The Hong Kong government has announced its intent to regulate ride-hailing services, including Uber Technologies Inc. (NYSE:UBER), casting a shadow of uncertainty over Uber's operations in the city.

What Happened: The Transport and Logistics Bureau of Hong Kong plans to license platforms like Uber and enforce stricter penalties for rule violations. The bureau also intends to upgrade taxi services by introducing premium fleets, Bloomberg reported on Tuesday.

The proposal, however, lacks clarity, raising concerns. Oliver Chan, an assistant professor at the Chinese University of Hong Kong, pointed out that if the number of hire-car permits isn't increased, many Uber drivers would continue to operate illegally. The South China Morning Post noted that officials have no plans to increase the quota.

Uber, which has been operating unregulated in Hong Kong for a decade, welcomed the government's plan but emphasized the need for a feasible licensing regime. The company cautioned that any move to limit the number of ridesharing licenses would affect drivers who rely on the platform for flexible earnings.

The Transport Department intends to conduct a study on commuter needs to help shape the new regulatory regime, with results expected within 12 months. Lawmakers will discuss the regulatory framework in a panel meeting on Friday.

Why It Matters: This development comes a month after Dida Inc. became the first publicly traded ride-sharing app in China. Dida's listing on the Hong Kong Stock Exchange could potentially influence the regulatory landscape for ride-hailing services in the region, including Uber.

Price Action: As per Benzinga Pro, Uber's stock closed at $71.25 on Monday.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari