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When Uber/Grab gets legalized in Malaysia, how will it affect us?

about 1 year ago SiewAnne



This article is for general informational purposes only and is not meant to be used or construed as legal advice in any manner whatsoever. All articles have been scrutinized by a practicing lawyer to ensure accuracy.

Why is there a legal limbo when we discuss Uber and Grab’s legal liability? Is there a big difference between Uber and Grab’s legal liability and that of a Taxi company? The answer is yes. Basically, a Taxi company works like any other company, that is to say that the company is the employer and the Taxi drivers are their employees. However e-hailing companies like Grab and Uber do not operate the way a regular company does, this is because they do not have exclusive contracts with their drivers. This creates a legal limbo which is, does the law consider Uber and Grab drivers to be employees of the company or not?

In two cases of sexual assault by an Uber Driver in United states, the legal question posed to the federal court was whether drivers of Uber were independent contractors or employees. The case however was never resolved because there was a preliminary settlement.

The difference is that if Uber drivers are contractors rather than employees of Uber, Uber or the insurance taken up by Uber are only responsible when the drivers are on the road with a passenger .Anytime an Uber driver committed an offence after he cancelled a ride, or in between a completed ride, then Uber is no longer responsible.

What is Malaysia's position on the matter?


Photo credit: freemalaysiatoday


Wong Mei Yan, a sales assistant, was robbed while on her Uber ride on the 21st of May. She has demanded that Uber pay her medical bills over the miscarriage she suffered. She also stated that she planned to take legal action against Uber over the incident. This case has not been concluded so we have yet to find out Malaysia’s position on the legal liability of an e-hailing app towards victims of their drivers.


So, why was Uber and Grab in a legal limbo?

Usage of private vehicles to carry fare–paying passengers is an offense under the Land Public Transport Act 2010. This is because it is a requirement for every driver to obtain an operator’s, however a driver operating a private vehicle may not obtain such licence as only those operating a public service vehicle may. This is specified under section 16 of the Land Public Transport Act 2010 shown below.

Requirement for operator’s licence

16. (1) Subject to sections 194 and 195, no person shall operate or provide a public service vehicle service using a class of public service vehicles unless he holds an operator’s licence issued under this Chapter.

This means that all the drivers of Uber and Grab have been operating without legal operating licenses this whole while. This makes their services illegal.

What changed now that Uber and Grab are about to be legal?

You’re probably not Malaysian if you haven’t tried using Uber or Grab. Since their initialization in 2013, these e-hailing apps have dominated the car sharing market and most Malaysians haven’t used a taxi since. Even though these services have been popular ever since, they aren’t exactly legal in Malaysia.

In July this year,amendments in the Land Public Transport Act 2010 and the Commercial Vehicles Licensing Board Act 1987 were passed by the Dewan Rakyat. These amendments would allow e-hailing services like Uber and Grab to operate legally. This prospective legalization means that Malaysia has finally caught up to it’s South East Asian peers.

Singapore had retouched their regulations since the inception of e-hailing services in the country to allow them to operate legally in Singapore, Philippines introduced rules for “transportation network companies” in May of 2015 and Indonesia followed earlier this year.

1. Uber and Grab Drivers now have to obtain a license to operate

Under an amendment to the Land Public Transport Act 2010 (LPTA) and the Commercial Vehicles Licencing Board Act (CVLB) , e-hailing vehicles will be classified as public service vehicles, and the operators would need to obtain an “intermediation business licence”.

Operators of ride-sharing services who run their businesses without the licence can be fined up to RM500,000 , or face a maximum jail term of three years, or both, upon conviction. Those who fail to comply with the licence conditions can be fined between RM1,000 and RM200,000, or sentenced up to two years in jail.

2. Uber and Grab Drivers and passengers don’t have to fear angry Taxi drivers anymore.

Two taxi drivers harassing drivers. Photo credit: ONG SON HIN/The Star

There were so many reports of Taxi drivers screaming and shouting at Uber and grab drivers, as well as harassing their customers. Most people have taken it to avoid calling an Uber or a Grab near a Taxi stand. But now, they don’t have to worry anymore as the new law will provide protection for the drivers and passengers.

Under section 200 of the amended Land Public Transport Act 2010, those found guilty of assaulting, hindering or obstructing e-hailing services’ providers can be fined up to RM1,000, or jailed three months or both, according to the amendment to the Land Public Transport Act. Thus the Taxi drivers can no longer disturb you when you are in an Uber or a Grab.

3. As a passenger, your ride will be insured!

Now all Grab and Uber drivers are required to take up passenger insurance. This is a different type of insurance than regular car insurance because this insurance also compensates your passenger for injuries or losses in case of an accident or a robbery. Before this, Grab and Uber drivers uses regular insurance because they were considered a ‘private vehicle’ in accordance to the Land Public Transport Act 2010 (LPTA) and couldn’t take up passenger insurance, the same way taxi drivers could.

This could potentially stop insurance fraud as well. Before the legalization, most Uber and Grab drivers have a car insurance but those car insurance are usually personal car insurance used to insure them in case of an accident. Personal insurance cannot be used if the car was used for commercial purposes namely as an Uber or a Grab car. Many Uber and Grab drivers lied to their insurance company in order to get insurance compensation and with that, they have violated their duty to disclose information and infringed the Insurance Act 1996, specifically section 150 of the act which reads: (in part)

150. (1) Before a contract of insurance is entered into, a proposer shall disclose to the licensed insurer a matter that—

(a) he knows to be relevant to the decision of the licensed insurer on whether to accept the risk or not and the rates and terms to be applied;

4. Background checks

Photo credit: CNN money

From June 16 onwards, e-hailing operators are required to submit records of their drivers to SPAD to enable the agency to conduct stringent background checks with the cooperation of other enforcement agencies, including the police and the road transport department (JPJ).

Minister in the Prime Minister’s Department Datuk Seri Nancy Shukri said that “All rules and regulations imposed on conventional taxis will be applied to the e-hailing drivers as well and this includes regulations on medical check-ups, periodic vehicle inspections, insurance requirements and drivers’ identification card”

Background checks are especially important in light of the recent robbery of a pregnant women by her uber driver.

5. You can complain!

Once the new law comes into effect, operators, drivers, and passengers using e-hailing services can make official reports and complaints to the SPAD and CVLB respectively. Previously since SPAD and CVLB does not recognize Uber and Grab as legal services, they are not the regulating bodies in charge of them and your complaint would be in vain, but it is different once the new law comes into effect.

There are various way in which you can submit your complaint.

You may submit an e-feedback form.

or you may call up SPAD and lodge a complaint at 1800 88 SPAD(7723) or email them your complain at


In conclusion, it will definitely be safer to ride an Uber or a Grab once the new laws regulating them come into effect. No longer will you have to worry if your driver is a potential criminal due to the extensive background check. However the tedious way in which drivers have to get license now will deter many of them from driving. When we have a shortage of drivers, both Uber and Grab will become less efficient as drivers are no longer freely available at every corner. On top of that, services might be more expensive now that drivers have to pay for licenses, insurance and taxes as well.