Grab, Uber benefit from ‘unfair competition’: Vietnamese ministries

The two most popular app-based ride-hailing services in Vietnam, Uber and Grab, hold an unfair advantage over local taxi firms, according to reports by the trade and transport ministries.

“App-based ride-hailing services are not regulated by the same laws as transport providers like local cab firms and motorbike taxis," said the trade ministry in its report.

"These app-based services should be regulated the same as transport providers," the ministry said. 

Both ministries are in favor of a change to the legal framework to guarantee fair competition.

Uber and Grab currently operate in Vietnam as part of a pilot scheme that also allows for 10 or more app-based ride-hailing services, including the apps launched by Vinasun and Mai Linh. They are treated as providers of transport software which, unlike traditional taxis, excludes them from being accountable for passenger and traffic safety. 

Responding to a proposal in September from the Hanoi Taxi Association, the transport ministry said a complete halt to their operations was unlikely, but the government should hold fast on new approvals for app-based taxis. 

Authorities fear the fast-growing number of app-based taxis will contribute to Hanoi and Ho Chi Minh City's traffic problems. There are now already over 50,000 Uber and Grab vehicles registered in the two cities.

In Vietnam, local cab firms like Mai Linh and Vinasun have to pay VAT of 10 percent and corporate income tax of 20 percent, while Grab and Uber only have to pay 3 percent and 2 percent.

But this July, the tax department found that most local cab firms in Ho Chi Minh City only paid 0.01 to 0.06 percent corporate income tax, while some like Mai Linh Taxi paid less than 3 percent value added tax. The finance ministry subsequently asked the tax department to review these cases for possible tax fraud,

Meanwhile in September, Ho Chi Minh City's tax department demanded Uber Vietnam pay over VND10.5 billion ($460,000) in tax arrears.

"We look forward to new regulations that ensure fair, relevant competition among transport providers," a Grab Vietnam representative told VnExpress International last month, in response to recent allegations of local cab firms regarding unfair competition.

Both Uber and Grab have repeatedly told local media they are not violating any laws. 

Vinasun, the biggest taxi firm in Vietnam, has lost 10,000 employees so far this year, and its nine-month revenue only reached 58 percent of the company's annual target. Rival firm Mai Linh also has lost 6,000 employees this year, 20 percent of its total drivers.