Japan trails other countries in discussing the lifting of the ban on ride-sharing services. In China, the spread of ride-sharing services sparked the integration of transportation services and information technology in the blink of an eye. In Japan, Uber Technologies, a U.S. firm that is taking the lead in the sharing economy sector, is being prevented from providing services due to legal barriers and is only allowed to test its e-hail app in a depopulated area. It was not asked to join a government council on the sharing economy, either.
At the root of this is the government’s protection of the domestic taxi industry. The government can issue an order for slashing the number of cabs in an area where it finds there are plenty of taxis. It also has the authority to restrict the entry of new service providers. The lifting of the ban on Uber-style, ride-sharing transportation services is meeting stiff opposition, as the move could intensify competition with existing taxi services.
The passenger traffic volume of taxis has fallen nearly 30% over the past decade. The industry will continue to decline if it avoids competition.