The rise of sharing economy – boon or bane in Singapore

Singapore bought into the sharing economy dream early, but as established industries feel the pressure of new sharing schemes, has the dream become a nightmare?

By Oliver Ward

Bike sharing has exploded in popularity across Singapore, but delving deeper down the rabbit hole of a sharing economy opens yet another industry up to the pitfalls and damage that comes with it.

The new bike sharing scheme has been a hit among commuters. Mobike, ofo and oBike, are being pedalled as the “Uber for bicycles”. The bike sharing scheme certainly shares similarities with the ride sharing goliath. They both offer a user-friendly service at excellent value for money. But they share a more sinister trait. If left unregulated, they both have the ability to destroy established industries.

The sharing economy grew rapidly in Singapore

The sharing economy is a ship of titanic proportions, PricewaterhouseCoopers say the industry is worth US$15 billion today and will be worth as much as US$35 billion by 2025. Singapore was an early adopter of the sharing economy, with global giants like Uber. Airbnb and Tripda establishing themselves in Singapore from 2012.

The rise of Uber has been at the forefront of the transition to a sharing economy in Singapore. They both have their regional headquarters in the city. Car ownership is at an eight-year low, as more and more people opt to use technology to match cars to commuters when needed. The number of rental cars on Singapore’s roads increased by 38% to 24,573 between 2014 and 2015, and reached 36,002 in May of 2016.

But it was not only international giants which caused the sharing economy explosion in Singapore. Companies like iCarsClub, which was founded in Singapore to rival Uber in 2012, has gone from strength to strength. It allows the 120,000 private car owners using the site to rent out their cars, giving them an income boost, and offering renters a lower cost car rental service.

iCarsClub raised US$10 million in funding from series A back in 2014 which allowed them to break into the Chinese market. Four months later they raised a further US$60 million from series B. They received a further US$315 million in additional investment from the National Research Foundation in 2015.

Grab also drove Singapore and ASEAN nation into new economic frontiers. The e-hailing taxi app began in Malaysia in 2012 and by just 2015, the app had been downloaded more than 4.4 million times and was averaging seven bookings a second. By 2016 the app reached 13 million downloads and was valued at US$1.5 billion. Their bookings between 2015 and 2016 grew by more than 5 times according to their annual report.

It has crushed established industries

The rise of the sharing economy promised shared assets, a reduced carbon footprint and more flexible jobs. But the reality has been quite different.

More than 1,620 cs now sit idle as companies like Uber and Grab are destroying the local taxi industry. The hotel and hospitality industry is under similar pressures. There are now over 6,000 listings on Airbnb in Singapore, severely encroaching on local hotels’ profits. The first quarter of 2017 has seen revenue per available room continue to drop by 0.8%.

Source: SBR

Protests have taken place across Southeast Asia. Taxi drivers in Jakarta and Taipei protested the introduction of Uber last year.

Uber has come under fire for exploiting their workers. Their workers are not entitled to a minimum wage or other worker rights. The promised job flexibility has come at the cost of job security.

Airbnb have been linked with a shortage of affordable housing and the rise of illegal hotels. Former Minister for National Development, Khaw Boon Wan weighed in on the issue of Airbnb in a blog post. He said they were “not a good idea” as neighbours would not want to see their neighbourhood becoming a hotel district.

Left unchecked, these companies will take Singapore down a road of increased inequality, worker exploitation and putting thousands of jobs at risk. Instead of prosperity, the rise of the sharing economy has only compounded inequality. A select few at the top get richer, while workers have to settle for less rights, less stability and, in many cases, lower pay.

How can a sharing economy deliver mutual prosperity?

A recent study from BSR Consulting found that government collaboration was essential in creating a sharing economy that works for everyone. They outlined the need for government regulation to create a human-centred approach. This would create stable, fairly-paid jobs with employee benefits and rights.

Other ASEAN nations are already collaborating to ensure sharing platforms can be of benefit to everyone. The Philippines government and the World Bank collaborated with the ride-sharing app, Grab in 2016 to share the driver GPS information and use it address traffic and congestion issues.

It is no coincidence that countries like the Philippines, where collaboration is being explored, there is significantly less public resistance than in Taiwan and Indonesia, where the sharing economy remains unregulated.

Legislation has begun to be passed to curb the negative effects of the sharing economy

Governmental approaches in Singapore have been more focussed on curbing the disruption, than by forging a mutually beneficial relationship, as seen in the Philippines.

In February Singapore passed new regulations allowing officials the right to force their way into homes suspected of being rented out illegally. Currently, the Singaporean law forbids landlords from renting out private property for a period of less than six months.

Between 2013 and 2014 more than 13,000 inspections were carried out but only 24 flat owners were charged with unauthorised subletting. With the new powers this figure should increase dramatically, as officials now have increased powers to inspect and detain those involved. Those found guilty can now be fined up to S$200,000 (US$143,000) and spend up to a year in prison.

The government also introduced measures to curb ride sharing. Uber and Grab drivers are now required to get a vocational licence or risk being fined. “I know a lot of people will give back their keys, that’s for sure” said Uber driver, Lionel Ong, who is abandoning his part-time job as an Uber driver to find something less demanding.

What does the future look like for the sharing economy?

Singapore’s answer to Airbnb, Roomarama, has also gone from strength to strength. They have moved into European and American markets through the acquisition of a French start-up. The sharing economy is still a new phenomenon but it is evidently here to stay.

Governments are still grappling with legislation aimed at harnessing the new technologies in a way that generates wealth for everyone. The future is bright for a sharing economy. Flexible working hours and a lower carbon footprint offer a promising future, but without regulation, the road which takes us there will be littered with the hollowed-out corpses of established industries.