• New laws aim to reshape passenger safety
• Regulation, digital tracking, standard fares proposed 
• Govt. pushes app-based operations and welfare schemes
• Unions warn of pricing imbalance

For more than half a century, Sri Lanka’s three-wheeler industry has functioned in a space that is at once indispensable and insufficiently regulated. Three-wheelers, commonly known as ‘tuk-tuks,’ have become the backbone of last-mile connectivity in both urban and rural areas.

They fill the gap between bus halts and homes, railway stations and workplaces, markets and schools. Yet, this very ubiquity has also exposed the weaknesses of an informal transport ecosystem that evolved faster than the laws designed to oversee it.

From fare disputes and meter tampering, to allegations of harassment and crimes against passengers, especially women, the sector has long been marked by tension between service necessity and regulatory absence.

That landscape is now poised for structural change with the enactment of the National Transport Commission (Amendment) Act No. 8 of 2025. The amendment represents the first comprehensive attempt by the State to bring what is now termed “paratransport” under a formal regulatory regime.

The shift involves redefining the legal status of three-wheelers, mandating digital integration, introducing a welfare levy for drivers, and creating a dedicated regulatory authority to oversee informal passenger transport services. 

However, as the reform agenda moves from Cabinet papers to street-level enforcement, a multi-layered contest has emerged involving Government ministries, three-wheeler unions, multinational ride-hailing platforms, and civil society groups concerned about passenger safety.

From informality to ‘paratransport’

The National Transport Commission was established under the National Transport Commission Act No. 37 of 1991. For decades, its core mandate focused primarily on the regulation of private bus services. Vehicles such as three-wheelers, school vans, and privately operated office transport services remained largely outside its statutory reach. 

National Transport Commission (NTC) Director General Dr. Nilan Miranda explained that the original act did not anticipate the growth and diversification of small-scale passenger transport services that now dominate urban mobility. 

“The NTC was established under the Act of 1991. In that original act, there was no provision for bus owners to transfer their permits legally and there was also no mechanism to regulate services outside the formal bus sector,” Dr. Miranda said. 

“We identified this structural gap and amended our governing statute through the National Transport Commission (Amendment) Act No. 8 of 2025. This amendment allows us to regulate what is now defined as ‘paratransport’ and to facilitate the legal transfer of route permits within a transparent framework.” 

The term ‘paratransport’ is central to the amendment. It legally encompasses three-wheelers, school vans, office transport services, and similar point-to-point passenger vehicles that operate outside the scheduled bus system. By bringing these vehicles within the NTC’s statutory jurisdiction, the State has, for the first time, asserted regulatory authority over a sector that has historically operated under municipal by-laws and ad hoc administrative arrangements.

“Until this new amendment, three-wheelers were not regulated by any single national entity. We are now stepping in to regulate them by promulgating standard fares, specifying vehicle conditions, and introducing enforceable compliance standards,” Dr. Miranda said. 

The implications are significant. Standardised fares would aim to reduce arbitrary pricing and disputes. Prescribed vehicle conditions would create uniform safety benchmarks. Compliance mechanisms would enable sanctions for violations, which previously fell into a grey zone of fragmented enforcement.

Public Security Minister Ananda Wijepala confirmed that the legislative amendment would be supported by institutional reform. 

“A Cabinet decision was taken recently to create a regulatory mechanism specifically for the private transport sector through the NTC,” Minister Wijepala said. “This mechanism will focus on resolving issues in informal sectors such as school vans and three-wheelers. Our objective is to bring accountability, transparency, and public safety into a sector that has grown without sufficient oversight.”

The future through apps

Among the most debated aspects of the reform agenda is the proposal to require all three-wheelers to operate through digital applications. The policy objective is twofold: first, to eliminate meter manipulation and ensure fare transparency, and second, to create a verifiable digital trail for each journey, thereby enhancing safety, complaint resolution, and tax compliance.

Dr. Miranda made it clear that digitisation was not optional in the long-term vision of the commission. “In the future, we aim to implement a mandate where all three-wheelers must operate through an application. Whether through private companies or any other platform, once they operate through an app, they fall under the taxi category and must abide by our regulations. This is not about favouring one company over another. It is about ensuring that every journey is recorded, traceable, and accountable.”

Ride-hailing platforms such as Uber and PickMe have already transformed segments of the market in Colombo and other major cities. Their model is built on GPS tracking, algorithmic fare calculation, digital payment options, and rating systems for drivers and passengers. 

Both app-based services, though widely welcomed by their customers, are not without criticism, especially about driver behaviour and pricing. However, the majority of three-wheelers across the country continue to operate independently, relying on roadside hires and informal stand-based systems.

The Government has clarified that it does not intend to develop its own proprietary application. Instead, it aims to establish regulatory standards that all platforms must meet. 

Ministry of Digital Economy Secretary Waruna Sri Dhanapala explained the role of his ministry in this process: “We can facilitate the process through technology, but we do not interfere with the regulatory framework itself. However, if there are matters concerning personal data or cybersecurity across these platforms, we will intervene to ensure that they meet national standards. Any digital system that handles passenger information must comply with the National Digital Economy Blueprint and the applicable data protection laws.”

Data Protection Act 

Sri Lanka’s Personal Data Protection Act has introduced obligations relating to data minimisation, purpose limitation, and security safeguards. In the context of ride-hailing, this means that passenger names, phone numbers, travel histories, and payment information must be stored and processed in accordance with statutory requirements.

“System owners must identify themselves clearly and comply with our requirements,” Dhanapala stated. “Our first priority is to ensure organisational-level compliance with personal data protection and cybersecurity standards. The public must have confidence that their information will not be misused.”

Local innovation and the politics of pricing

While the Government frames digitisation as a pathway to safety and transparency, sections of the three-wheeler community view it with caution.

All-Island Three-Wheeler Drivers’ Union (AITWDU) President Lalith Dharmasekera stated that he was 100% in support of the reforms that were being introduced by the NTC.

“These are necessary changes for which I have fought for over two decades. I have been a part of the reform process and even lobbied for the amendment to the National Transport Commission Act in June 2025. The three-wheel sector has evolved, and certain organisations are taking advantage of us. We must also evolve to have a competing edge,” he said.

Dharmasekera argues that the narrative of technological salvation overlooks the history of local innovation and the economic realities of drivers. “Uber started globally in 2009, and PickMe followed in Sri Lanka in 2015. But long before that, we had local initiatives such as Budget Taxi,” Dharmasekera said. 

“In 2005, we introduced the digital meter, and by 2006 we were operating under the metered taxi concept with visible boards. We implemented gateway technology before mobile applications became a global standard. It is not accurate to suggest that Sri Lankan drivers were waiting for foreign companies to teach them about technology.”

Dharmasekera contended that taxi service platforms such as Uber and Pickme had capitalised on regulatory gaps to consolidate market power. “They claim that there is no safety, no driver information, and no fixed pricing in traditional three-wheelers, and they use that disorder to market themselves,” he said. “They are marketing the mess of the informal sector, but they also profit from that same disorder. We believe that without proper regulation, these platforms can manipulate surge pricing and extract disproportionate commissions from drivers.”

He also provided an example of differential pricing: “A driver might earn only Rs. 180 on a fixed meter for a certain trip, but under surge pricing on an application, the customer may pay far more. The driver is compelled to operate on both systems to survive. That creates a dual pricing environment where the same journey has two different prices depending on how it is booked,” Dharmasekera stated.

His critique extends beyond economics to civic philosophy. “The problem in our society is that there are fewer citizens and more consumers. A consumer may choose what appears cheaper or more convenient in the short term, but a citizen considers the collective good and the sustainability of livelihoods. We are not against technology. We are asking for regulation that levels the playing field.”

According to Dharmasekera, once minimum standards are enforced, including a certified meter, visible driver identification, and mandatory receipts, technology can function as a facilitator rather than a disruptor.

“The application itself is not the central issue,” he said. “The central issue is the absence of enforceable standards. If the standards are in place, then technology simply connects driver and passenger within a fair framework.”

The 1% Welfare Levy

Another cornerstone of the reform package is the introduction of a welfare mechanism funded by a 1% levy on fares. The proposal seeks to integrate three-wheeler drivers into a quasi-formal social protection system linked to the Employees’ Trust Fund (ETF) and Employees’ Provident Fund (EPF). 

A senior official from the Transport Ministry who wished to remain unnamed explained the rationale. “Many of these drivers are economically vulnerable and can lose their livelihoods at any moment due to illness, accident, or market fluctuations,” the official said. “To support them, we have proposed a welfare package. If a passenger pays Rs 250 for a taxi ride, the passenger will pay an additional 1% levy. That amount will be directed digitally to the driver’s welfare account.” 

The mechanism is designed to be automated and transparent. “It will be linked digitally. When the driver issues a ticket to the passenger through a certified meter or application, the one percent contribution is automatically transferred to a designated fund. After three years of continuous contributions, the driver becomes eligible for benefits similar to those provided under the ETF or EPF,” the official said. 

Sri Lanka’s informal sector accounts for a significant portion of total employment, yet many workers lack access to structured retirement savings, health benefits, or insurance coverage. By attaching a welfare contribution to each fare, the State hopes to create a contributory scheme that does not rely solely on Government subsidies. 

“These meters must be connected to a digital sensor system to ensure accuracy and prevent leakage,” the official said. “When a ticket is issued, the transaction is recorded, and the contribution is calculated automatically. The objective is to create a transparent ecosystem where drivers accumulate long-term financial security.”

Passenger safety and the legal gap

Concerns about passenger safety, particularly for women, have intensified in recent years. Allegations have ranged from verbal harassment and inappropriate conduct to the unauthorised sharing of passenger details on social media platforms. In some cases, victims have struggled to obtain effective redress through company-based complaint systems. 

Minister Wijepala acknowledged that cyber-related offences presented specific legal challenges.  “Regarding cyber security and online harassment, there is a gap in implementation until the amendments to the Online Safety Act is finalised,” he said. “At present, we are operating under existing criminal laws while the final draft of the bill is being prepared. However, there is no barrier under current Criminal Law to investigate harassment, intimidation, or data misuse.” 

He clarified that the Criminal Investigation Department(CID) retained jurisdiction over cyber-related offences. “The CID is actively investigating such matters, including online scams and digital harassment,” Wijepala said. “We encourage victims to lodge complaints so that law enforcement can take action under the applicable statutes.” 

The Transport Ministry official emphasised that the new regulatory framework would require identifiable information for every driver. “We must safeguard the passengers who use three-wheelers. Our priority is to protect the public. Every driver will have to be registered, and their details will be accessible to the regulatory authority. This reduces anonymity and strengthens accountability.”

Implementation challenges and the road ahead

Sri Lanka is estimated to have well over 100,000 registered three-wheelers, with many more operating informally. The scale of the sector presents logistical challenges in registration, compliance monitoring, and digital integration. Moreover, public acceptance will depend on how seamlessly the new systems are introduced.

The proposed regulatory authority will have to coordinate with the Ministry of Transport, the Commissioner General of Motor Traffic, law enforcement agencies, and digital service providers. It will also need to address regional disparities, as digital penetration and smartphone usage vary significantly between urban and rural districts.

Dharmasekera emphasised that the reforms must be inclusive: “When a formal system is introduced, it often benefits large companies first. Our position is that reform should benefit everyone, including the independent driver who operates from a rural stand. Regulation must not become a tool for monopolisation.” 

For the Government, the balancing act is delicate. It must modernise a critical transport sector without triggering widespread resistance or inadvertently displacing livelihoods and enhance safety for passengers without creating bureaucratic hurdles that undermine service availability. 

The National Transport Commission (Amendment) Act No. 8 of 2025 has laid the legal foundation. The next phase will determine whether that foundation can support a fair, transparent, and secure paratransport system.