A question of priorities and needs …

By Robert Ingall

In a bid to offer an alternative to Sri Lankans when it comes to transportation, the BOI is offering nine licences to run taxi services that will be won through a bidding process.

In a move to ensure that standards are of the highest quality, the service is to be “world class” where the bidding process will go through the Colombo Stock Exchange to ensure transparency.

Looking for that bit of class.

This was the recent announcement by the BOI, in tandem with the NDB Investment Bank, in the presence of Rohitha Bogollagama, Minister of Enterprise Development & Investment Promotion. Among the invitees were a number of potential investors, with the hope that they would get on board.

The licence process is also a move for foreign direct investment in the country, and was hailed as the first of its kind in the region.

As the evening progressed and explanations of what the licence allowed the winning bidder to operate, questions came to mind about the need and costs of suddenly having up to 900 new cars on the road, especially concerning the present inadequate infrastructure and the continuing high oil prices.

But for now, a look at what is on offer. According to Prof Lakshman R. Watawala, Chairman/Managing Director of the BOI, the service, when up and running, would offer people something different. “Today there are a lot of shortcomings when it comes to the transport sector, such as comfort, reliability, quality, coverage and availability. Hence, the nine homogeneous licences that would allow each holder to operate up to 100 brand new cars,” he said.

For the bidder there are a number of incentives, especially when it comes to tax breaks, ranging from a tax holiday for five years, to the majority of import duties being waived, all this for a minimum investment of $500,000.

Stipulated in the licence agreement is the type of car that can be imported. Here they must be sedan and/or station wagons, where the combination can be all up to two litres, or 75 percent up to two litres and 25 percent up to a maximum of three litres. The fleet must be uniformly coloured, with a maximum of two, and can be both diesel and petrol. “Where all the cars have to be imported within nine months of the winning bidder signing an agreement with the BOI,” the chairman said.

On the economic benefits, Ajith Nivard Cabraal, Secretary, Ministry of Plan Implementation, said that such a new service was commendable, as “Sri Lanka was on the threshold of a new era, where there shouldn't be any distractions from the problems facing the country”.

“Investment needs to be encouraged, where growth for the quarter ending in June is expected to be 7 percent. This taxi service investment will complement the bigger planned infrastructure projects to be implemented. This government is all for improving the infrastructure but we still need private sector help,” the secretary said.

Bogollagama said that this was a novel programme put forward by the BOI, and that it would fit commuter needs. “The taxi cab service as a whole cannot be second best to any other service found in any other part of the world. So through foreign investment and the local private sector, this must be allowed to happen. The specifics put down must be adhered to for the BOI will not allow any abuse of the rules stipulated. If any are found, licences will be canceled,” the minister said, adding that the winning factor here will be finding the drivers who will be the “best of the best”.

And there it was: a world-class taxi cab service coming to Sri Lanka. But is it really needed? For all the mention of comfort, safety and the rest, people have their own cars, and of the main taxi services already present, those using them will use those that they already trust.

There might be a variety in fares, but again, those using them soon find out their preferred choice.

When Vajira Kulatilaka, Director/CEO, NDB Investment Bank, was asked who would use this service and why, he said that when such vehicles are on the road, he expected commuters to start pooling, leaving their cars at home and traveling in with those in their area.

“With the price of oil being so high, and not looking like its coming down, this would make common sense.

At the moment there are no proper taxis on the streets. With such a service, women would be able to work in the night and feel much safer knowing that there was a taxi not too far away to get her home,” the banker said.

“There are hardly any services presently running after midnight, and it would also cut down drunk driving,” Kulatilaka said, adding that initially the cost might be too high for the majority, but there would be a spill-down effect, where the service’s reputation would make more people use them.

As for the BOI Chairman, Watawala, he said that presently not too many people were using taxis, so if a well-organised service came into being, the people will use it. “If people don’t have such a service, how can they miss it? This project will change that, and such a number won’t clutter up the streets as they will be offering a service,” the chairman said.

When asked about the price, and those who will be able to afford it: “Market forces will tell the operators the right price to offer the maximum benefits to as many people as possible.” He hoped there would be standardised pricing as the government didn't want to get involved in controlling prices, “Market demand should take care of it,” he said.

It all sounds very positive and potentially transparent, with the biding starting on August 14. But the worry here is that will people used the service enough to make it cost-effective to those winning the bidding? It will be interesting to see what the taxi prices are and the areas where they work. The idea is that the services cover the whole island, but where is most the money based? And where are the majority based who have access to it?