Hong Kong Calls The Taxi Crash Permanent
The Plate That Cratered
A Hong Kong urban taxi licence changed hands for HK$7.66 million back in 2015, the kind of number that made owning a plate a better retirement plan than owning a flat. By this year it was trading around HK$2.6 million, a two-thirds haircut nobody in government has offered to explain, let alone reverse. Someone floated a HK$5 million buyback earlier this year to soften the landing for the roughly 18,163 taxis and the 46,000 drivers tied to them. The Chief Executive said no, and used the word 'irreversible' to describe what has happened to the trade. The government is looking at an asset it helped devalue and telling the people holding it: this is the new price, get used to it. Every other Hong Kong asset class gets a task force when it drops two-thirds. Taxi plates get a shrug and a policy briefing about how the market has spoken. It has, and it spoke in a two-thirds price cut the licence holders never agreed to absorb.
The Door Stays Open
On Friday, August 28, the Transport Department opened licence applications for ride-hailing platform operators, and both Uber and Didi said they are getting their paperwork ready. Uber called it 'preparing our application.' Didi said it would submit 'as soon as possible.' Secretary for Transport and Logistics Mable Chan said there is no cap on how many platforms can be licensed, just a HK$50 million paid-up capital bar to clear first. That sounds generous until you hit the number that actually matters: the government capped ride-hailing vehicle permits at 10,000 back in May, and that cap has not moved. So an unlimited number of companies, each with HK$50 million to spare, are about to compete for a fixed 10,000 seats at the table, seats platforms themselves argued should be closer to 30,000 or drivers would face longer waits and higher peak fares. Nobody serious thinks 10,000 is the resting number. It is just the number the government picked to look firm on volume while doing nothing to protect the people already in the trade.
Who Actually Pays
Chau Kwok-keung, who speaks for those 18,163 taxis and their roughly 46,000 active drivers, is watching night-shift income fall while a new written test opens the same lane to people who have never carried a passenger for a living. More than 1,000 drivers had signed up by early August for the combined taxi and ride-hailing exam, first sitting mid-September. Pass it and you can drive either kind of car. From next August, running an unlicensed platform costs up to HK$1 million and a year in jail; driving unlicensed costs a driver HK$10,000 and a ban of one to three years. Those numbers exist to police the new entrants. Nothing on that list does anything for the man who paid HK$7.66 million on the old rules and is now sitting on an asset worth a third of that, with a government that has already told him the number is not coming back.
The exam sits in mid-September. The licence applications close whenever Uber and Didi finish their paperwork, which will not take long. What doesn't move is the 10,000 cap, and what doesn't come back is the HK$7.66 million plate. The Chief Executive has picked a number and is sticking to it while calling it the market's decision. The 18,163 taxi owners who bought in under the old number get to watch, same as the rest of us, and pay for the seat they already own.
Sources
- HKFP -- Uber and Didi confirm plans to apply for ride-hailing licences as applications open (hongkongfp.com)
- RTHK -- Chan says no cap on ride-hailing licences, sets HK$50m capital bar (news.rthk.hk)
- SCMP -- Hong Kong sets ride-hailing permit cap at 10,000 (scmp.com)
- SCMP -- Taxi trade fears 10% could lose cabs as drivers gear up for ride-hailing (scmp.com)
- HKFP -- Explainer on plummeting taxi licence values amid Uber's rise (hongkongfp.com)