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|Customers will not be affected by Decree 10, providing clear rules for ride-hailing apps. Photo: Le Toan|
Tran Bao Ngoc, director of the Transport Department under the Ministry of Transport said that the ministry’s pilot programme on ride-hailing services will officially expire on April 1.
Afterwards, services must comply with new regulations as stipulated in Decree No.10/2020/ND-CP issued on January 17 to replace Decree No.86/2014/ND-CP enacted in 2014 on business conditions for road transportation firms.
The main difference in the new decree, according to ride-hailing leaders, is that some companies will have to separate the business that provides ride-hailing apps from those that offer actual transport services.
The pilot for the application of sci-tech to support transport management on a contractual basis was issued in 2016, allowing ride-hailing services such as Grab to operate without being subject to regulations applied to other transport services.
The new decree aims to align ride-hailing firms’ business operation with better standards and recognise their apps as legal businesses. After coming into effect on April 1, all firms operating in passenger transportation with cars or motorbikes with fewer than nine seats using ride-hailing applications are to be treated as taxi firms. The previous pilot programme will be suspended to avoid any conflict with Decree 10.
All passenger cars with less than nine seats are being given a badge for transportation services before April 1. They will also have to feature signs that indicate the type of licence they are operating under, and complete installation of this before July 1, 2021.
Commenting on the decision, a representative of Grab said that the halt of the pilot programme will not affect Grab’s operations in Vietnam. Customers can use ride-hailing, food delivery, and express delivery services as usual, while the company’s drivers will operate normally on Grab’s platform.
The representative added that Grab is studying the new decree to find the best option for its business model in Vietnam. The firm is actively working with regulatory bodies to learn more about the regulations for ride-hailing businesses.
Last year, Grab announced investment of $500 million into Vietnam over a period of five years to tap into fintech opportunities, new mobility solutions and logistics, in order to spur development of the country’s digital economy.
Go-Viet also stated that operations will not be affected. The company is offering multiple services such as motorbike hailing, food delivery, and consumer-to-consumer delivery in Vietnam. Unlike Grab, Go-Viet does not yet offer car hailing but is considering similar services.
Ta Long Hy, chairman of the Ho Chi Minh City Taxi Drivers Association, said that Decree 10 is an important move in regulating the operations of taxis and contract-based vehicles. According to Hy, there are not so many differences between the new decree and the previous one, despite the separation of transport firms and ride-hailing providers. Therefore, the change will have little impact.
On the other hand, he added that it will be more convenient for management and regulation when separating transport units from software providers. Specifically, software providers are in charge of the technological side without being involved in setting fare rates and promotions. They could only act as an intermediary providing the platform for transport businesses.
Over the past few years, there has been fierce competition between traditional taxi companies and platforms such as Grab, Go-Viet, and FastGo. In 2017, Vinasun filed a lawsuit against Grab, claiming that the latter’s illegal activities have caused a slump in its earnings. The prolonged court case between Vinasun and Grab reflects the new competition between traditional taxi operators and ride-hailing firms in Vietnam.
However, this kind of battle is not specific to Vietnam. Many other countries including the United States, where the model was developed first through Uber, have had to resolve the legislation ambiguity.
According to industry insiders, the underlying trade-off behind the recent decision is to ensure that traditional taxi companies maintain a decent level of activity while allowing other companies to innovate in order to offer better value for money to the consumers. Thus, Decree 10 reflects Vietnam’s effort to solve the controversies between traditional taxi companies and ride-hailing apps.