Malaysia legalizes e-hailing services as Grab, Uber compete

KUALA LUMPUR (Reuters) - Malaysia's parliament on Thursday passed two bills that will legalize e-hailing services, as ride-hailing firms Grab and Uber Technologies Inc race to expand in the region.

Grab expects to raise $2.5 billion from investors in a bid to extend its lead over Uber in the region, as major companies aim to tap into Southeast Asia's developing economies driven by a young and tech-savvy population.

The amendments to Malaysia's Land Public Transport Act and the Commercial Vehicles Licensing Board (CVLB) Act will allow ride hailing services to operate on an "intermediation business license", a new category specific for the service.

The new license will regulate "the business of facilitating arrangements, bookings or transactions of an e-hailing vehicle whether for any valuable consideration or money’s worth or otherwise", according to the CVLB bill made available on the Malaysian parliament website.

Prime Minister Najib Razak's Cabinet agreed to legalize ride-hailing services last year even as taxi driver associations protested, arguing that their livelihoods were threatened by the private hire services.

The CVLB had previously declared that both Uber and Grab drivers were operating illegally in the country.

Singapore-based Grab operates private car, motorcycle, taxi and car-pooling services across seven countries with 1.1 million drivers, and claims a market share of 95 percent in third-party taxi-hailing and 71 percent in private vehicle hailing in Southeast Asia.

Both Grab and Uber recently launched operations in Myanmar, aiming to capitalize on the country's burgeoning mobile services market.