Singapore bought into the sharing economy dream early, but as
established industries feel the pressure of new sharing schemes,
has the dream become a nightmare?
By Oliver Ward
Bike sharing has exploded in popularity across
Singapore, but delving deeper down the rabbit hole of a sharing
economy opens yet another industry up to the pitfalls and damage
that comes with it.
The new bike sharing scheme has been a hit among
commuters. Mobike, ofo and oBike, are being pedalled as
the “Uber for bicycles”. The bike sharing scheme certainly shares
similarities with the ride sharing goliath. They both offer a
user-friendly service at excellent value for money. But they share
a more sinister trait. If left unregulated, they both have the
ability to destroy established industries.
The sharing economy grew rapidly in Singapore
The sharing economy is a ship of titanic proportions,
PricewaterhouseCoopers say the industry is worth US$15
billion today and will be worth as much as US$35 billion
by 2025. Singapore was an early adopter of the sharing economy,
with global giants like Uber. Airbnb and Tripda establishing
themselves in Singapore from
2012.
The rise of Uber has been at the forefront of the
transition to a sharing economy in Singapore. They both have their
regional headquarters in the city. Car ownership is at
an eight-year
low, as more and more people opt to use technology to
match cars to commuters when needed. The number of rental cars on
Singapore’s roads increased by 38% to
24,573 between 2014 and 2015, and reached 36,002 in
May of 2016.
But it was not only international giants which caused
the sharing economy explosion in Singapore. Companies like
iCarsClub, which was founded in Singapore to rival Uber in 2012,
has gone from strength to strength. It allows the 120,000 private
car owners using the site to rent out their cars, giving them an
income boost, and offering renters a lower cost car rental
service.
iCarsClub raised US$10
million in funding from series A back in 2014 which
allowed them to break into the Chinese market. Four months later
they raised a further US$60 million from series B. They received a
further US$315
million in additional investment from the National
Research Foundation in 2015.
Grab also drove Singapore and ASEAN nation into new
economic frontiers. The e-hailing taxi app began in Malaysia in
2012 and by just 2015, the app had been downloaded more
than 4.4
million times and was averaging seven bookings
a second. By 2016 the app reached 13
million downloads and was valued at US$1.5
billion. Their bookings between 2015 and 2016 grew by more than
5 times according to their
annual report.
Grab’s
valuation (US$ billion)
Sources: TechCrunch, TechCrunch, CrunchBase
It has crushed established industries
The rise of the sharing economy promised shared assets,
a reduced carbon footprint and more flexible jobs. But the reality
has been quite different.
More than 1,620
cs now sit idle as companies like Uber and Grab are
destroying the local taxi industry. The hotel and hospitality
industry is under similar pressures. There are now
over 6,000 listings
on Airbnb in Singapore, severely encroaching on local hotels’
profits. The first quarter of 2017 has seen revenue per available
room continue to drop by 0.8%.
Year-on-year
growth rate of hotel revenue per available room (%)
Source: SBR
Protests have taken place across Southeast Asia. Taxi
drivers in Jakarta
and Taipei protested the introduction of Uber last
year.
Uber has come under fire for
exploiting their workers. Their workers are not entitled
to a minimum wage or other worker rights. The promised job
flexibility has come at the cost of job security.
Airbnb have been linked with a shortage of affordable
housing and the
rise of illegal hotels. Former Minister for National
Development, Khaw Boon Wan weighed in on the issue of Airbnb in a
blog post. He
said they were “not a good idea” as neighbours would not
want to see their neighbourhood becoming a hotel district.
Left unchecked, these companies will take Singapore
down a road of increased inequality, worker exploitation and
putting thousands of jobs at risk. Instead of prosperity, the rise
of the sharing economy has only compounded inequality. A select few
at the top get richer, while workers have to settle for less
rights, less stability and, in many cases, lower pay.
How can a sharing economy deliver mutual prosperity?
A recent
study from BSR Consulting found that government
collaboration was essential in creating a sharing economy that
works for everyone. They outlined the need for government
regulation to create a
human-centred approach. This would create stable,
fairly-paid jobs with employee benefits and rights.
Other ASEAN nations are already collaborating to ensure
sharing platforms can be of benefit to everyone. The Philippines
government and the World Bank collaborated with
the ride-sharing app, Grab in 2016 to share the driver GPS
information and use it address traffic and congestion issues.
It is no coincidence that countries like the
Philippines, where collaboration is being explored, there is
significantly less public resistance than in Taiwan and Indonesia,
where the sharing economy remains unregulated.
Legislation has begun to be passed to curb the negative effects of
the sharing economy
Governmental approaches in Singapore have been more
focussed on curbing the disruption, than by forging a mutually
beneficial relationship, as seen in the Philippines.
In February Singapore
passed new regulations allowing officials the right to
force their way into homes suspected of being rented out illegally.
Currently, the Singaporean law forbids landlords from renting out
private property for a period of less than six months.
Between 2013 and 2014 more than 13,000 inspections
were carried out but only 24 flat owners were charged with
unauthorised subletting. With the new powers this figure should
increase dramatically, as officials now have increased powers to
inspect and detain those involved. Those found guilty can now be
fined up to S$200,000 (US$143,000)
and spend up to a year in prison.
The government also introduced measures to curb ride
sharing. Uber and Grab drivers are now required
to get a vocational licence or risk being fined. “I know a
lot of people will give back their keys, that’s for sure” said Uber
driver, Lionel Ong, who is abandoning his part-time job as an Uber
driver to find something less demanding.
What does the future look like for the sharing economy?
Singapore’s answer to Airbnb, Roomarama, has also gone
from strength to strength. They have moved into European and
American markets through the acquisition of a
French start-up. The sharing economy is still a new phenomenon
but it is evidently here to stay.
Governments are still grappling with legislation aimed
at harnessing the new technologies in a way that generates wealth
for everyone. The future is bright for a sharing economy. Flexible
working hours and a lower carbon footprint offer a promising
future, but without regulation, the road which takes us there will
be littered with the hollowed-out corpses of established
industries.
