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Will Careem and Uber be able to survive in Pakistan?

The transport situation, especially in metropolitan cities always a grave issue. Buses are in deplorable conditions and have closed operation on routes, which they consider non profitable. According to a report, buses are to ply on more than 300 different routes in Karachi but they are operating on only 115 routes, causing huge difficulty to commuters. Taxis and rickshaws, plying on roads of the city, are charging arbitrary fares and the public, with no viable option in sight, has to avail other transport services.

Considering the existing pathetic situation of our public transport, two multinational transportation network companies – Careem and Uber– decided to launch an app-based car booking service in Pakistan. From the very beginning, they received a positive response from the masses.

Careem, a Dubai-based company, started its operations in Pakistan in 2015, while the world renowned company, Uber has fully launched its services in Pakistan a little later in 2016. These companies are different from the conventional transportation companies because the company itself does not own the cars, it acts as middleman to connect the taxi driver with the intended passenger through their respective mobile app. Careem even offers a different range of cars to the customer so that the passenger can select the vehicle according to his or her budget. These companies offer a variation in fare at different timings, and are convenient and reliable. Initially, everyone thought that these app-based taxis would be more expensive than the conventional rickshaws and taxis but time and again they were proven wrong.

Uber is operating in more than 536 cities of the world while Careem is operating in 32 cities of the world. Wherever they are operating, they are following the laws and regulations meted out to them. For example, in India, a person who wants to become an Uber driver has to obtain a business license. It is also the responsibility of Uber and other mobile-app based taxi services to pay taxes from all the fares collected from customers.

In Pakistan, Careem and Uber are not only providing safe, convenient and inexpensive rides but are also providing an alternate way to earn. It is a general belief that drivers of these services are earning Rs70,000 to 80,000 per month, which is a decent income for any average Pakistani. Furthermore, Careem also went a step ahead and included female drivers in its fleet. Many people, university students or friends, avail one taxi which makes their ride cheaper.

In a country like Pakistan, where the job market is tough and employment is low, these app-based taxi services have opened the door of self-employment to otherwise unemployed or under-employed youngsters. At the moment, there is no other industry or service in the country that has created close to 10,000 new, well-paying jobs in a matter of just over a year.

As users, many of us have become so used to the many benefits of Careem and Uber that we have forgotten how astonishing the leap over the traditional provider really is.

LIFE NEEDUBER/CAREEM SOLUTION
I’m worried I’ll be lateShow predicted time of arrival
Can I really afford this?Show fare estimate before agreeing
I feel vulnerable waiting on the street alonePhone shows car position and its movement towards you
Am I safe late at night with this driver?Show and record driver name and car details
Will sharing with others be awkward?Request a fare split
Will the car suit my needs?Choose the car level

Uber and Careem, overtly or by degree, have expanded the role they want to play. Unlike most brands, they do not put all their efforts into building a relationship directly with users. Instead, they focus on understanding and delivering solutions for a set of wider functional and emotional needs in their lives. They add a life role to their transport role.

The ride sharing is a novel concept and regulation for it is in nascent stages. The government needs to work out a regulatory framework for ride sharing apps and similar services. Presently,

– The SECP mandates all companies registered in Pakistan to share all information about offshore companies.

– There is an annual corporate tax that any and all organizations have to pay to government annually and it is 34% as of now.

– On all transactions being done in a Pakistan based payment gateway, FED is paid out to government.

Talking about Careem, the transactions get done on some international payment gateway which transfers money out of Pakistan and the trail is completely invisible for the tax authorities in Pakistan. For the transaction to be part of corporate tax, it has to be processed within Pakistan.

In the case of Uberm it uses an EU payment gateway for processing all transactions in Europe — Stripe in USA for processing all transactions and Paytm in India. While I am in no way suggesting that these companies select a local payment gateway, the government should be provided more transparency so that the local economy is strengthened.

Like many other countries of the world, the Government of Pakistan has the authority to bring these services under the tax net. The government also needs to revisit their existing decades-old laws and should frame new regulations, instead of asking vehicles plying under Uber and Careem to follow those laws.

It is hoped that unlike in the past, where a tug-of-war destroyed an alternate transport option and the general public was left at the mercy of the transport mafia, governments of Sindh and Punjab in consultation with tax experts will devise laws that benefit the country, the businesses and most importantly, the people.

To sum it up, there is no doubt that these services provide jobs. But at the same time, high tech companies also have a greater corporate responsibility. Hopefully, they will live up to that and play fair in Pakistan.

The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan

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