Unfair competition with Uber, Grab prompts Vietnamese taxi firms' revenues to dip

By VnExpress February 24, 2017 | 12:18 am PT

A woman uses her smartphone to book for a taxi in Hanoi, Vietnam, September 9, 2015. Photo by Reuters

The growing popularity of app-based transport services like Uber and Grab has eroded profits of traditional cabs.

Ride-hailing services like Uber and Grab are paying lower taxes and face less stringent rules, which have created unfair competition and led to falling revenues of traditional taxi firms in Vietnam, industry experts said.

Uber and Grab bear responsibility for a drop of at least 10 percent in last year’s revenues of the taxi industry in Ho Chi Minh City, the city’s association of taxi drivers estimated.

“While [traditional] taxis are tied to [strict regulations], Uber and Grab are loosely regulated,” Tuoi Tre (Youth) newspaper quoted Nguyen Van Thanh, chairman of the Vietnam Auto Transport Association, as saying Thursday at a workshop.

Since 2010, Ho Chi Minh City’s market regulators have capped the number of taxis on the road at 11,000 cabs, said Ta Long Hy, chairman of the city’s association of taxi drivers.

But private minicabs, mostly offering transportation services via car-hailing apps, have now reached 20,000, Hy added, suggesting the rapid growth of transport apps Uber and Grab has quickly narrowed the market share of traditional taxis.

Besides, Uber is paying a 3-percent value added tax, while a local taxi firm is paying a 10 percent VAT and 20 percent corporate income tax, the newspaper cited taxi associations as saying.

Uber now keeps 20 percent revenue of a ride and sends 80 percent back to the driver.

Hy urged the authorities to impose a 5 percent VAT on taxi services via mobile-phone apps.

Do Quoc Binh, chairman of the Hanoi Taxi Association, said traditional cabs were also tied to strict business regulations such as parking, registration license, roof-sign, listed fares and drivers’ uniform.

He called on the authority to set the same rules for Uber and Grab.

He also proposed cancellation of the two-year trial of ride services via smart phone apps, in which Grab is currently the only foreign firm allowed to operate in five cities across the country.

The Hanoi government has finished a draft law that, if approved, will force Uber and Grab cars to place taxi signs on their roofs in the latest attempt to regulate private cars' business.

Uber and Grab drivers will also have to give passengers e-invoices with information including the operator's name, registered plate numbers, starting point, destination, time and fare.

> Hanoi plans to put taxi-style roof signs on Uber, Grab cars