The debate over ride-hailing permits in Hong Kong is built on a lie.
Government officials, transport academics, and taxi lobbyist groups are currently locked in a circular argument about "optimal supply." They are obsessing over whether the city needs 5,000, 10,000, or 20,000 licenses to "balance" the market.
They are all wrong. The moment you start counting permits, you’ve already lost the war for urban mobility.
The obsession with a hard cap on permits isn't about traffic congestion or passenger safety. It is a desperate, failing attempt to protect a legacy asset class: the Hong Kong taxi license. By framing the discussion around "how many permits," the government is acting as a wealth manager for medallion holders rather than a regulator for seven million citizens.
The Myth of the "Fixed Pie"
The standard argument goes like this: there is a finite amount of road space and a finite number of passengers. If you let Uber and its peers run wild, the roads clog, and the "legal" taxi industry collapses.
This is fundamentally flawed. It ignores induced demand and service elasticity.
When you make transport reliable, people stop using their private cars. When you make it accessible, people travel more. The "pie" isn't fixed. The taxi industry didn't "lose" its market share to ride-hailing; it forfeited it through decades of stagnant service, rejected hires, and a refusal to modernize.
In a functioning market, supply isn't dictated by a bureaucrat with a spreadsheet from 1994. It is dictated by real-time demand. A hard cap on permits is a price floor for inefficiency.
The Medallion Trap: A Financial Bubble, Not a Transport Tool
To understand why the permit conversation is so toxic, you have to look at the math of a Hong Kong taxi license. For years, these pieces of paper traded for over HK$7 million. They weren't transport tools; they were speculative instruments.
Owners don't drive. They lease the cars to drivers who work 12-hour shifts just to cover the "stall fee." This is modern-day sharecropping.
When the government discusses "permits" for ride-hailing, they are terrified of one thing: devaluation. If ride-hailing is legalized with a low barrier to entry, the value of those HK$6 million medallions goes to zero.
The "consensus" suggests we should slowly phase in ride-hailing to protect these investors. I disagree.
Protecting an unproductive asset at the expense of technological progress is a death sentence for a "smart city." If you bought a taxi license as an investment, you took a market risk. When the market changed, you lost. The government owes these speculators nothing. The public, however, is owed a transport system that actually works in the rain.
Congestion is a Pricing Problem, Not a Permit Problem
The most common "pro-regulation" argument is that ride-hailing causes congestion. It’s a convenient scapegoat.
The logic: more cars on the road equals more traffic. Therefore, we must limit the number of cars.
This is a 20th-century solution to a 21st-century problem. If the goal is to reduce congestion, you don't limit the number of cars; you price the usage of the roads.
Electronic Road Pricing (ERP) is the only honest way to handle traffic. A ride-hailing vehicle that is constantly moving, carrying multiple passengers throughout the day, is a more efficient use of space than a private Mercedes sitting in a Central parking garage for nine hours.
By capping permits, you aren't fixing traffic. You are just making sure that the only cars stuck in traffic are private ones and "legal" taxis. You are rationing a service rather than managing a resource.
The "Safety" Red Herring
The Transport and Logistics Bureau loves to talk about "passenger protection." They claim that because taxis are regulated, they are safer.
Have you been in a Hong Kong taxi lately?
The average age of a taxi driver is north of 60. The vehicles are often decades old. The "regulation" consists of a plastic card on the dashboard and a meter that may or may not be "broken" when you want to go across the harbor.
Ride-hailing platforms offer:
- GPS Tracking: Every meter of the journey is recorded.
- Two-way Rating Systems: Bad drivers are de-platformed instantly.
- Digital Receipts: No more "forgetting" to give change.
- Automatic Background Checks: Data-driven vetting that exceeds a simple manual license check.
To suggest that a 1980s-era licensing system is "safer" than a data-backed, real-time monitoring platform is a joke. It's not about safety; it's about control.
Why "Hybrid Schemes" Will Fail
The current middle-ground proposal is a "premium taxi" or a limited "ride-hailing license" with strict quotas.
This is the worst of both worlds.
By creating a "Premium" tier, you create a two-class system. You allow the government to pick winners and losers by deciding which companies get the few thousand available slots. This breeds corruption and cronyism.
If you limit ride-hailing permits to 5,000, you will see the exact same thing happen that happened to taxis: those 5,000 permits will become speculative assets. People will hoard them, lease them out, and the price of a ride will skyrocket to cover the "permit rent."
We don't need a "new" category of restricted licenses. We need to abolish the concept of restricted entry entirely.
The Hard Truth: The Taxi Industry Must Die So Mobility Can Live
The industry insiders won't tell you this, but the taxi as we know it is an obsolete technology.
A vehicle that cruises around empty, looking for a hand signal from a pedestrian, is an ecological and logistical disaster. It is a "dumb" node in a city that needs to be "smart."
Ride-hailing isn't just "taxis on an app." It is a logistical engine that predicts where demand will be before it happens. It optimizes routes to reduce "dead mileage."
Every minute we spend debating how many permits to give Uber is a minute we waste not building a unified, multi-modal transport network. We should be talking about how to integrate ride-hailing with the MTR, how to use autonomous shuttles for the "last mile" in the New Territories, and how to eliminate private car ownership in the urban core.
The Actionable Pivot
Instead of asking "How many permits?", the government should be asking:
- How do we implement ERP? Charge every vehicle (taxi, Uber, or private) for the space they occupy in high-traffic zones at peak hours.
- How do we deregulate the taxi fare? Let taxis compete on price and quality. If they want to charge less to win back customers, let them. If they want to charge a premium for a 5-star vehicle, let them.
- How do we move to a "Driver's License" model? If a driver passes a rigorous background check, has the right insurance, and a roadworthy vehicle, they should be allowed to work. The "permit" should stay with the human, not the piece of tin on the hood.
The Cost of Cowardice
The Hong Kong government is currently paralyzed by the fear of a few thousand vocal taxi owners. They are sacrificing the efficiency of the entire city to prevent a market correction in taxi license prices.
This isn't just a transport issue; it's a litmus test for Hong Kong's future. Are we a city that embraces the friction-less economy of the future, or are we a museum for 20th-century cartels?
Stop looking for the "magic number" of permits. There isn't one. The only number that matters is the number of people who are currently waiting on a street corner for a car that isn't coming because a bureaucrat thought 18,163 was "enough" licenses for a city of millions.
Open the market. Price the roads. Let the speculators go broke.
Anything else is just rearranging the deck chairs on the Titanic.
