Thursday, March 21

Facing up to digital economy realities

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Taxis waiting to pick up passengers at Sibu Airport.

 

PART 1

AS digital economy is gaining a firm foothold in the global market, traditional businesses are bracing for tougher competition from their technology-savvy counterparts.

The latter’s ability to stay just a mouse-click or phone call away from the beck and call of their clientele gives them a big leg-up over their traditional business competitors.

For instance, hoteliers are facing increasing competition from new high-tech industry players like AirBnB while taxis are no longer the first cab off the rank in the transport-for-hire business with the advent of e-hailing services such as Grab, among others.

Robert Angkah

In fact, e-hailing service has transformed the public commuting landscape in Malaysia, particularly in big towns and cities in this digital era.

Macarthy Gindau who lives on the outskirts of Sibu town, said hiring a cab had never been this easy and convenient.

“As long as you have a smartphone, you can just call for a Grab car to your doorstep to take you to your destination,” the Bawang Assan Homestay Programme chairman said, alluding to the case of a foreign tourist who called a Grab car to take him to a homestay.

According to the Malaysian Reserve, Transport Minister Anthony Loke had said the number of trips recorded by e-hailing companies had increased from six million a month in 2016 to 18 million for same period this year.

It said this growth had been hugely beneficial to consumers looking for convenient and affordable options to get around. A spinoff of e-hailing’s increasing popularity is that the ride-sharing service has also become an important source of employment.

 

Rivalry in digital era

But things are not as rosy for the traditional metered taxis in the face of tougher competition. The arrival of digital economy is rapidly undermining the conventional notion on how businesses are structured, how firms interact and how consumers obtain services and information.

Malaysia Digital Economy Corporation Sdn Bhd (MDEC) chief operating officer Datuk Ng Wan Peng had said traditional companies should strive to improve and adapt to the new business trend.

Macarthy Gindau

According to an online website (www2.deloitte.com/mt/en/pages/technology/articles/mt-what-is-digital-economy.html) Professor Walter Brenner of the University of St Gallen in Switzerland has described ‘the aggressive use of data as having transformed business models to facilitate new products and services, created new processes, generated greater utility and ushered in a new culture of management’.

TechCrunch, a digital economy news site, noted: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And AirBnB, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”

Damodar Sahu, Research Scholar at SunRise University, India, and Dr Rajendra Prasad Mahapatra at SRM Institute of Science and Technology, India, have urged today’s transport service providers to quickly identify their roles in the new mobility ecosystem and be ready to drastically transform how they operate.

 

New economic reality

Associated Taxi Owners’ Association of Sarawak secretary Robert Angkah said taxi operators in the state had seen a big drop of about 80 per cent in their business since e-hailing services were legalised.

“This is the new reality — e-hailing is the choice among the younger generation, especially college and university students,” he told thesundaypost.

Chief Minister Datuk Patinggi Abang Johari Tun Openg has advised local taxi associations to create their own apps to improve service efficiency.

A ride-sharing app platform for commuters to engage their service.

Robert reckoned if taxi operators had mobile apps, they would not have to wait at taxi stands for prospective passengers to call them. However, he also pointed out that there was the question of location to consider.

“For example, if you are at the wharf and a passenger at University College of Technology Sarawak (UCTS) wants to go back to the Li Hua Hostel, it’ll be costly for you to drive from the wharf to UCTS to send the passenger to the hostel — a distance of about 8km,” he explained.

Regardless, he sees light at the end of the tunnel, saying there is a strong possiblity taxi and Grabcar operators will embrace the same technology and compete on a level playing field.

E-hailing services such as Grab have been subjected to the same regulations as taxis from July 12 this year, especially for licence registration, vehicle inspection and operational requirements.

 

Opportunities in digital economy

According to UCTS School of Computing and Creative Multimedia senior lecturer, Gary Loh Chee Wyai, digital economy will bring about changes as to how people share information and knowledge.

“In a digital economy, we no longer pay a higher price for certain things. For example, we can use e-hailing service rather than taxi. We now see a fair playing field. Everyone can participate in e-hailing business. What you need is a smartphone with Internet connection and an e-hailing apps installed when you drive a car.

“This is one of the many examples of digital economy. Imagine the benefits for rural folk when the costs of delivering their products can be shared through the same e-hailing concept. This will cut down on transportation costs. Digital economy will open up the market and enable everyone to participate in it,” he said.

In this regard, he stressed it was important to adapt to the digital economy eco-system.

“I think for the time being, the traditional taxi operators are really feeling the pinch. But we’re not sure what will happen next as the Transport Minister Anthony Loke has announced he wants all the Grab drivers to be registered with the same licence as taxi operators.

“But what seems certain is that there will still be many Grab users because the service is very convenient. We just have to adapt to change and not resist it blindly. The technologies are good if used correctly,” he added.

Loke was reported as saying Grab had positively impacted the livelihood of 7.1 million micro-entrepreneurs in Southeast Asia — many of them in Malaysia.

According to a national English daily, Grab, last valued at US$9bil (RM37bil), is large enough to enter Malaysia’s top 20 public-listed company rankings in market capitalisation.

Today, the Singapore-based Grab has stamped its footprint in eight countries and 225 cities in Southeast Asia as the leading online-to-offline mobile platform in the region.

In March this year, Grab acquired its rival Uber’s Southeast Asia operations and integrated Uber’s ride-sharing and food delivery business in the region into Grab’s existing multi-modal transportation and financial technology platform.

 

The way forward

The TaxiGo application has been introduced as another e-hailing platform for taxi and car rental operators in the country.

Loke had said more such platforms could bring positive development to the taxi industry as well as give consumers more options on affordable fares and good service

Despite the introduction of more new ride-sharing services and the ensuing competition, Robert felt the taxi industry would still remain relevant.

“The older generation will still use the traditional taxis.They feel more comfortable with taxi service than e-hailing. Some of the older folks may not know how to use the ride-sharing apps to call a Grab car,” he noted.

However, to keep pace with new technology, he stressed taxi operators had to improve their services.

“I think it’s important we provide quality customer service to our passengers,” he said.