ALMOST everyone has something to say about taxis in Singapore.

Foreigners and tourists are often bewildered by their absence at certain times of the day. The complex fare system, with its numerous surcharges, adds to the confusion and anxiety.

Many tweaks have been made to the fare system and the call-booking system has been enhanced, but these seem ineffective in getting you a taxi when you need one.

Like no other

SINGAPORE is one of those rare countries where taxis come under the direct purview of the Government.

The Land Transport Authority's (LTA) White Paper for a world-class land transport system, published in 1996, states that taxis are an important part of the urban transport system in that they fill the gap left by mass public transport and private vehicles.

Yet, taxis are not accorded the common privileges of public transport - they are still liable to ERP, COE, ARF and other costs associated with private vehicles.

The general public also seems to view taxis as integral to public transport, even though they do not have the common characteristics of public transport.

A taxi is after all a chauffered car providing point-to-point service, with no stops in between. A large majority of taxi users here want the comfort of a private vehicle but cannot or will not buy one, making them grudging users of taxi services.

There are more than 23,000 taxis on Singapore roads, making Singapore's taxi-to-population ratio one of the highest in the world. A quick visit to the depots of the various taxi companies will show that there are scores of new taxis waiting for prospective hirers, and leased ones returned to the company. These are signs that a taxi driver's career is not as rosy as often made out to be.

Instead, what we experience is a demand-supply mismatch where the demand for taxis during certain times of the day (especially in the morning and evening on weekdays) far outstrips the available supply. This is made worse by the fact that most of this peak demand is uni-directional (either suburbs to city, or city to suburbs) and confined to certain areas of Singapore (CBD area, shopping belts, etc).

Fares and fair play

MANY suggestions have been made to further enhance the current fare system, but as the LTA will point out, the industry has been largely deregulated since the late 1990s.

Fares are left to the taxi companies themselves to determine. Theoretically, the economic mechanism of open competition should be a self-adjusting one catering to changes in demand and supply.

However, all is not fair in the taxi arena where there exists one dominant player (ComfortDelgro) and a few other smaller players. In such a situation, price leadership occurs and unless the dominant player adjusts its fares first, it is unlikely that the smaller companies will make any autonomous changes to theirs for fear of a consumer boycott (if fares are increased) or driver discontentment (should fares be reduced).

Keeping things simple has its benefits. For one, the current surcharge system needs a rethink. The much-loathed midnight surcharge that results in the 'Cinderella syndrome' of disappearing taxis that reappear at the stroke of midnight was introduced way back in order to ensure that there were enough taxis on the roads during the wee hours of the night.

However, plenty has changed since then: The Singapore of today is a global city with many people working - or partying - late into the night. Restaurants, pubs and other entertainment venues operate for longer hours. Simple economics tells us that where there is demand there should be supply, and with the call-booking system available should there really be a need, the midnight surcharge has outlived its purpose. Removing it will remove a market distortion that now sees a gross oversupply of taxis after midnight.

And do we really need the other surcharges - peak hour, CBD, airport, etc? I would put my head on the chopping block and venture a 'No' for an answer. But this is if and only if the current base fare is increased to, say, $5 or even $7.

The reason is simple. The surcharges have created artificial peak periods (try hailing a taxi in the city after 8pm) and distorted the islandwide distribution of taxis.

One may argue that there may be a shortage of taxis at the airport and that is not a good thing for tourism, but do we really need such a long queue of vacant taxis waiting at the airport? For every tourist at the airport waiting for a taxi, I am sure there is another one frantically trying to get back to his or her hotel after a long day of sightseeing and shopping.

Over time, the system should readjust itself and most taxi drivers will go into areas of high demand to pick up fares. Drivers will find their incomes rising with fewer trips needed and the price differentiation will sieve out those who really need to take a taxi from those who don't.

Of course for any improvement to take place, the LTA must recognise the failure of the market mechanism that currently exists and intervene accordingly. The state must take ownership of the problems; the standard 'Sorry, but the industry is deregulated and we cannot do anything about it' reply in the newspapers' forum pages will not do.

The writer is a Research Scholar in the Department of Geography at the National University of Singapore. The opinions expressed in this article are his own.

This article first appeared in The Straits Times on 4 July 2007