Uber is implementing ride hailing services in Danang, Khanh Hoa and Hanoi without reporting its operations to provincial authorities in clear violation of Vietnamese regulations.

Uber is showing an increasing number of violations and reluctance to heed authorities' warnings

This is the report of provincial representatives at the meeting reviewing the implementation of the two-year pilot programme of ride-hailing services via technology application, organised on December 19 in Hanoi.

On January 7, 2016, the Ministry of Transport (MoT) issued Decision No.24/QD-BGTVT on the pilot scheme for ride-hailing services. The pilot duration was two years, lasting from January 2016 to January 2018.

According to the decision, the pilot programme of ride-hailing services will be implemented in five cities and provinces, namely Hanoi, Quang Ninh, Danang, Khanh Hoa, and Ho Chi Minh City.

However, after two years, only four cities and provinces have joined the programme, while Danang remained exempt. At the same time, the authorities identified numerous violations in Uber operations.

Notably, as of December 4, the Hanoi Department of Transport also had yet to receive the report about the company’s operation for the last two years.

Besides, in early August this year, when Uber Vietnam released information about implementing its services in Danang on its website, the Danang Department of Transport asked Uber to stop the pilot programme and the relevant advertisement campaign. However, Uber ignored the request and continued both activities.

In addition, Uber is operating in Danang without any the representative office as well as legal representation.

Uber entered Vietnam in June 2014. Since then, tax collection for the ride-hailing service application has remained controversial as this was the first service of its kind in the country, triggering worries about the efficiency in collecting taxes as well as unfairness to other transport firms in the country.

According to Dang Duy Khanh from the General Department of Taxation, Uber’s total revenue from 2014 to June 30 this year was estimated at more than VND2.77 trillion ($122.1 billion) and the firm has paid approximately VND76.9 billion ($3.38 million) in taxes.

Uber and Grab to need business registration certificates

Uber and Grab will need business registration certificates in Vietnam and pay taxes to the Vietnamese government.

This was announced by Le Dinh Tho, Deputy Minister of Transport, at the meeting reviewing the implementation of the two-year pilot programme of ride-hailing services via technology application, organised on December 19 in Hanoi, according to newswire Vnexpress.

Tho said that during the past two years, Uber and Grab have expanded the transport market by bringing a larger variety of choices for customers. Besides, Uber and Grab’s appearance created competition with traditional taxi brands, forcing traditional taxi companies to adjust fares as well as improve service quality.

However, Tho stated that the authorities’ management of Uber and Grab is still loose as the regulations on the enterprises operations have yet to be clarified, allowing them to take advantage of loopholes. Thus, Uber and Grab must have business registration certificates in order to create a fair playground for all stakeholders.

Tho added that the Ministry of Transport (MoT) will propose the government plans as well as adjustments to regulation to improve the authorities’ control over the operation of ride-hailing services.

In the framework of the meeting, a representative of MoT stated that Uber’s operations in Vietnam lack transparency and the company has yet to complete its tax obligations. The representative of Uber Vietnam only gave general answers without addressing MoT’s questions.

“Uber has yet to receive any proposals, the company will listen to the authorities’ opinions and co-operate to ensure the transparency of Uber’s operations in Vietnam,” the representative said.

Previously, MoT issued Decision No.24/QD-BGTVT on the pilot scheme for ride-hailing services. The pilot duration was two years, lasting from January 2016 to January 2018.

The appearance of ride-hailing services, especially Uber and Grab, has impacted the operations of traditional taxi companies. Notably, Mai Linh Group released bleak business results in the first six months of this year. Accordingly, the number of Mai Linh employees decreased by approximately 6,000 to 24,000, falling 20 per cent on-year.

Besides, the company’s net revenue was VND1.72 trillion ($75.4 million), down 5 per cent on-year. Profit from other activities decreased to VND29 billion ($1.29 million), only half of what it was in the first half of last year.

Furthermore, as of the end of June 2017, the company bore an accumulated loss of VND800 billion ($35.1 million), equalling 80 per cent of its charter capital. In the first six months alone, its net loss from business operations was VND47.5 billion ($2.08 million), doubling on-year due to a sharp increase in sales and management expenditures.

Similarly, in the second quarter of this year, Vinasun’s net revenue reached VND810 billion ($35.7 million) only, a record low since 2014. Besides, quarterly after-tax profit fell by 50 per cent on-year, to VND16 billion ($706,299). The cumulative figure for the first six months was VND1.9 trillion ($706.29 million), signifying a decrease of 15 per cent.

Within the first six months of this year, the number of Vinasun employees decreased by approximately 8,000 to 9,179. According to a Vinasun representative, the company’s business results may remain gloomy until the end of this year.

VIR