Top Vietnamese taxi company sues Grab for $1.84 mln in losses

By Hai Duyen   February 6, 2018 | 03:07 am PT
Top Vietnamese taxi company sues Grab for $1.84 mln in losses
Vinasun and other taxi cabs on the street of Saigon. Photo by VnExpress/Duy Tran
The ride-hailing firm says that if Vinasun wants compensation, it should file a suit against the Ministry of Transport instead.

The opening statements of a dispute between Vietnam’s top taxi firm Vinasun and the Malaysia-based ride-hailing firm Grab were heard by the People's Court of Ho Chi Minh City on Tuesday.

Vinasun is trying to sue GrabTaxi Vietnam for “unhealthy competition” and dumping its service on the domestic market to drive out local competitors.

One of the most convincing charges the company has put forward is that GrabTaxi Vietnam ran promotions for more than 90 days in a single year, which is against the law.

“This has caused losses to Vietnamese taxi firms, including Vinasun,” the plaintiff said.

The company said it has submitted documents, photos and videos to the court to prove that Grab has violated the law by dumping its service on the local market.

Vinasun is looking for VND42 billion ($1.84 million) in compensation, calculated by the profit loss it claims to have suffered due to Grab in 2016 and 2017.

However, a legal representative for Grab said the suit filed by Vinasun is groundless because the company has failed to show how it has calculated its alleged losses. Grab said it has been operating since 2016 on a trial basis approved by the Ministry of Transport. Together with Grab, nine other companies are currently operating ride hailing businesses in Vietnam, so if Vinasun wants compensation it should file a suit against the Ministry of Transport, the representative said.

“The matter does not come within the jurisdiction of this court; it lies with state management agencies,” the Grab representative said.

Vinasun earned VND4.25 trillion ($187 million) in revenue and VND205 billion in net profit in 2017, down 10 and 34 percent respectively compared to 2016.

In July last year, Vinasun said nearly 8,000 of its drivers had quit in the first half of 2017 due to harsh competition from ride-hailing firms.

Three months later, it reported losing 2,000 more drivers for the same reason, leaving the company with 7,000 employees.

In a letter sent to the Prime Minister last year, Vinasun said ride hailing firms, including Uber from the U.S. and Grab, had repeatedly ran promotions without gaining permission from authorities.

Other countries like Thailand, Indonesia and Japan have either banned or tightened their management of Uber and Grab after concluding that the two companies have been operating as “disguised taxi firms”, read the letter.

Vinasun has asked for an end to the unhealthy competition, and said ride hailing firms should be placed under the same umbrella as traditional taxi firms in Vietnam. This would mean Uber and Grab would have to limit the number of cars they operate and adhere to price controls.

Earlier in January, the Ministry of Transport said Grab and Uber are to be officially authorized in Vietnam after completing trial runs, but the government has pledged to impose the stricter controls that currently govern local transport firms.

Ride-hailing services will have to register their businesses with investment authorities, the transport ministry and tax authorities.

“Tax agencies will keep track of fares so management can be more transparent,” said Tran Bao Ngoc, director of the ministry's Transport Department.

Hanoi has also recently put up traffic signs banning Uber and Grab cars from operating on roads off-limits to traditional taxis.

The court hearing will last until Wednesday.

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