Cab firm Smart may have to stop operation in September if its application for license renewal is being rejected by the Land Transport Authority (LTA). The company has failed to meet the minimal fleet size stated by the LTA - one of the basic requirement for a license renewal.

Under the new regulations announced by LTA last year, cab firms are required to have at least 800 vehicles on the road when their 10-year license is up for renewal.

At May, Smart's fleet stood at 315 - the smallest among all taxi companies. In comparison, cab operator Prime - the newest entrant into the market - had 808 vehicles.

Speaking to The Straits Times, Managing Director of Smart, Johnny Harjantho, said, "It's a chicken and egg issue. We can't expand if we are not certain that our license will be renewed. We've told the authority that if they give us the renewal, we will expand."

Mr Harjantho added yesterday that he is still interested in carrying on his business in Singapore.

If Smart's license is not renewed, the number of cab operators will drop to six.

With the new rules which kicked in this January, cab companies will find it more difficult to expand their fleet. The regulations require operators to have 70 percent of their fleet to clock at least 250km a day, and keep 70 percent of them on the road during peak hours. By 2015, the standards will rise to 85 percent.

In the past quarter after the new rules kicked in, only Comfort and Citycab have passed both requirements.

Mr Lim Chong Boo, Managing Director of Premier, told the local paper that "compliance has become costlier". For instance, to meet one of LTA's requirements, his company has spent "a few million dollars" to have a satellite-based taxi despatch system in place.

Singapore's taxi fleet has shrunk by two percent in the first four months of 2013. An expert on the field warned that the new standards could have adverse impact on cab availability if the fleet continues to shrink.