Malaysia needs a better business model, not better taxis

 It is time to consider allowing drivers to voluntarily join professionally managed fleet operators that provide vehicles, maintenance, insurance, technology platforms and structured employment.

From Wan Agyl Wan Hassan

When the government launched the National Madani Taxi Reform Programme recently, it sent an important signal that Malaysia has not forgotten its taxi drivers.

For years, they have shouldered the burden of an outdated ecosystem.

The decision to phase out the long-criticised “pajak” system, introduce individual permit ownership and modernise the fleet with the Proton S70 represents genuine progress.

These reforms deserve recognition because they address longstanding structural concerns that drivers themselves have raised for many years.

But while these initiatives are welcome, they also present an opportunity to ask a bigger question.

Have we been solving the wrong problem all along?

For more than two decades, every major discussion about Malaysia’s taxi industry has revolved around vehicles, permits, subsidies and financing.

Each reform has been an attempt to improve the industry by changing what drivers own. Far less attention has been given to how the industry actually operates.

Perhaps that is where the next chapter of reform should begin.

Because the real challenge facing Malaysia’s taxi industry today is no longer simply the vehicle. It is the business model.

A taxi driver today is expected to do much more than ferry passengers.

He or she must purchase a vehicle, obtain financing, pay commercial insurance, maintain the car, absorb depreciation, comply with regulations, compete with technology platforms, manage daily operating costs and still generate enough income to support their family.

In other words, we have not simply asked taxi drivers to drive. We have asked every one of them to become the owner of a small transport company.

That expectation deserves closer examination. Imagine asking every bus driver to purchase his own bus. Or asking every airline pilot to finance an aircraft before flying passengers.

No modern transport system operates that way.

Professional transport services are usually built around professionally managed organisations that take responsibility for assets, maintenance, insurance, technology and operations, allowing drivers to focus on delivering safe and reliable services.

Why should taxis remain different?

To be fair, many taxi drivers value the independence that comes with operating their own business.

Some have built loyal customer bases over decades and earn incomes that reflect their experience and commitment.

Nothing in this discussion should diminish their achievements or suggest that independent operators no longer have a place in Malaysia’s transport ecosystem.

In fact, they should continue to have that choice.

The question is whether independence should remain the only pathway available.

There are also many drivers who carry significant financial risks every day, not because they lack effort, but because they shoulder every business cost individually.

One unexpected repair, one prolonged illness or one period of weak demand can immediately reduce household income.

For these drivers, should there also be another option?

Perhaps it is time for Malaysia to begin discussing a dual-model industry.

One pathway would continue supporting independent taxi entrepreneurs who wish to operate their own businesses.

Alongside that, another pathway could allow drivers to voluntarily join professionally managed fleet operators that provide vehicles, maintenance, insurance, technology platforms and structured employment.

This would not replace today’s taxi industry. It would expand the choices available to drivers.

Some may still choose independence. Others may prefer the stability of employment, predictable income, statutory benefits and career development.

Neither model is inherently better. The market and the drivers themselves should decide.

Such professionally managed fleet operators are not a new concept.

Across the world, large fleet operators leverage economies of scale to negotiate lower vehicle costs, centralise maintenance, secure more competitive insurance premiums, optimise fleet deployment through technology and maintain consistent service standards.

These efficiencies benefit not only operators but also drivers and passengers.

Drivers spend less time worrying about vehicle ownership and more time serving customers. Passengers enjoy cleaner vehicles, shorter waiting times and more reliable service.

The government benefits from a more organised and accountable industry.

This is also different from the old “pajak”, or lease, system that many drivers rightly opposed. The model generated revenue primarily through permit ownership and daily rental payments.

A modern fleet operator should generate value through operational excellence — efficient fleet management, better technology, driver development and superior customer experience.

The business model is fundamentally different. Success would depend on delivering better mobility, not extracting higher rents from drivers.

The government’s role is not to manage these fleets.

Instead, its responsibility should be to create the regulatory framework that encourages competition, protects driver welfare, maintains service quality and allows innovative fleet operators to emerge.

The Madani Taxi Reform has already addressed important issues surrounding permit ownership and fleet renewal.

Perhaps the next stage of reform should explore how Malaysia wants the taxi industry itself to evolve over the next 20 years.

Ultimately, this discussion is not about replacing taxi drivers. Nor is it about forcing anyone to become an employee.

It is about recognising that one business model may no longer suit every driver operating in a rapidly changing mobility landscape.

Malaysia has successfully modernised many transport sectors by strengthening institutions, improving operational standards and embracing new technologies.

There is no reason why the taxi industry cannot begin the same conversation.

The reason is simple: the future of Malaysia’s taxi industry will not be determined solely by the next generation of vehicles. It will be determined by whether we are prepared to rethink the way the industry itself is organised.

The next taxi reform should not begin in the showroom. It should begin in the boardroom. - FMT

Wan Agyl Wan Hassan is the founder and senior adviser of MY Mobility Vision, a transport think tank.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.