LAHORE/KARACHI: While the Sindh government said it had given the companies operating in Karachi a month to fulfil the legal requirements, the Punjab government on Tuesday moved to declare operations of the popular ride-sharing mobile applications — Uber, Careem, A-One, etc — in the metropolis as illegal, asking the traffic police and transport authorities to “initiate a prompt” legal action against them.

The Sindh government said it didn’t want to ban the service but added that it should be under the “ambit of law”.

In its order, the Punjab Provincial Transport Authority (PTA) cited concerns over “security threat” to the users of the service and loss of (tax and non-tax) revenue to government as basis for initiating action against the technology companies.

Sindh gives technology companies 30 days to fulfil legal requirements

The PTA letter issued on Jan 27 noted with “grave concern” that some companies were offering taxi services through mobile network technology without registering private cars with any regulatory body and without obtaining fitness certificates and route permits, causing a loss to the exchequer and posing a security threat to the public.

The ride-sharing tech companies make money by acting as a virtual platform to connect the users with the private car owners through the use of their mobile apps.

The use of private cars for commercial purpose, the PTA pointed out, was a violation of the Motor Vehicle Ordinance, 1965, as well as its policy under Rent-a-Car service. “Further, the drivers of these vehicles are not cleared by the security authorities.”

Reacting to the PTA order, Careem’s managing director Junaid Iqbal urged the government in a live broadcast on the Internet to “embrace new technology to create jobs, generate tax revenue and boost investment”.

“We’re working with the government for formulating a legal regime for regulating this new sector of the economy for creating jobs and encouraging entrepreneurship,” the top official of the Dubai-based tech firm in Pakistan said. “The world is moving away from physical marketplace to digital marketplace and other countries are drawing up new laws and regulations to embrace this change.”

Mr Iqbal said his company would continue to work with the authorities to create 100,000 jobs by the end of 2018. “For that we need private cars, taxis, rickshaws and motorcycles to use our platform,” he added.

San Francisco-based Uber was rather cautious in its response to the government move. In a brief statement, its spokesman said: “There are currently many drivers in Pakistan that are partnering with apps like Uber to help earn a sustainable income for themselves and their families....”

It pledged to continue to work with regulators and policymakers to help ensure that “Pakistanis have access to safe, affordable and efficient transportation option. In the meantime, we will stand by our driver-partners.”

Talking to this reporter, PTA secretary Mohammad Iqbal sought to refute reports that a ban had been placed on the ride-sharing apps. “It is a routine letter that we keep exchanging with other government departments and agencies. We just want the operators to work within the legal bounds so that responsibility could be pinned if something happens to passenger(s).”

But many suspect that the provincial transport authorities had moved to put restrictions on the app-based ride-sharing operators on the behest of a Turkish ride-hailing operator, which was pushing the authorities to act against its rivals.

“The Turkish company, which has invested a significant amount of money on building a large fleet of taxis in Lahore, has been facing tough competition from the ride-sharing operators because of their low fares,” an official told Dawn.

Punjab Information Technology Board chairman Umar Saif intervened to quash the controversy immediately after the order became public. In a tweet, he said: “Working on the Uber and Careem issue. Better sense will prevail.”

“We are coming up with a formal policy. This letter was an internal memo and has prematurely been made public,” he told Dawn.com.

“There are two ways that a government can approach such companies when they launch: treat them as a taxi service or treat them as a service that government can regulate. We don’t want to treat them as a taxi service. But they need to be regulated and taxed. They must register as a formal business under a new taxation regime.”

Like others, the PTA letter also took Saif by surprise. “We brought them to Pakistan with a lot of effort and the conversation had been going on from the start... They’ve had extensive meetings with the transport department and provincial authorities.”

Sindh’s stance

Sindh Transport Secretary Taha Ahmed Farooqui told Dawn the ride-sharing service would not be banned in Karachi. “We want such businesses to flourish. But it should be under the ambit of law. It is for this reason we’ve given them a month to fulfil the legal requirements.”

He said the government wanted the companies to register by obtaining a No Objection Certificate. “We’ve been discussing the issue with them for one year. But they haven’t registered so far. Out of the estimated... 1,000 to 1,500 cars run by Uber, only six have been registered with the transport ministry.”

Careem had recently come into contact with the provincial transport ministry. “Careem quietly started its business without seeking an NOC or getting itself registered. In the past six months, we communicated our reservations to them. After no action was taken from their side, we issued a warning a week back about blocking their website through the Pakistan Telecommunication Authority,” Farooqui added.

Published in Dawn, February 1st, 2017