Sindh govt speed-breakers for Über and Careem, may lead to u-turn on Pakistan’s PayPal dream

October 25, 2018

Über and Careem have changed lives in Karachi, a city of 20 million people who struggle with public transport. It was hardly a surprise when everyone got angry that Sindh Transport Minister Awais Qadir Shah said they were suspending these services.

The minister said that these companies should share vehicle registration information and driver data with the government so they can verify if their documents are complete and the drivers have no criminal record. The UK has already done what the Sindh government is trying to do. In September 2017, London’s transport authority stripped Über of its license over public safety concerns, following complaints that the company was not screening drivers.

When the public reacted, the minister did a double take. He said he was misquoted and had just wanted to ensure public safety. But this isn’t the first time we’ve seen this kind of back-peddling. Last year, the previous transport minister had to take back his words when he made a similar pronouncement.

Related: Careem launches ride-hailing service in Bahawalpur

Government after government, including Shah’s that has been in power since 2008, have failed to fix Karachi’s broken public transport system. Über and Careem filled the gap. A growing middle class depended on these ride-hailing services to get to school and office. These services meant greater mobility for women, in particular. Besides moving people, these companies created jobs for tens of thousands of unemployed young men at a time when our economy hasn’t produced enough. This is also why the public has been angry.

There is nothing wrong in regularizing these services—Über, Careem and the IT industry agree. But the way the provincial government wants to go about this is a problem.

The minister has given these companies seven days to register all drivers. This means, these drivers who number in the tens of thousands, have to acquire their route permits and vehicle fitness certificates within a week. Given the government’s capacity to process such requests, it is nearly impossible to meet this target.

What is an even bigger problem is that this exercise will only expose these drivers to harassment and bribery that taxi, rickshaw and bus drivers already face, in government offices and on the road. A rickshaw driver recently committed suicide because a law enforcer was extorting money from him.

Related: Asad Umar wants PayPal in Pakistan, gives IT ministry four months to do so

Given the reputation of our police and the Sindh government’s transport department, this move will also discourage young people, students and even bankers or engineers often found driving Careem and Uber full- or part-time. The country cannot afford this at a time when two million people enter the job market every year. Careem says it will alone provide one million jobs by end of 2020. Given that our economy is heading for a slowdown, even half of that number will make a big impact.

The way the government handled this matter says that it did not do its homework and is disconnected with ground realities. Is it wise to issue statement without assessing their impact and implications?

It would be better to fix the system first and make rules before setting such ambitious deadlines. Plowing ahead without doing this only sends investors negative signals. There is a reason why Pakistan is so low down on the World Bank’s Ease of Doing Business Index (147 out of 190). This low ranking means the country’s regulatory environment is less conducive to starting and operating a business.

Related: Uber settles for $148 million with 50 US states over 2016 data breach

Only a week ago, the federal finance minister said he intended to bring PayPal to Pakistan. The country’s financial regulations are already under scrutiny from the international community (read FATF), which is screening our progress on fighting money laundering and terrorism financing. The Sindh government’s poor handling of technology and app-based services will only push that PayPal dream further away.

The Sindh government is referring to laws dating back to the 1950s and 1960s to regularize future technology when it should actually be doing the opposite. Industry experts say these laws are outdated and need to be updated if the country wants to come at par with the fast changing world of technology.

Other than signing a memorandum of understanding with these companies, the government has done no work on the structure or regulatory framework to regularize them. It would be better to first remove all regulatory hurdles and create a one-window facility for technology services and then set such ambitious deadlines.

 
 

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