The government is considering whether to further deregulate “ride-sharing” services that allow drivers of private vehicles to carry passengers for a fee.

Proponents are calling for total deregulation. But the system is still riddled with problems, such as how to ensure worker protection and maintain a fair and competitive environment.

Priority should be given to reviewing, and improving on, the existing ride-sharing system, which was introduced this past spring following the partial lifting of a ban on such services for commercial purposes.

The government said in this year’s Basic Policy on Economic and Fiscal Management and Reform, more commonly known as the “big-boned policy,” that it will “press ahead with discussions on the future course of business operations, including the legal system,” in reference to allowing business operators other than taxi companies to enter the ride-sharing market.

Some proponents are arguing vocally that similar businesses should be allowed to operate ride-sharing services on an outsourcing basis without having to employ drivers. The government is weighing the option of submitting legislation to the ordinary Diet session next year to lift the ban on similar practices.

The existing ride-sharing system, which is peculiarly tailored to the Japanese market, allows ride-sharing services to be provided in urban regions under the supervision of taxi companies, but only in areas and time slots where there is a taxi shortage.

A separate framework allows municipal governments and other parties to operate ride-sharing services in provincial communities.

After the ride-sharing system was introduced, the transport ministry found that the rate of driver-passenger matching on apps in the early hours of Saturdays in Tokyo improved from about 70 percent to about 90 percent. The matching rate, however, remains as low as 40 percent or so on rainy weekday mornings.

Steps were put in place earlier in July to increase, in certain areas, the permit quota for ride-sharing vehicles on a conditional basis linked with rain forecasts. Another measure introduced earlier this month allows for padding of ride-sharing fares, within a reasonable range, in some areas.

We urge the ministry to carry out in-depth reviews on the basis of available data with the aim of making similar improvements in the ride-sharing system.

The average annual income of taxi drivers, in the meantime, recovered sharply from only 2.80 million yen ($17,700) in 2021, when the COVID-19 pandemic was raging, to 4.19 million yen last year.

The number of taxi drivers is increasing, partly because those who wish to work in an urban setting no longer have to pass a geography exam.

There is little need to lift the current ban on outsourcing in ride-sharing, given concerns that doing so could affect the treatment and rights of workers if the number of available taxi drivers and ride-sharing drivers combined continues to grow unabated.

Deregulation of entry into the ride-sharing sector is fine as long as employment quality is ensured and safety standards are met.

There have, however, been instances overseas where large-capital businesses that specialize in ride-sharing took over the market by offering low prices in the initial stage of entry and, once there were fewer taxi operators, raised fares or reduced the remuneration for drivers.

Any institutional systems should be designed cautiously so as not to invite a similar situation.

Ride-sharing proponents have recently been emphasizing “freedom of movement.” This will require in-depth discussions on whether further deregulation will really help improve this form of public transportation.

It remains uncertain, for example, whether full deregulation would prompt new market entry in depopulated areas, where there is only limited demand. There is, at the same time, a pressing need in popular tourist destination areas, which are plagued by serious traffic jams, to improve the operation of bus services and devise ways to get visitors to share taxi rides.

Drawing up new legislation should not be a done deal. There needs to be regulatory reform that reflects reality.

--The Asahi Shimbun, July 14