Monday, 19 Aug 2019

Vietnam’s transport ministry views ride-hailing firms as taxis

Updated at Wednesday, 05 Jun 2019, 18:42
The Hanoitimes - Ride-hailing firms that not only provide software but also manage the transportation process should be considered a transportation company.
Vietnam’s Ministry of Transport (MoT) proposes temporarily putting ride-hailing firms such as Grab or Fastgo in the same category as traditional taxis until the revision of the Law on Road Traffic is completed, local media reported. 
Illustrative photo.
Illustrative photo.
Such view was given in the MoT’s report submitted to the ongoing seventh meeting session of the National Assembly. 

According to the report, after two years of implementing Decision No.24, which pilots the application of technology in managing and connecting electronic contract-based passenger transportation, Vietnam has a total of 14 companies providing ride-hailing apps, including 13 local and one foreign companies, and partnering more than 46,000 drivers. 

The fierce competition between electronic contract-based passenger transportaion cars and traditional taxis has led to outcry from the latter, while there has been a lack of regulations for electronic-contract based cars, stated the report. 

Additionally, some ride-hailing firms have not fully complied with the law, such as tax evasion, no light-box installed, or inappropriate contracts, among others. 

Minister of Transport Nguyen Van The said there are two types of ride hailing firms. The first one just purely provides ride-hailing software, and does not take part in managing transport vehicles, employing drivers or deciding transport fares. They receive commissions from transportation companies. 

The second one not only provides the software but also takes control of the whole operation, including the management of transport vehicles and transport fares, and later pay the drivers for their services.

This type should be considered a transportation company, said the minister. 

The transport minister revealed the new regulation would remove a number of business conditions for taxis, allowing all kinds of transportation businesses to apply technologies in management and operation. Moreover, there will be a clear definition of taxi and electronic contract-based vehicle in the regulation. 

Grab and Uber arrived in Vietnam in 2014 and operate both car and motorbike hailing services. The two services started to run on a trial basis in early 2016, but have been caught up in a turf war with traditional taxi drivers, as the rise of these two firms have led traditional taxi firms on the downhill path.

In February, High-level People’s Procuracy in Ho Chi Minh City appealed the verdict of People’s Court of Ho Chi Minh City on the law suit of local taxi firm Vinasun against Grab, citing no cause-effect link between the operation of Grab and Vinasun’s lost revenue.

The decision was made in reference to the verdict of the People’s Court of Ho Chi Minh City on December 28, 2018, ordering Grab to pay VND4.8 billion (US$206,985) in compensation to Vinasun. 

Vinasun filed a lawsuit against Grab 18 months ago, accusing the latter of unfair business practices that had cost it US$1.76 million in lost profits. 

According to the Procuracy, a slump in Vinasun’s profit was due to the corporate governance of the enterprises, market conditions, fierce competition between multi modal transport businesses, and a change in passengers’ demands, among others. 
Ngoc Thuy
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