The Fall Of oBike

The Fall Of oBike

In June 2018, the bike sharing operator oBike announced that it would cease operations in Singapore citing difficulties in meeting the new requirements under the new licensing regime by the Land Transport Authority (LTA) to tackle indiscriminate parking.

There are currently around 100,000 shared bicycles in Singapore, owned by six operators, oBike, mobike, ofo, SG Bikes, GBikes and The new licensing regime will enable LTA to control these operators’ fleet size based on their past record in dealing with indiscriminate parking, among other considerations. It also ensures the timely removal of improperly parked bicycles. Failing to comply, the operators could face a fine of up to S$100,000. This is on top of an MOU signed last year to enforce adoption of geo-fencing technologies by operators to detect the whereabouts of their shared bicycles by end of last year and timely removal of improperly parked vehicles within half a day. With guidance from your economics tutor in economics tuition, discuss the cost implications of LTA’s new licensing regime on these bike sharing operators. A good economics tutor should be able to compare the costs of implementing these measures to the social benefits that they may bring about. Sign up for economics tuition with Economics Cafe Learning Centre today if you need help with this subject. Economics Cafe Learning Centre is a premier economics tuition centre in Bishan headed by its Principal Economics Tutor Mr Edmund Quek, widely regarded as the best economics tutor in Singapore.

Implications Of oBike’s Exit From Singapore Market

oBike’s announcement was followed by a swarm of complaints from its users who were unable to get their deposit refunded. Total deposits owed by oBike to its customers amounted to S$6.3 million. However, the Consumers Association of Singapore (CASE) confirmed that oBike customers would not be able to pursue any legal claims against the company upon commencement of oBike’s liquidation process which is already in progress.

To prevent such a messy market exit in future, LTA is currently studying the need for a security deposit or performance bond to be placed by the operators that require a deposit from its customers. This is to ensure that bike sharing users can get their deposit refunded at least in part, if not in full. Before the new measures are in place to safeguard their interest, bike sharing users will have to adopt a more cautious approach when it comes to choice of various payment schemes. A pay per use scheme is preferred to an upfront deposit.

Resulting from oBike’s exit, a fleet of some 14,000 bicycles owned by the company is now left abandoned all over places in Singapore. Despite LTA imposing a deadline for oBike to remove its bicycles from public spaces, the company may not be able to comply. It is left to LTA to take things to its own hands by removing the oBike bicycles themselves. It is then up to oBike to decide whether to claim back its bicycles, subject to various fees applicable.

Reactions Of Competitors

Another bicycle sharing operator Mobike took the opportunity to increase their market share. Mobike announced that it would waive the deposit for its customers here. Same as oBike, Mobike also charges a S$49 deposit from its customers. The waiver of this deposit will apply to both its new and existing customers. Existing customers will be able to get their deposit refunded within 10 working days upon submission of their request via the company’s mobile app. Approach your economics tutor in your economics tuition class for a cost and benefit analysis of Mobike’s move.

With oBike’s abrupt exit, it remains to be seen how the other five operators will fare in face of more stringent regulations by LTA.

Jordan Goh

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