [designating] which industries are strategic and which ones are not. For example, licenses for airlines and banks are only granted to local companies. It depends on individual sectors. Currently, the ground transportation industry is not under the government. One exception is bus lines: they are 100 percent under government control. But when it comes to taxis, there is no consistency. I don’t think the government has considered the taxi industry much yet.

If you ask local businesspeople if we need government support in competing with foreign investors, we would definitely say that we like that [idea]. But how and when the government is going to do that is up to their decisions on strategy. At the moment, we don’t expect anything from the government.

What is needed for a healthy market?
For the taxi industry to be improved, we need three things. First, vehicles have to be better. Second, drivers have to be more qualified, and third, we need more regulation of taxi meter fares. Right now, we are all only competing to make the booking process more efficient.

Fundamental reforms—model restrictions for cars, qualifications of taxi drivers, fares and the quantity of taxis—should be carried out first. These are major reforms essential for the industry.

The more we deeply reform the industry, the more that industry will succeed in the long term. To go deep, you need smart policies.

Is the industry at risk of becoming chaotic with foreign firms entering before these reforms?
I think that could happen. Right now there are already market forces. Service providers will look at their interests when the government wants to make reforms. But what are the real interests for the country? They are the three things I mentioned earlier: cars improve, drivers become more qualified, and prices become stable. That’s exactly what we need. What happens now is a lot of simulation. Normally, a simulation period is three to six months. It’s the government’s job to carry out these reforms.

What would be the most suitable model for Rangoon’s taxi service?
Many people think hailing taxis on streets is more convenient than using ride-hailing applications, but it’s not. You can’t get a taxi immediately in deserted places. Booking apps improve the productivity of drivers because they don’t need to go around the city to get passengers. For consumers, there is fairer pricing and better security. If they forget any [personal] property or if anything happens in the cars, they can track the cars easily. Such applications are really good. There is a benefit to society.

Do you agree with Rangoon chief minister U Phyo Min Thein’s claim that Rangoon has a lot of taxis?
Let’s take Singapore as an example. The population of Singapore and is pretty much the same. Singapore has 28,000 taxis and we have 70,000 here in Rangoon. But we also have to remember that Singapore has a metro and we don’t. However, we have more people using the bus than in Singapore. Singapore has strict regulations on car ownership. What I want to say is that Rangoon has a lot [of taxis] if we just look at the ratio of the city’s population and its taxi quantity. But contextually, Rangoon doesn’t have a reliable alternative transport system.

Source: Irrawaddy

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