Category Archives: other

Simplilearn to Train College Recruits on Digital Economy Skills (India)

Mission-critical skills such as big data, machine learning, artificial intelligence, cloud computing, and digital marketing are ones that enterprises are increasingly turning to fresh graduates to fill

Campus and entry level recruiting is a critical component of every corporate HR strategy but often involves many months of onboarding and mentoring to get these employees productive. Simplilearn offers a New-Hire Training Initiative that significantly shortens this time-to-productivity via a structured training curriculum for campus recruits that they can complete before their first day on the job, or within their first couple of weeks.

Simplilearn focuses exclusively on digital-economy skills such as big data, machine learning, artificial intelligence, cloud computing, and digital marketing. These mission-critical skills are also ones that enterprises are increasingly turning to fresh graduates to fill.

Simplilearn’s new program enables organizations to help their recent on-campus recruits become job-ready (and even certified) with necessary technology skills, gained through Simplilearn’s online training courses prior to onboarding of the new employee.

“Campus hiring has never been more critical. With today’s rapid technology changes, it has become essential to ensure young professionals are up-to-date with the digital skills they will need to have an immediate impact at their new companies,” said Krishna Kumar, Founder and CEO of Simplilearn.

“Offering our vast experience in the latest technologies, Simplilearn is well-suited and proud to help Fortune 500 companies and other organizations bridge the gaps in skills and productivity that often come when onboarding new employees fresh from academia,” he added.

During their final semester in their college or university degree programs, recruits will undertake this training, following predefined learning paths that match their upcoming job roles. In addition to online videos and instructor-led lessons, the courses also include practical applied projects and assessments that are relevant in the high-demand fields such as data analysts, programmers, developers,

Simplilearn has partnered with leading IT/ITes, consulting, internet retail companies and Global System Integrators to support their new hire training initiatives. Also, as part of the company’s core offerings, the Simplilearn Digital Transformation Academy covers all aspects of people, process and technology to help organizations achieve competencies in digital technologies and applications.

The Digital Transformation Academy is designed to be customizable across a wide variety of industries and for all employee and management levels and roles while delivering on Simplilearn’ s outcome-centric, high engagement learning approach.

source: www.dqindia.com

Digital Economy is the Key to Realizing Indonesia into the Big Five of the World Economy

IndonesiaIn an oration entitled “Leap Frog Indonesia Through Digital Economy”, Rudiantara revealed that the development of a digital economic ecosystem is the key to realizing the nation’s economy towards the ranks of the world’s top five economies.

“The experience of a number of startup companies or startups that have grown up like Gojek, Tokopedia, Bukalapak and Traveloka shows that information and communication technology is the main booster rocket that can make a leap frog from zero, passing many stages at once, “To reach a point farther than what other conventional companies can achieve,” said Rudiantara.

To overcome the widening welfare gap in the world today, Rudiantara also urged the world to carry out a global movement. This has been conveyed by Rudiantara at the International Telecommunication Union (ITU) forum in Korea.

One way is through the adoption of innovative digital economic business models and strategies to enable shared economy, digitalization of labor, and financial inclusion. This proposal departs from the experiences of a number of Indonesian startups which prove that digitalization can be directed towards empowering the workforce through new ways.

Rudiantara also mentioned that the digital economy in Indonesia in 2020 is expected to reach 130 billion US dollars or Rp 1,831 trillion. With these achievements, the next two years the digital economy will contribute around 11% of Indonesia’s gross domestic product.

“But of course it’s not as easy as turning your palm to achieve all of that. There are at least seven main issues in the digital economy that must be a common concern. These seven issues are human capital, startup funding, taxation, cyber security, ICT infrastructure, consumer protection, and logistics, “said Rudiantara.

According to Rudiantara, what the government has to do to meet the big changes in the economy and business is to cut regulations a lot and create an ecosystem that provides broad opportunities for innovation to develop.

Rudiantara added, leadership in the digital era must be pursued with at least three principles, namely less of a regulator, by simplifying regulations, simplifying and eliminating permits; more of a facilitator, by providing affirmative policies in developing infrastructure, encouraging digital entrepreneurship, and growing digital economic talents; and more of an accelerator, by accelerating the growth of new digital startups and other business sectors, especially MSMEs.

“The government and the education world must work hand in hand to grow and assist young people to have a passion for technology and become a workforce that has digital skills that are able to view community problems as a challenge to be solved and monetized,” said Rudiantara.

Some time ago, Gojek Indonesia launched Go-Viet in Hanoi, Vietnam. According to Rudiantara, this showed the ability of the nation’s younger generation to solve the problems of modern humanity.

“In the range of the digital economy that is still very young, our nation’s younger people have been able to carve out legacy that is not only sweet to remember, but also surely will inspire the achievements of other nationals in the digital realm of the world,” said Rudiantara.

According to him, this phenomenon also proved that digital space in Indonesia has the same opportunities as other countries in the world. In an increasingly digital world, the perspective of the market must be broader.

Meanwhile, to help prepare Indonesia’s human resources in supporting digital transformation and improving the digital economy, in the near future the Ministry of Communication and Information will launch “Digital Talent Scholarship”. This program is in the form of intensive training scholarships by holding five universities in Indonesia, including Unpad.

source: www.unpad.ac.id

Digital economy plays key role in high-quality growth (China)

chinaChina’s manufacturing industry is aiming to transform itself from “Quantity” to “Quality”. The key strategy is to develop a digital economy, said Li Yizhong, the former minister from China’s Ministry of Industry and Information Technology on Sunday.

Speaking at the 2018 World Forum on Scientific and Technological Innovation in Beijing,Li said “A digital economy means a deep integration of Information technology (IT) and the manufacturing industry.”

“It is the trend of a global economy as well as a national strategy for a high-quality growth in manufacturing and internet development,’ he added.

Then, how to develop a digital economy?

Li noted that cutting-edge technologies like big data, internet, cloud computing, and Artificial Intelligence (AI) need to be closely integrated with the manufacturing industry to develop new products and business models.

There are three areas where China’s digital economy has developed the most in recent years, Li summarized, firstly, the IT industry has seen a fast growth and contributed 8 percent to the overall GDP growth last year.

Secondly, enterprises have played bigger roles in developing a digital economy. They have realized the significance of the integration between manufacturing and IT. For instance, Alibaba has rolled out an industrial system that integrated the internet and its companies. The IT industry includes telecom manufacturing, communication services, software and the internet industries.

Thirdly, the benchmarks in digitalization have been improved. For example, indoor broadband penetration has reached 86.7 percent while mobile broadband penetration has risen to 86.3 percent, and the internet surfing fee has been reduced by 46.2 percent, which has exceeded the goals set for 2020.

The number of robots used by every 10,000 workers on average has been increased from 23 in 2013 to 50 as of now, which is close to the world’s averages. The patents held by every 10,000 citizens on average have doubled since 2013. Moreover, enterprises hold over 60 percent of the overall patents.

He also pointed out the challenges faced by digital economy developments.

Core technologies are still controlled by other nations. The Chinese economic structure is still at the low-end. There are significant gaps between China and other developed countries in chips, integrated circuits, software, and data processing techniques. Ninety-five percent of high-end chips are from overseas. Therefore, technological innovations are vital for developing a digital economy.

Most enterprises lack awareness when it comes to digital transformation. They need technical assistance and support. Their understandings of how technologies could enhance productivity require further education. Meanwhile, tech companies lack the knowledge of the industrial demands.

Li suggested strengthening the communication and education for digital transformation among enterprises and leading industrial enterprises by collaborating with internet giants to develop new applications.

On the one hand, interdisciplinary talents who have both knowledgeable of technologies like big data and have the industrial expertise are extremely scarce. On the other hand, loads of traditional workers have been laid off. In France, 3 million jobs will disappear because of digitalization. While in the Guiyang hi-tech industrial development area, 42,000 jobs were created by the digital economy and related industries, Li said.

source: http://en.xfafinance.com

Competition challenges in the digital economy

Competition21-750x400Slow productivity growth and rising income inequality have shaped the world economy in a time of rapid technological change. A variety of explanations have emerged to help us understand these related trends, but one overarching theme is the decline in competition.

The combination of increasingly concentrated markets, rising market power of large firms, and slowing business dynamism suggest that competition among firms is weakening. The concern is that the rise of dominant firms will hinder the diffusion of technology and exacerbate income inequality.

Adding to these concerns are two key features of the digital economy—the potential for scale with digital platforms and the growing importance of intangible capital—that, by their very nature, lend themselves to bigger and more dominant firms.

These characteristics of the digital economy present challenges on how we think about and implement competition policy. Policies aimed at ensuring a level playing field and fostering a dynamic and inclusive economy will therefore need to adjust to better reflect a growing reality.

POTENTIAL FOR SCALE WITH DIGITAL PLATFORMS

First, market concentration is especially high in markets with large returns to scale and network effects. Going digital can come with high capital expenditures, like setting up data centers and other digital infrastructure. But it also comes with the ability to reproduce digital offerings instantly and at low or zero marginal cost, implying large returns to scale and lower prices for consumers. When network effects are involved, the potential returns to scale are even greater.

The argument for bigger firms in these markets is that consumers are the biggest winners. Free digital services and a plethora of user data used to customize and cross-sell products help raise consumer welfare and offer greater choice. (In some cases, firms controlling “big data” can extract more consumer surplus through sophisticated algorithmic pricing and customization of offerings.)

Small businesses and entrepreneurs also benefit, the argument goes. Digital giants like Amazon, Google, and Microsoft, among others, reduce startup costs for small firms by offering cloud services and open-source software, make it easier to reach distant markets through their platforms, and offer venture funding and financing.

Due in part to the potential to scale up quickly, the threat of disruption is higher in the digital economy than in the past. Many argue that this threat strengthens competition among big firms as well as smaller firms who can unseat the giants (see herehere, and here).

However, it is not so clear that these arguments for bigger firms always hold. Less than one percent of startups end up as $1 billion companies and are often acquired or imitated by the giants along the way. In addition, industry lines are increasingly blurred as big firms leverage their user’s data to offer a broader range of goods and services, providing more valuable data on spending habits, and, ultimately, reinforcing the competitive advantage of big firms across industries.

A challenge for policymakers and regulators comes when assessing who indeed the biggest beneficiaries are. Diane Coyle of the University of Manchester points out that although the network effects of digital platforms produce real economic welfare gains, it is unclear how big those gains are or who captures them. Advertisers also place great value on free services and, as Luigi Zingales and Guy Rolnik of the University of Chicago notes, users do pay for these services in the form of very valuable information.

More economic tools are needed to quantify consumer benefits in such markets where traditional pricing does not provide the same kind of signals on market power as in other industries. Such assessments would better help policymakers and regulators ensure a level playing field and better distinguish between competitive and anti-competitive behaviors.

GROWING IMPORTANCE OF INTANGIBLE CAPITAL

A second feature of the digital economy that advantages larger firms is the growing importance of intangible capital.

Unlike tangible capital like buildings and equipment, intangible capital is not physical. It consists of ideas, branding, business processes, software, supplier relationships, licensing agreements, and other immaterial assets that generate value for a firm.

As digitization changes business models, firms are placing greater emphasis on intangibles. In the U.S., U.K., and some European economies, intangible investment already exceeds investment in tangibles.

As Jonathan Haskel and Stian Westlake describe in their book Capitalism Without Capital, there are four key economic properties of intangible assets that differentiate them from tangibles. Those properties are “scalability” (multiple people can use them simultaneously), “sunkenness” (the cost of producing them is mostly sunk), “spillovers” (easy for others to appropriate), and “synergies” (can be combined effectively).

With these properties, firms can achieve much larger scale, go to great lengths to prevent spillovers to competitors who can appropriate their sunk investments, and acquire other firms with intangible assets that offer synergies (like human capital or branding). Haskel and Westlake argue that these properties help explain the rise of superstar firms, more mergers and acquisitions, and higher market concentration in industries with a larger share of intangible investment.

In industries with greater intangible investment, small firms may have a harder time finding financing to invest and boost productivity. Small firms typically rely on bank lending that often require collateral from borrowers. But intangibles cannot offer physical collateral, are hard to measure, and, in the case of investments in knowledge and research and development, can easily be appropriated by others. These characteristics of intangibles make private equity financing more attractive for intangible-heavy firms, not only to undertake investments in assets where the cost is mostly sunk, but also to have an easier time protecting intellectual property when privately held.

In addition, private equity financing and venture capital for small firms can be difficult to scale up. These difficulties are partly due to the importance of social relationships and the large role of public subsidies in supporting a vibrant venture capital industry, which takes a long time to develop.

Large firms, on the other hand, can use their economies of scale (and buying power to acquire firms) to capture spillovers and exploit synergies. They also more easily attract capital.

LOOKING AHEAD

Are we headed into an economy dominated by big firms? Even techno-optimists, who believe that it is only a matter of time before the potential for today’s technological advances drive faster growth, are pessimistic on the implications for distribution. Concentrated markets may become the new normal. Policies would need to adjust to ensure level playing fields. In addition, better intellectual property protections, broad and inclusive financing ecosystems, new measurement standards, and greater investment in skills are examples of policies better suited for an intangible economy that is dynamic and inclusive. The possibilities are limitless, but the promise won’t realize itself.

source: www.brookings.edu

President Trump’s Indo–Pacific Economic Investment Initiative

Indo-Pacific_biogeographic_region_map-enUS Secretary of State Mike Pompeo has laid out a new vision for American economic engagement in the Indo–Pacific, announcing the rollout of a new US regional infrastructure initiative, which, while not explicitly targeting China’s growing economic power in the region, attempts to provide Indo–Pacific countries with US financial and technical alternatives to China. The funds may be modest, yet they remain important; the key question is whether the strategy will be sustained, and whether it will succeed in engaging other US allies as well.

Secretary of State Mike Pompeo has announced the launch of ‘America’s Indo–Pacific Economic Vision’, which will focus on digital economy, energy, and infrastructure investments to the tune of $113 million. While the initiative indicates that the US’s Indo–Pacific Strategy is gaining substance, more will need to be done to convince the region that the US is committed to sustained engagement and that Washington is determined to create a power balance that will allow countries to make the best choices for themselves.

 

The initiative encompasses three main project funding strands: $25 million to expand partner countries’ digital connectivity and US technology imports; $50 million to develop sustainable and secure energy markets across the Indo–Pacific; and $30 million to launch an Infrastructure Transaction and Assistance Network for infrastructure development in the region. It is a not a great deal of money, but it is a significant start and a symbolic gesture.

More: https://rusi.org

 

Tax Department’s Consultation On Digital Taxation May End Up Being An Academic Exercise, Experts Say

taxationTechnology giants like Facebook, Google, Amazon, Alibaba and other such digital companies derive considerable value from a large user base. For instance, some digital companies sell user data for targeted advertising. It’s this value that nations now want to tax.

Europe, for instance, has proposed a tax on turnover. Australia is mulling a tax on digital advertising. Singapore has announced a sales tax on digital services, starting 2020. India isn’t far behind either.

Digital advertising on foreign platforms is already under the tax net, also known as the equalisation levy. But now, India now wants to tax the business profits of digital companies, for which the taxman has reached out to various stakeholders for consultation. Experts told BloombergQuint the move will run into two problems: attribution of profits among countries i.e. who can tax how much, and treaty troubles.

Digital Services: What Gets Taxed?

Two years ago, the government imposed a 6 percent tax on digital advertising, which is attracted when an Indian resident or a non-resident with a fixed place of business in the country advertises online with a service provider with no permanent establishment in India. Permanent establishment is, in tax parlance, a fixed place of business. The levy is applicable if the transaction value exceeds Rs 1 lakh in a financial year. Reportedly, this levy has added close to Rs 3,000 crore to tax collections in the last two years.

Equalisation levy is applicable on advertising revenues and the administration of it has been smooth in the last two years, Sudhir Kapadia, partner and national tax leader at EY India, told BloombergQuint. It’s a tax on business-to-business transactions and the law has ensured there’s no double taxation, he said.

There is no income tax in the hands of a non-resident once the equalisation levy is discharged. So, it is a proxy for any kind of income tax liability that can be levied on the company concerned.Sudhir Kapadia, Partner, EY India

What About B2C Transactions?

Enter, Significant Economic Presence. In budget 2018, the government proposed to get its fair share of tax from business-to-consumer transactions by introducing the concept of significant economic presence. According to the finance minister, the idea is to tax profits of those digital businesses that don’t have a physical presence in India but derive significant economic value from the country.

India’s belief is that we follow strict source-based rules of taxation; our domestic law and treaty definitions of permanent establishment have lost their relevance because of the digital invasion, Mukesh Butani, managing partner at BMR Legal, said.

A lot of foreign luxury goods and garment manufacturers don’t have a physical presence in India. You can use an Amazon platform and order those goods, or you can go to the company’s website and order. But you can’t tax those activities in India, assuming they don’t have presence here. Under this significant economic presence, such activities will come under the tax net.

Mukesh Butani, Managing Partner, BMR Legal

What Does The Tax Department Want To Know?

In one word, thresholds. The department has asked for consultation on:

  • Revenue threshold of transactions with respect to physical goods or services carried out by a non-resident in India.
  • Revenue threshold of transactions pertaining to digital goods or services or property, including the provision of download of data or software.
  • Threshold for number of “users” with whom systematic and continuous soliciting of business activities is done through digital means.

To begin with, the phrase used in our law is significant economic presence and not just digital presence as is the case in Europe, Kapadia said. The first element on which consultation is sought is about transactions involving physical goods and so, our approach is far more overarching, he added.

The budget memorandum only talked about digital economy, but this would include all transactions of import of goods, which currently attract only customs duty. For example, EPC contracts, manufacturing, supplies from vendors etc who do not have a presence in India.

Sudhir Kapadia, Partner, EY India

If India is determined to bring this, revenue threshold for digital goods and services and user threshold can be akin to what the E.U. has proposed, he said.

Europe has proposed a three percent tax on businesses with E.U. digital revenues of over 50 million euros and total global revenues of over 750 million euros. Revenues derived from online advertising, sale of user data and online marketplaces will attract this levy.

So, What’s The Problem?

The first is profit attribution. Or, how should governments determine the revenue attributable to digital activities in their country.

It’s going to be very difficult for India or any other country to ascertain this since the conventional principles of permanent establishment won’t apply to digital businesses, Kapadia said. He explained that data about users in other countries, revenues collected in other countries arising from that user data isn’t easy to get despite the exchange of information arrangements.

 Currently, India has two provisions for attribution. Rule 10 of the Income Tax Rules which essentially says that revenues from India divided by global revenues multiplied by global profits should be the taxable base in India. This, in a brick-and-mortar space, poses enough challenges. It would be impossible to apply this principle in a digital business. Second is the arm’s length principle under transfer pricing. That can’t be the answer either since the entire functions, contractual and legal risks are outside of India in the digital business context.

Sudhir Kapadia, Partner, EY India

The second issue would be tax treaties. If the treaty problem isn’t addressed, this consultation will just be an academic exercise, Butani said.

When the law was passed in Budget 2018, it clearly said India is proposing this law in order to be prepared for the changes that occur in double-tax treaties, Butani said. This subordinate legislation that the department is proposing won’t be useful in situations where the non-resident tax payer is from a country that has a tax treaty with India, he added.

The definition of permanent establishment under the tax treaties don’t contemplate digital transactions. The only way is to amend the treaties using the multilateral instrument tool proposed by the Organisation for Economic Co-operation and Development. But if the treaty partner hasn’t signed up to MLI, the provision under the domestic law won’t help.

Mukesh Butani, Managing Partner, BMR Legal

You’re looking at a scenario where some treaties will trigger a digital permanent establishment and some treaties won’t, he said. So, how will a change in the domestic law affect the taxable position under these treaties, he added.

What ride-sharing means for Canada’s cities

dfasfHow are ride-sharing and other digital platforms changing our cities? Questions remain about the impact of the sharing economy on our jobs and the economy.

“I’ll just grab a Lyft or Uber,” I casually said when my friend asked how I was planning to get home to Etobicoke from the heart of Toronto. If you aren’t familiar with Toronto, the city spans about 630 square kilometres, and Etobicoke is its westernmost district.

The part of Etobicoke where I’m from is 25 kilometres from downtown. To put this distance into a broader context, 25 kilometres from downtown Vancouver would put you roughly in Delta or Surrey, and in Montreal it would take you halfway to Laval. Needless to say, Toronto is big, and getting around in it can be a challenge — so much so that a recent study named Toronto the worst city in North America for commuting. This isn’t exactly what we want to come first for. One key development — ride-sharing — is taking root and scaling fast, and it is helping Toronto shed this less than favourable reputation.

The rise of the sharing economy

How are the digital economy, the gig economy, ride-sharing and the future of transportation important for Canada, for our collective economic future and for the shaping of our cities? What is the impact of the increasing influence of technology across economic sectors, and what does it mean for Canadians in terms of jobs, skill needs and changes in employment and the economy? These are some of the issues that the Information and Communications Technology Council studies.

One thing that is increasingly reshaping how we understand our economic systems is the changing nature of work. What we refer to as the sharing economy operates mostly by reliance on gig workers who are part-time, freelance or on contract rather than full-time. Such employment is a central component of the sharing economy, which offers opportunities for people to pool underutilized resources, such as properties or vehicles that they own, while generating income and also connecting people in the community.

Recent estimates suggest that the proportion of Canada’s workers who are engaged in part-time, temporary work or self-employment is around 30 percent. Clearly, the sharing economy and gig work — both disrupters of traditional work structures and business models — are here to stay.

Ride-sharing is more than just driving

Looking at ride-sharing, we see new apps and services emerging regularly. Examples include companies like Curb, based in San Jose, which lets users schedule pickups ahead of time, or Wingz, based in San Francisco, which allows users to schedule rides to and from airports at flat fees and even to choose their preferred driver.

A substantial player in the sharing economy, ride-sharing is quickly becoming a staple of transportation. Peer-to-peer platforms that blend technology and community-driven services, ride-sharing apps have recalibrated what it means to commute and travel. With the simple use of a mobile phone, applications like TuroLyftUber and many others provide access to vehicles on demand.

I lived in Los Angeles for a few years, and ride-sharing was a significant lifeline. Offering the ability to hail a car within minutes, platforms like these provide a convenient and cost-effective method of travel — particularly for millennials like me, who increasingly choose not to own a car. Similarly, companies like Amazon, through Amazon Flex, are also using the concept of ride-sharing to bolster their businesses, while providing new avenues for employment. Applications like Turo challenge the vehicle rental market, by allowing users to connect to vehicle owners in their community to essentially “rent” a car. If you consider that the majority of vehicles reportedly are not in use 95 percent of the time, finding a way to make the best of that unused time by sharing them seems logical.

Other digital platforms have also taken off. While some of the more well-known ones are accommodation-rental services like Airbnb, of particular interest is the growth of services that focus on pets. Apps like Rover let users browse available pet-sitters in their area, and DogVacay matches pet owners with sitters in the area who can host the pet at their homes.

The future of transportation for Canadian cities

A few weeks back, I had the pleasure of joining a panel in downtown Toronto, moderated by TV/radio host and author Amber Mac, where I chatted with Turo’s Cedric Mathieu and Lyft’s Aaron Zifkin about ride-sharing and what it means for Toronto. Icons of peer-to-peer vehicle sharing, both companies had recently followed Uber’s decision in 2012 and chosen Canada as their first location for expansion outside the US. While Lyft is still fairly new to the Canadian market, this spring marked Turo’s two-year anniversary in the city.

What are the results so far when it comes to ride-sharing in Canada? Uber is currently available in 17 cities across the country. During its two years in Canada, Turo managed to draw 350,000 users to its platform, which lists more than 10,000 vehicles. Similarly, even before its debut, Toronto was already gearing up to go for a ride with Lyft. The app received more than 50,000 downloads in Toronto prior to official launch. Whether you’re hailing a car to get from one end of the city to another, or renting one to drive to Mont-Tremblant for the weekend, sharing applications like Uber, Lyft and Turo service a need for convenient, fast and affordable transit alternatives.

In the end, the 25-kilometre ride from the panel in downtown Toronto to Etobicoke cost me $20 on a Lyft Line — a car-pooling option similar to UberPOOL. On that journey I met two other passengers who were going my way and chose to car-pool. For $20, I was able to get to my destination quickly and conveniently, make a connection in the community and possibly eliminate the need for one or two more cars on the road. Similarly, the next time I need to take a trip outside of the city, I will most likely forgo a trip to Hertz and grab a Turo instead.

Ride-sharing, connected cities and the future of work

The benefits of the sharing economy — increased connectivity, the efficient use of assets or skills and greater economic participation — are playing an important role in our cities and communities. Ride-sharing apps like Lyft and Uber fill a need for accessible and convenient transportation. Services like Airbnb, Homestay and Couchsurfing provide access to accommodation that might offer better prices and more flexibility than traditional hotels, and freelancing platforms like UpWork and Toptal allow skilled workers to access more employment opportunities.

These kinds of services are transforming the places we live, and also how we interact with them and within them. Increasingly, they are inspiring questions about how basic needs like housing, employment and transportation should be met. Uber currently has over 40 million active users per month, and Airbnb cites more than 150 million global users on its platform. Challenging the traditional modes of transportation like taxis, or traditional accommodation like hotels, these services offer a greater availability of options, convenience and experiences for consumers, and could reshape our cities.

However, even these new developments, which are propelled by consumer demand and are shifting business and economic models, often require some finesse to operate within our current economic and social platforms. Last month, the city of Barcelona instructed Airbnb to remove more than 2,500 listings that were operating without city-approved licences. The crackdown on Airbnb was a direct result of the increase in popularity of Barcelona as a tourist attraction, which had led to a surge of Airbnb listings, limiting the ability of residents to find affordable housing.

The city of Amsterdam took a different approach, in its effort to battle excessive rents and low vacancy rates. It introduced a regulation allowing owners to rent out their places on Airbnb for a maximum of 60 days per year. Owners who surpass this limit have to apply for a hotel licence.

The idea behind both approaches is to allow these alternative services to continue, while ensuring that communities are not negatively impacted by them.

The sharing economy and regulation

During the Q & A portion of the Toronto panel, an audience member raised a question about the role of inclusivity in the sharing economy: While the sharing economy has immense potential to integrate new players economically, what can we do to ensure that this new marketplace doesn’t become an elite platform of income generation for those who already own assets like housing or vehicles? How can populations such as remote communities, people with disabilities and Indigenous communities benefit from the sharing economy? These are important questions that need to be kept at the forefront of the discussion and will play a key role in regulation.

While in some ways, sharing economy platforms like Uber or Lyft have been seen to offer expanded mobility and employment opportunities for people with disabilities, for example, issues including unfair pay and lack of work benefitshave recently arisen. In May, the Supreme Court of California tackled this issue. Its ruling significantly limited the ability of businesses to classify workers as independent contractors who therefore do not receive key employment benefits. While the debate about how the sharing economy should be regulated and who should regulate it continues, decisions like these will guide the public bodies that are willing to engage in the debate.

Most of the regulation we have seen to date around the sharing economy has taken place at the city level. Some early adopters of the sharing economy like Portland, Oregon, Washington, DC, and Chicago have established tax-collecting arrangements with sharing companies. This means that these sharing services will be subject to taxes, just like traditional businesses. Similarly, in 2016, five Florida-based cities formed a public-private partnership with Uber to subsidize rides. All Uber rides in these cities were subsidized to the tune of 20 percent, and those taking public transit were subsidized by 25 percent. This initiative was undertaken in order to alleviate traffic problems and to find savings on transportation and road building.

However, not all regulators have been as positive toward the sharing economy as those in Florida. For example, in late 2017, Uber shut down operations in Denmark, following the development of new taxi laws that required Uber vehicles to be fitted with fare meters and seat sensors. Companies like Uber continue to face challenges in many European cities, following the decision by the European Court of Justice classifying these services as transport companies. This ruling means that ride-sharing services are subject to stricter regulation and licensing in the EU.

The sharing economy vs. traditional industries

Innovations like ride-sharing can reshape the way we think of driving and commuting. They could even contribute to turning the most challenging commute in North America into one of the best. But ultimately, the success of these and other applications in the sharing economy is rooted in their ability to contribute to economic growth and their ability to provide advantages for everyone, including Canada’s most vulnerable populations. It’s our job to ensure that the new doors that the sharing economy opens are open to all, and that the future economy is one that everyone has the opportunity to participate in.

How will these trends in transportation affect consumer markets and labour productivity, and what impact they will have on the economy in general? In the interests of creating an inclusive, sustainable and innovative future for Canada, we need to evaluate questions like these.

In Ontario, over the past few years, the government has tailored insurance schemes to be relevant to ride-sharing companies. The Financial Services Commission of Ontario has approved auto insurance products for eight ride-sharing companies and three car-sharing companies. They work by activating the company’s insurance while the app is in use, and then switching to the owner’s private insurance once the app is turned off. Responding to changes and disruptions created by these new platforms, the Ontario government recently created the Sharing Economy Framework with the intent of generating new wealth for the province, while assessing challenges and issues along the way. The framework seeks to conduct research and consult with stakeholders on the sharing economy, identify opportunities or gaps, develop methods to address those gaps and gather data on actions taken to assess outcomes and results.

The approach to regulating the sharing economy is not standard across the country. In 2016, the British Columbia Chamber of Commerce called for policies on the sharing economy. This call focused on assessing proper taxes on short-term rentals like Airbnb, as well as the establishment of relevant regulations, the removal of unnecessary red tape and the integration of ride-sharing into the broader provincial Passenger Transportation Act. However, progress has been slow to date, and BC has become all but infamous for the delay in allowing these services to enter the province. Most recently, stating the need to develop BC-specific policies and insurance mechanisms to support ride-sharing, the government announced that ride-sharing would continue to remain unavailable in the province until the fall of 2019. Instead, the province has committed to adding more taxis to the road in the interest of mitigating supply shortages.

What is the best way forward for Canada in the sharing economy? Should legislation and policy development be considered on a case-by-case basis at the municipal level, as in the Florida cities that forged a partnership with Uber for reduced fares? Should it be at the provincial level, encouraging the development of policy frameworks for each province, like Ontario’s Sharing Economy Framework? Or should it take place at the federal level, offering a clear standard or guidelines for all provinces and municipalities to implement, similar to the ruling by the European Court of Justice that Uber is a transportation service?

The answers to these questions are neither easy or straightforward. They require substantial research and data collection on considerations relevant to each type of sharing platform, as well as extensive consultation with stakeholders, policy-makers and consumers. While the policy needs of British Columbia may differ in some ways from those of Ontario when it comes to this newly developing economical structure, one thing is clear: the sharing economy is not only here, but it is likely here to stay. The challenge now is to assess the appropriate balance between safety, consumer protection and economic needs, while at the same time continuing to support and drive Canada’s growth in the innovation economy.

source: http://policyoptions.irpp.org