SINGAPORE: The Land Transport Authority (LTA) has introduced a new regulation that requires business-owned private hire cars in Singapore to be used for a minimum of three years.

Analysts believe this measure is key to "leveling the playing field" by reducing the competitive edge that private hire cars like those used by Grab have long enjoyed over traditional taxis, which have faced more stringent regulations.

In a recent interview, Walter Edgar Theseira, an associate professor at the Singapore University of Social Sciences, highlighted that the previous system favored private hire vehicles, which, unlike taxis, could be repurposed for other uses without restrictions.

This freedom had contributed to a dramatic shift in the ride-hailing landscape, with the number of taxis plummeting from nearly 29,000 in 2014 to just over 13,100 by 2024.

Meanwhile, the number of private hire cars has skyrocketed, increasing 38-fold to reach 59,371, as per LTA statistics.

Recent data reveals that the demand for taxi services has declined significantly, partly due to a drop in the number of available taxi cabs on the streets of Singapore.

As of February 19, the new regulation mandates that private hire cars owned by businesses remain committed to their original function for three years.

If a vehicle is transferred to another business, the lock-in period persists, although this does not apply to private individuals using their cars for personal or ride-hailing purposes.

Mr. Theseira indicated that the three-year lock-in rule not only aims to level competition but will also mitigate speculative practices in the private hire car market.

Concerns have been raised about private hire vehicles being prematurely converted into regular cars or sold off for profit, which has distorted the balance between taxis and ride-hailing services.

Assistant Professor Lee Kwok Hao from the National University of Singapore Business School noted that this convergence has prompted complaints and disrupted fairness in the transportation sector.

He predicted that with the lock-in period enforced, fewer car rental companies will actively bid for private hire car permits, as the requirements will demand more careful consideration of market demand before acquiring these licenses.

Transport Minister Chee Hong Tat disclosed that between January and October 2024, rental companies constituted approximately 10% of the private hire car permits issued.

In light of these changes, fleet operators will now need to engage in more strategic planning concerning Certificates of Entitlement, as the stakes have changed significantly with the introduction of the new regulations.

This proactive approach from the LTA aims not only to safeguard the future viability of taxi services in Singapore but also to ensure fair competition in a rapidly evolving transport landscape.

Is this the beginning of a new era for Singapore's transportation? Only time will tell!