Saigon cab firm lodges formal complaint after losing out to Uber, Grab

By Phuong Dong   June 22, 2017 | 05:39 pm GMT+7
Saigon cab firm lodges formal complaint after losing out to Uber, Grab
Two Vinasun taxi cabs in Ho Chi Minh City. Photo by VnExpress

The plight of traditional taxis has received little sympathy from members of the public, who say they are fed up with unreliable services.

Vietnam’s second biggest taxi firm Vinasun said it lost over 4,200 drivers in the first quarter of 2017 while more than 300 of its cabs have been left in the yard due to harsh competition from ride-hailing firms Uber and Grab.

In a document sent to the government, Vinasun said more than 21,100  cars have been granted licenses to work for Uber and Grab in Ho Chi Minh City, not to mention over 1,800 cars from other cities and provinces.

The figure matches data from the city’s transport department, which says the number of so-called technology taxis in the city had reached 22,000 at the end of the April, far beyond the authorities’ expectations.

As Uber and Grab are not registered to run passenger transport services, they do not have to follow the strict regulations that traditional taxi firms do and pay less taxes, according to Vinasun.

Due to loose management, Uber and Grab have been able to offer a string of promotions to lure customers, it claimed, calling the competition "unhealthy" and "unfair".

Vinasun asked the government to treat Uber and Grab like traditional taxi firms, limit the number of cars they operate and charge them corporate income tax.

In response to Vinasun, the Ministry of Transport said the government welcomes all transport firms that use hi-tech applications to support their businesses.

Uber and Grab are not taxi firms but transport firms that ink contracts with their passengers that are electronic instead of on paper, it said.

Yet late last week, the ministry instructed localities to stop licensing new ride-hailing services in a bid to control app-based taxis.

With the number of technology taxis threatening to spiral out of control, Nguyen Hong Truong, deputy transport minister, said his ministry will tighten management of ride-hailing firms.

U.S.-based Uber and Malaysia-based Grab entered Vietnam in 2014. Since then, collecting tax from the two firms has proved a headache for local authorities.

As currently regulated, Uber has to pay 3 percent VAT while Grab has to pay 5 percent. Traditional taxi firms have to pay 10 percent VAT and 20 percent corporate income tax.

In April, Mai Linh, another major taxi firm in Vietnam, also complained that they were losing business to Uber and Grab.

Mai Linh said its net profit plunged nearly 70 percent last year to VND43 billion

Ho Huy, chairman of the company, said Uber and Grab were the main reasons 2016 was such a difficult year for Mai Linh and other traditional taxi firms.

But so far, the plight of traditional taxis has received little sympathy from the public. Many people are fed up with poor and unreliable services provided by traditional taxi firms, such as drivers refusing to take short trips or failing to show up for a booking, while ride-hailing firms are clean and their fares are transparent.