Iran Online Cabs Regulation: Who Is the Boss

EghtesadOnline: Tehran Municipality should be in charge of regulating the affairs of ride-hailing companies, the mayor says, but the head of Iran e-Commerce Union hold the view that as per law his organization has jurisdiction over such firms.

News ID: ۷۴۶۰۹۷

13 October 2018

Regulation of online taxi services has long been a point of contention between the private and the public sector. The latest comments by Mayor Mohammad Ali Afshani on Tuesday deepened the controversy.

Afshani told a press briefing, “Just like the [Tehran] Taxi Organization, which functions under the municipality’s watch, TM should also have jurisdiction over online cabs.  Ride-hailing firms should get their permits from the municipality,” news website Peivast reported.

Earlier in February, the Interior Ministry drafted a bill on ride-hailing services and sent it to the government for review. If approved, it will put online taxi services such as Snapp and Tap30 under the direct supervision of municipalities, according to Financial Tribune.

Afshani said, “The bill is still awaiting approval by the administration.”

As per current regulations, online taxi firms must get their permit from the E-Commerce Union. Afshani says the rule must change and such firms should be regulated by authorities from the public sector. “The oversight will not mean unwanted interference in the affairs of such companies,” he told the press.

Vice President for Science and Technology Sorena Sattari who has always been a strong supporter of online business, has also lent his voice to the proposed plan saying, “Startups active in the [transport] sector should get permission from the municipalities.”

Following the introduction of the bill, ICT Minister Mohammad Javad Azari Jahromi told reporters given the economic hardships Tehran Municipality is facing, “delegating regulatory work of online taxi services to the TM  is not economically defensible.”

In October the TM released its balance sheet for the first six months of the past fiscal that ended in March. The numbers were pathetic at best, unraveling the state of its almost empty coffers. The huge organization is sinking in red ink and its finances and spending procedures are open to question.

> Private Sector Responds

In response to comments from Afshani and Sattari, Head of Iran e-Commerce Union Reza Olfatnasab told online news service Shanbe Magazine that “Members of the union have no problem with [municipal] oversight, however, a legal framework should first be defined.”

He pointed to the bill which is awaiting government endorsement. “Any decision about regulating online taxi services should be enforced nationwide,” so as to avoid confusion in the cities.

Olfatnasab further pointed that Afshani and Sattari’s comments took private firms and the union by surprise because they believed constructive talks were underway between the private and the public sector about creating a mechanism for regulating online taxi services.

TM officials, he said, are calling for the issuance of new working permits for ride-hailing companies, while the law explicitly says such companies must get permits from the e-Commerce Union.

The judiciary too has joined the fray saying that municipalities should monitor activities of ride-hailing companies, which in Olfatnasab’s opinion does not mean issuing new permits.

The union head pointed to the ride-hailing firms’ “successful record” saying, “The main ride-hailing companies offer service to over 1.8 million people every day across the country.”

“These companies were established four years ago and have a strong foothold with the people. Taxi organizations [which are managed by the public sector] have enjoyed state support for decades. However, due to misappropriation of funds and mismanagement, they have  failed to deliver or offer quality services.”

He urged those in charge to give startups and private firms some breathing room to provide the people with quality services.