Experts call for sharing economy to be regulated to help shore up industry and beat violations

Hong Kong is not dead set against the sharing economy despite a recent backlash against some prominent players, but would like to see a more decent contest among business stakeholders, according to industry pundits.

Overhauling regulations, they say, is one viable, immediate option for the Hong Kong government to accommodate the new business model that has seen exponential growth worldwide in the past few years in tandem with the technological boom.

Leading players in the industry have either hit the buffers or run afoul of the law in the region after having drawn the ire of local authorities and whipping up public discontent.

Global ride-sharing giant Uber Technologies was forced to put the brakes on its services in Macao last month after a futile two-year battle with the city's government over regulations. It was the second time the company had terminated its operations there. In August last year, Uber, which debuted in the gaming hub in late 2015, halted services after some 300 drivers were handed fines totaling more than 10 million patacas ($1.24 million) for violating local laws.

Uber had also pulled out of Taiwan in 2016 and sold its business on the Chinese mainland to its rival Didi Chuxing last year. In addition, authorities in Japan, South Korea and Thailand are clamping down on private car-hailing activities.

The San Francisco-based tech titan's bumpy journey in Macao also reflects a similarly tough climate in Hong Kong, where 22 Uber drivers were detained in an undercover police operation in May. They were charged with contravening the Road Traffic Ordinance, which prohibits carrying passengers for hire or reward without a permit and third-party risk insurance.

Uber had argued that a ride-hailing insurance policy of HK$100 million was in place for each trip for both third-parties and riders, and was in compliance with Hong Kong's laws, including insurance regulations.

A Hong Kong court convicted five Uber drivers in March this year on charges of conducting illegal car-hailing services. They were fined HK$10,000 each and had their driving licenses revoked for one year, but the penalties were suspended on appeal by the drivers.

According to a Reuters report, more than 1 million of Hong Kong's 7.3 million residents have downloaded the Uber app so far, while tens of thousands have registered as drivers.

Bike-hiring app operator Gobee.bike also had its fair share of problems when it debuted in the SAR in April, amid market concern over vandalism, theft of bicycles, leakage of personal data, as well as complaints about unfair competition.

Gobee.bike, which has registered 61,000 downloads to date, currently deploys 3,500 smart bikes across the New Territories, covering Sha Tin, Tai Wai, Tai Po, Ma On Shan, Tung Chung, Sheung Shui, Fanling, Tuen Mun, Tin Sui Wai, Tseung Kwan O and Yuen Long.

Bike-rental shops in the districts are up in arms against the locally based bike-sharing platform, saying they've been forced onto an unlevel playing field, as Gobee.bike is profiting by taking advantage of free bike-parking spaces, while bike-rental shops have to pay rent for their businesses.

In addition, the bike-hiring app may be susceptible to breaching the road traffic parking rules, under which any person who parks a vehicle in a parking space for a continuous period of more than 24 hours commits an offence.

Both Uber Hong Kong and Gobee.bike declined requests by China Daily for interviews.

In such a scenario, it's only proper that laws be enacted to ensure that the sharing economy companies find its niche in the market.

"The Uber and Gobee.bike cases show that the government has no policy coordination and no plan to make legislative revisions to accommodate sharing economy companies after having lured these enterprises to Hong Kong," says lawmaker Charles Mok Nai-kwong, who represents the information technology sector in the Legislative Council.

InvestHK - the Hong Kong government's investment agency - sees Uber as one of its success stories, but the endorsement on its website was removed following the Uber drivers controversy.

"The government should carry out public consultations on whether to regulate Uber's operations here. Any consultation should clearly delineate what kind of regulatory restrictions should be enforced. This should clear the air over whether the company's business is legal or not," said Mok.

Secretary for Innovation and Technology Nicholas Yang Wei-hsiung warned in June that "anyone operating illegal businesses in the name of sharing economy is unacceptable".

The intricate issue is that sharing economy apps threaten to seriously jeopardize the vested economic interests of well entrenched players.

In Uber's case, the growing popularity of its service could hurt the vested economic interests of Hong Kong's oligopolistic taxi license owners. Currently, a local taxi license can fetch up to HK$7 million.

"The government should conduct consultations involving relevant departments, established business leaders and sharing economy stakeholders on revising existing regulations to help accommodate the new sharing economy business model," said Wilson Chow, TMT (telecommunications, media and technology) leader at PwC (PricewaterhouseCoopers).

As the number of sharing economy players escalates, established players should also strive to stay competitive and improve their services by forming alliances to create a bigger market share. For instance, local taxi drivers can upgrade their services by introducing pre-appointment or door-to-door delivery services, or improving the industry's image, Chow suggested.

But, he stressed that the lawsuits meted out against Uber drivers and those suspected of vandalizing or stealing Gobee.bike vehicles do not mean that Hong Kong is turning its back on the sharing economy.

He's sanguine about the industry's future prospects in Hong Kong which boasts one of the world's highest internet and smartphone penetration rates, with people here very receptive to the global trend of the new business model.

Regarding the conflicts between data privacy and the sharing economy, Chow urged the government to require industry operators to set up internal control systems on monitoring the release of information, mandatory encryption to prevent information being exposed to unnecessary parties, and provide third-party assurances on the validity of internal control systems.

oswald@chinadailyhk.com

(HK Edition 08/11/2017 page7)