Bike-sharing ofo licence to operate cancelled after failing to comply with LTA regulations

Chinese bike-sharing company ofo lost its licence earlier this week due to failure of providing justification to continue its operation.

Ofo’s licence to operate was suspended at first since mid-February when the company received a notice of licence cancellation from the Land Transport Authority on 3 April.

In the notice, ofo was given two weeks to overturn the decision with written representations. The reason for the suspension was the company’s failure to meet regulatory requirements, such as a QR code-based parking system which limits bicycle parking within specific areas.

Ofo informed the LTA that it was in the “advanced stages of negotiation” with another partner to meet these requirements, causing LTA to extend the deadline to 28 March. However, ofo still hadn’t complied with the conditions by then.

Prior to this, a former employee stated that ofo had more than 90,000 bikes deployed in Singapore since they started operating in early 2017.

Although the company secured US$866 million (S$1.17 billion) in March last year from backers including Chinese e-commerce behemoth Alibaba Group, reports later that same year emerged of ofo battling with “immense” cash flow problems and considering dissolution.

On Monday (22 April), it was updated that: “As ofo has not provided LTA with sufficient justifications on why its licence should not be cancelled, LTA cancelled ofo’s bicycle-sharing operating licence on 22 April.”

“Ofo will not be able to offer dockless bicycle-sharing services in public places in Singapore without this licence.”

With ofo’s shutdown, other bike-sharing operators continued to operate as usual in Singapore; with the exception of Mobike, which had a licence to run 25,000 bikes yet they withdrew from the Singapore market last month to “rationalise” operations in South-east Asia, according to a spokesman of its parent company Meituan Dianping.

SG Bike currently operates a fleet of 3,000 bicycles, while Anywheel was awarded a licence earlier this month to manage a fleet of 10,000 bicycles from its previous cap of 1,000.

Meanwhile, industry newcomer Moov Technology was also granted a sandbox licence earlier this month to operate 1,000 two-wheelers in the country.

Experts have analysed that though many of the bike-sharing companies worldwide are supported by cash-rich backers, they struggled to acquire a sustainable business model and eventually suffered massive losses.

This was made apparent in Singapore when the bike-sharing industry started to have problems such as vandalism and indiscriminate parking. A new bill that was passed last year caused some of the companies to close down, citing difficulties in keeping up with the new licensing regulations.

Unlicensed operators may be fined up to $10,000 and/or a jail term of up to six months if convicted, after which a further fine of $500 per day would be charged for the offence.