PETALING JAYA: A think tank has spoken up against an MP’s call for the government to intervene in e-hailing company Grab’s compensation for drivers, saying it is regressive.
“Asking the government to intervene in how companies run their businesses is an old habit that needs to stop,” said Center for Market Education CEO Carmelo Ferlito.
He was commenting on Hulu Langat MP Sany Hamzan’s call to transport minister Loke Siew Fook to intervene after Grab revised its driver compensation which is based on the time and distance for a journey.
Under the new compensation structure, drivers will earn 25 sen a kilometre down from 70 sen a kilometre now, and 43 sen a minute, up from 20 sen a minute.
Sany claimed the revision would affect Grab drivers as they did not operate in congestion-prone areas like taxis.
When contacted, Grab said it revised its fare structure because of increased traffic congestion on the roads which led to an imbalance in demand for rides and the availability of drivers during periods of heavy traffic.
For the drivers, it led to them spending more time in traffic and more on petrol for each ride.
“This provides fairer compensation to our driver-partners and ensures the entirety of their trip from passenger pick up to drop off, especially during high traffic periods, are worth their while,” it said in a statement to FMT Business.
Ferlito pointed out that businesses have to make decisions based on market signals which ultimately come from consumers.
“The issue is bigger than Grab. It’s about politicians looking to the government at every turn for a solution, forgetting that businesses have to make business decisions to survive.
“If businesses are constrained by government decisions, they may end up going out of business,” he said.
Ferlito said this was similar to the price controls for eggs that led to poultry farmers reducing production.
“Executive intervention in businesses that are already complying with local laws is bad for the country and the economy.
“It would signal a high level of interference with market forces and this will discourage investors and entrepreneurs,” he said.
He said the government should only facilitate discussions between employers and employees but not dictate what businesses can or cannot do within the confines of the law.
Source: https://www.freemalaysiatoday.com/category/highlight/2023/02/03/govt-meddling-in-business-is-regressive-says-think-tank/