Realising the potential of Singapore’s sharing economy

New business models that enable people to share their vehicles, homes, offices, possessions and even skills have the potential to turn the sharing economy from a US$15 billion industry today to a $335 billion sector by 2025, according to market research firm PricewaterhouseCoopers (PwC). 

Such transactions also ensure that existing materials are used more efficiently, reduce additional resource consumption and waste generation, and can even have a direct impact on air pollution and the burning of fossil fuels.

Singapore, where land is scarce for housing and roads, and where car ownership is so costly that only nine in 100 people own cars, is “certainly very attractive for sharing economy companies,” says Costas Courcoubetis, professor at the Singapore University of Technology and Design (SUTD), and chair of its Initiative for Sharing Economy Research. 

The sharing economy, which delivers environmental and economic benefits to society and promises lower costs to users, has made major headway in the city-state, with international companies and local start-ups alike setting up shop here in the past few years. 

Global companies such as home-sharing service Airbnb, carpooling site Tripda, and on-demand taxi service Uber have all opened in Singapore since 2012, along with home-grown product sharing services BlockPooling and Leendy, car-share programmes like iCarsClub, and accommodation site PandaBed. 

Thousands of users have signed up for these services - BlockPooling reportedly has more than 3,500 users since its launch two years ago, while iCarsClub has more than 6,500 registered users. No official figures are available from Airbnb, but over 1000 properties are listed on the company’s Singapore website. 

No public figures are available for Tripda’s growth in Singapore either, but Victor Ang, the company’s managing director for Malaysia and Singapore shares that the start-up’s expansion in these countries has been “extremely positive, and we have been very happy with the progress” since the company opened its Singapore office last September. 

Some of these companies banded together to form the Sharing Economy Association of Singapore (SEAS) last August, which aims to help address challenges and explore the opportunities that lie in this new, collaborative way of doing business. 

The association, which started out with six members has 11 members today. SEAS chairman Eugene Tay notes that response from consumers and businesses “has been encouraging, and most of them like the idea of sharing, and promoting access rather than ownership”. 

Growing pains

But the sharing economy’s growth globally and in Singapore has not been without growing pains. 

More users connecting directly with one another have highlighted many areas of regulatory concern, including safety, insurance, taxes, and consumer rights. 

Incidents such as the alleged rape of an Indian woman by an Uber driver in India last year and the recent case of a Canadian couple whose Airbnb tenants wrecked their apartment during a “drug-induced orgy” are extreme examples of the dangers of peer-to-peer sharing. 

To be sure, the companies involved worked swiftly to address these issues and have many safeguards to prevent such abuses, but such uncertainties have made some governments hesitant to put their full support behind the sharing economy.

Uber, for example, is banned or suspended in countries including South Korea, Germany, and the Netherlands. It is also banned in the Indian capital, Delhi. Short-term home renting, too, is currently illegal in Singapore. 

How taxes should be calculated and collected  from peer-to-peer sharing and who ought to be responsible for and insure against any damage also remain grey areas in the sharing economy. 

It takes a combination of carefully thought-out business models and close dialogue with governments to resolve these challenges, say Singapore-based sharing economy companies and experts.

Getting the business model right 

“

Once regulators understand home sharing and the benefits it brings to cities, we have seen that they take proactive steps to clarify rules in favor of home sharing.

Jia Jih Chai, managing director Southeast Asia and India, Airbnb

While companies frequently rely on user-rating systems as a baseline safety measure, many are going beyond this as well. Airbnb for example offers a secure messaging platform and payments system, while Tripda offers a ladies-only option, and only allows users to sign up with Facebook to aid identity verification 

Tripda has also managed to stay on the right side of the tax issue by ensuring that no driver profits from offering others a ride, shares Ang. Users indicate their commute route, and a pre-set algorithm calculates the cost based on prevailing fuel prices. 

“With taxi hailing applications, drivers take passengers wherever they want to go because there is a profit,” explains Ang. “But with Tripda, drivers only take people where they are already going.”

At the moment, Tripda makes “zero revenue”, says Ang, adding that “we’re fortunate to have long-term minded investors”.

But once Tripda perfects the user experience, there are several profit-making options available to them, including advertising, an annual subscription fee, or enhancing the free service with premium features which users must pay for.

However, for many businesses like Airbnb, Uber, and BlockPooling, providing additional income streams for the public is a key goal. 

In these cases, companies have been working closely with policymakers on a way forward which permits sharing economy business models while effectively managing its potential pitfalls. Bigger companies have dedicated government liaison departments, while in Singapore, SEAS also undertakes policy advocacy on behalf of companies in the sharing economy.

Jia Jih Chai, managing director of Airbnb in Southeast Asia and India, acknowledges that “there are different regulatory in concerns in every market”, adding that Airbnb is working with governments on creating “fair and progressive” rules that will benefit each country. 

Airbnb’s experience in other cities suggests that once regulators are convinced of the benefits of home sharing, they tend to “take proactive steps to clarify rules in favour of home sharing,” he adds. 

This is a call echoed by SEAS, which last December released a position paper urging the Singapore government establish “fair and progressive rules for home sharing” instead of banning it altogether. 

Cities such as Amsterdam, Hamburg, Portland, and San Francisco already allow people to rent out their homes to short-term visitors on an occasional basis, said the paper, adding that “Singapore’s new policies on home sharing should include smart and targeted provisions” to prevent inconvenience in residential areas and other issues such as a loss of privacy, noise, and misuse of common facilities. 

SEAS “is prepared to work together with the Government to address home sharing in a constructive manner,” said the organisation. 

On its part, the government is also trying to meet businesses halfway. Singapore’s Urban Development Authority in January launched a public feedback exercise on allowing short-term stays in private residences to see if guidelines for the minimum permissible period of stay in homes - which is currently six months - should be adjusted. 

In March, the island nation also introduced a law allowing drivers to accept payment from carpooling. Drivers cannot offer more than two rides a day, and total payment must not exceed expenses incurred for the trip. 

In Ang’s view, this is a sign that the government realised that the benefits of carpooling - such as reduced traffic congestion, pollution, and lower costs of living for Singaporeans - “was far greater than any of these uncertainties”. 

A shared future

SUTD’s Courcoubetis notes that “companies are getting ready to immediately enter the market” when Singapore regulators ease up on restrictions around the sharing economy. While they wait, companies are expanding in other Asian countries, solving key operational issues, and improving the technology behind each web-sharing platform. 

He has faith that authorities “will take the right steps in making sure that the sharing economy will grow in a stable and healthy fashion.” 

Ang agrees, pointing out that the technological advances and interpersonal digital connections that are the mainstays of the sharing economy align well with the country’s ambitions to be a smart nation. 

“The sharing economy has a strong place in such intelligent cities,” Ang says. 

Edit: This article was amended on 22 May to reflect that Uber is only banned in Delhi, India.