Japan Considers Allowing 'Ride-Sharing' Amid Driver Shortage... Taxi Industry Protests

Reviewed in 2017 but scrapped due to taxi industry backlash
Calls for caution emerge within the Liberal Democratic Party... Conflict expected

The Japanese government and the ruling party have announced that they are considering easing regulations on 'ride-sharing,' which have repeatedly failed amid opposition from the taxi industry, judging that it is difficult to cope with the increased demand amid a worsening shortage of taxi drivers. Controversy is spreading as the taxi industry, expected to be directly hit if the regulations are lifted, strongly opposes the move, and politicians connected to the taxi industry have also expressed opposition, bringing the conflict to the surface.

On the 21st, Nihon Keizai Shimbun (Nikkei) reported that the government and the Liberal Democratic Party, led by former Prime Minister Suga Yoshihide and Digital Minister Kono Taro, are starting discussions on reforming ride-sharing regulations.

This discussion on deregulation emerged as taxi demand increased due to inbound tourists after the end of the COVID-19 pandemic. According to Nikkei, the estimated number of inbound tourists in July was 2.32 million, recovering to 80% of the pre-pandemic 2019 level. In the U.S. and Europe, the number of visitors to Japan has already surpassed the 2019 figures.

However, the number of taxi drivers is severely insufficient. The number of drivers, which was 340,000 in 2012, decreased to 220,000 in 2021, a drop of over 30% in ten years. The average age of drivers is also known to be high at 58.3 years.

According to Nikkei, the first to bring up the permission for ride-sharing was former Prime Minister Suga. In a lecture in Sendai City on the 7th, he repeatedly emphasized, "Transportation such as taxis is already insufficient in tourist areas," and "prompt response is necessary."

Then, in the cabinet reshuffle on the 13th, Digital Minister Kono, who is close to former Prime Minister Suga, concurrently took on the role of Minister in charge of regulatory reform, and it is expected that discussions on deregulation will accelerate in earnest.

[Image source=Yonhap News]

If ride-sharing regulations are lifted, ordinary people without taxi licenses will be able to enter the transportation business. Until now, vehicles operating for profit without an official taxi license have been classified as illegal business vehicles under the Road Transport Act.

In Japan, such vehicles were called 'Shirotaku,' a combination of 'shiroi (白),' meaning white, and 'taku' from taxi, because unlike taxis authorized by the Ministry of Land, Infrastructure, Transport and Tourism that have green license plates, these vehicles have white license plates. If ride-sharing regulations are lifted, this Shirotaku business will be immediately legalized, and it is expected to fiercely compete with existing taxi companies.

The taxi industry is strongly opposing the move, citing safety concerns as a pretext. The issue was already discussed in 2017 at the Regulatory Reform Promotion Council but was scrapped due to opposition from the taxi industry.

Members of the Liberal Democratic Party close to the taxi industry, including those from the Ministry of Land, Infrastructure, Transport and Tourism, have also expressed opposition, saying that ride-sharing should not be hastily deregulated. The LDP's 'Taxi Hire Parliamentary League' held a meeting at the end of last month and expressed opposition. At that time, the league's secretary-general, Moriya Masahito, Minister of Education, Culture, Sports, Science and Technology, emphasized that safety issues remain, saying, "Who will compensate in case of an accident?" Minister of Land, Infrastructure, Transport and Tourism Saito Tetsuo also stated, "There are problems from the perspective of ensuring safety."