Starting April next year, Japan is set to initiate a “taxi company exclusive” ride-sharing service. This decision has sparked debate and raised questions about whether entrusting this to the traditionally resistant taxi industry can genuinely support regional life and the economy, especially in depopulated areas.
Background and Decision
This summer, the discussion around ride-sharing suddenly gained momentum in Japan, culminating in the government’s decision on December 20th to launch a restricted version of ride-sharing from April. Contrary to the global standard of ride-sharing, which typically involves new legal frameworks like a specific “Ride-Sharing Business Law,” Japan’s version will operate under existing laws and be limited to taxi companies. This decision implies that the pricing and supply will largely adhere to current regulations.
This “Japan-style” ride-sharing, defined as a complement to taxis, might cause conflicts of interest within taxi companies and potentially fail to provide sufficient services to the public. Many see this version as starkly different from the globally recognized model of ride-sharing, which is seen as a burgeoning industry.
Government officials describe this as the “first phase,” with discussions about a new law set to continue in June next year. However, without a concrete timeline or commitment to new legislation, this approach seems inadequate as a regulatory reform.
Addressing the Needs of ‘Transportation Vulnerable’
The increasing number of ‘transportation vulnerable’ individuals, like the elderly and tourists, particularly in rural areas, is a critical and urgent issue. My concern, having been involved in these discussions, revolves around two key points.
Firstly, the role of taxi companies in addressing the ‘transportation vulnerable’ issue is significant. With upcoming deregulation related to taxi licenses and other aspects, the industry needs to proactively engage in this new ride-sharing initiative. However, past discussions reveal a consistently oppositional stance from the taxi industry, raising doubts about their commitment to this venture.
Media interviews suggest that the taxi industry views this new measure as potentially nonviable without additional support, like subsidies, similar to bus services. If the government is pushing a reluctant taxi industry to take on this project, there’s a risk that this initiative may not effectively address urgent issues.
A more logical approach would be to prioritize ‘other businesses’ and ‘local governments’ who are willing and eager to tackle these problems.
The Lack of Enthusiasm from Businesses and Local Governments
There hasn’t been a notable eagerness from businesses to make concrete proposals regarding ride-sharing, possibly due to various constraints. Even international companies like Uber, which halted its Fukuoka pilot project around 2015, took a while to make significant moves in Japan. However, some local governments are earnestly considering initiatives to support their residents and local economies.
As I mentioned in a previous article (June 2023 issue), regulatory reforms progress with concrete proposals from committed proposers. Government officials need to humbly listen to these specific needs from the field and work toward their realization, moving beyond just discussions in Kasumigaseki conference rooms.
Concerns Over Speed and Efficiency
The second concern is the lack of urgency. If the effectiveness of the “first phase” starting in April is unclear, discussions for the “second phase” of new legislation should not be delayed until June.
During this summer’s heatwave, I observed long queues of residents and tourists waiting for taxis at rural stations. While opponents of ride-sharing often cite its risks, the health risks for elderly people waiting in extreme heat are also considerable.
Alternative Approaches and Focus on Rural Areas
Given that legislative changes for the “second phase” will take time, shouldn’t we explore other avenues besides limiting this initiative to taxi companies? The problem of ‘transportation vulnerable’ is more acute in rural areas, including depopulated regions, due to increasing driver shortages and a growing number of vulnerable individuals.
A comprehensive strategy focused on rural areas should be considered immediately. One of the most advanced regions in addressing these issues is Yabu City in Hyogo Prefecture, a ‘reform sanctuary’ known for its breakthroughs in various regulatory reforms, including in agriculture.
Yabu City’s ‘Yabukuru’ service, a ‘paid transportation using private cars’ system started in 2018, has been particularly innovative. While constrained, this system allows non-profit organizations to use private cars to ensure mobility in areas with no public transport. Though initially established during the Koizumi administration as part of structural reform special zones and now utilized by over 600 operators nationwide, Yabu City’s approach is unique.
In spring 2016, Yabu City’s Mayor, Ei Hase, proposed a bold regulatory reform to me, then an official in charge at the Cabinet Office. This included expanding the use of private cars to tourists. The key negotiation points with the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) were 1) allowing business implementation without the need for local Public Transport Councils’ agreement, and 2) permitting corporations, not just non-profits, to participate.
Point 1 was crucial, as Public Transport Councils often include local taxi companies that could hinder new entrants. Removing this requirement would allow new businesses to operate on an equal footing with existing taxi services. Though point 2 was deferred, the acceptance of point 1 was a significant achievement. Subsequently, the law was passed, and ‘Yabukuru’ was realized.
Proposal for Corporate Entry and Government Decisions
In early November, Minister Kono visited Yabu City to inspect ‘Yabukuru.’ Mayor Hase proposed allowing corporate entry, which had been pending since 2016, considering attracting foreign companies and the potential shift of local taxi companies to ride-sharing operators. Unfortunately, Minister Kono’s response was cautious.
The recent government decision does not permit corporations to operate as primary business entities in ‘paid transportation using private cars,’ although they can undertake projects for non-profits. This seems insufficient – why can non-profits operate as business entities, but corporations cannot?
Urgent Need for Comprehensive Measures
Addressing the transportation needs of vulnerable populations requires various strategies. While relying on willing taxi companies is one option, utilizing foreign drivers in areas with a high number of foreigners is another viable approach.
However, for regions determined to solve their transportation issues primarily through the use of private cars, the government should provide bold regulatory reform measures. Focused and comprehensive strategies for rural areas should be developed and implemented immediately. For instance, using special zone laws, which allow for speedy reforms, could be an effective way to enhance the ‘paid transportation using private cars’ system.
The upcoming ordinary session of the National Diet, starting early next year and running until June, could be an opportunity to submit related bills as the “first phase” and then quickly transition to a “second phase” that includes a nationwide ride-sharing law.
The government’s efforts should respect the real voices of ‘transportation vulnerable’ residents and the regulatory reform proposals from local governments. By acknowledging these local voices and proposals, the government can make meaningful progress in addressing this pressing issue.