To Uberize or Not to Uberize? Opportunities and Challenges in Southeast Asia’s Sharing Economy

Abstract

Technology-driven market disruptions are not new. Joseph Schumpeter famously coined the term “creative destruction” to describe the impact of innovations on markets via the creation of new products that render old ones obsolete. The type of innovation associated with the services provided by Uber and Grab belongs to what is known today as the “sharing economy”.2 Made possible by technological advances in GPS, mobile communications, social networking and cloud computing, the sharing economy has affected almost all industries such as transport, retail, logistics, food and beverage, and accommodation. The stakes involved in the sharing economy are high. The size of the sharing economy, estimated globally for five sectors, is projected to increase from US$ 15 billion in 2014 to US$ 335 billion by 2025.3 The cost and benefit calculus of the impact of the sharing economy goes beyond the immediate gains enjoyed by consumers (and new service providers) and the losses incurred by traditional service purveyors. For starters, there is already some evidence of cross-border investment opportunities brought about by such innovations. For governments, such innovations – disruptive as they are – may provide new opportunities to revitalize micro-enterprises and even provide new sources of revenues for the state. More importantly, any misguided government policy and regulation in this area has the potential to dampen future innovations. Thus the question of “to uberize or not to uberize” is about how governments should respond to the challenges posed by the sharing economy. This essay addresses the question by explaining the nature of the sharing economy, its foothold in Southeast Asia, and finally, the various policy responses by governments in the region. The policy challenges of engaging with the sharing economy (“to uberize or not to uberize”) is examined via a comparative study of the countries in the region. Examples from the car sharing market is used in this essay to focus the discussions on specifics.