Uber Sells Stake To Grab After Launching E-hailing Culture In Vietnam

VietNamNet Bridge - Competing with traditional taxis and avoiding tax, Uber gained ill fame during its operation in Vietnam. However, it helped energized the taxi market and create an ‘e-hailing’ culture.

Uber launched e-hailing culture in Vietnam

In June 2014 in HCM City, Uber joined the market. Its taxi fee was around half of traditional taxi firms. Uber rates at that time were a base of VND5,000, VND4,999 per kilometer and VND300 per minute.

Traditional taxi firms collected VND12,500-16,500 every kilometer of travel.

Besides the low prices, people were attracted by the better service and cars of Uber. They could also give marks about the performance of drivers on the Uber app.

Nguyen Minh Loan in Hanoi said in the past, she had doubts about the honesty of taxi drivers. But the worry was lifted when Uber and Grab appeared. With the ride hailing apps, she knew the exact itinerary and the fee she had to pay before the ride.

To compete with Uber and Grab, traditional taxi firms also began providing hi-tech services.

Uber claimed that it was not a transport firm, just an app that connected drivers and passengers. Thus, it did not have tax obligations, it said, adding that it was also taking a loss.

Uber Vietnam later promised to pay VND66.7 billion in tax arrears as requested by the taxation agency. However, at the government’s regular press conference in January, Deputy Minister of Finance Vu Thi Mai said Uber had paid VND13 billion.

Mai said Uber paid only foreign contractor tax (FCT), but had not paid VAT, corporate income tax and personal income tax it withheld from drivers.

After March 26, dozens of drivers for both UberMoto and UberX received a message from Uber that Uber had merged with Grab in South East Asia. The drivers were told to join Grab if they wanted to continue working.

The ride hailing app market was first exploited five years ago, in December 2013, Easy Taxi, a well known app in Brazil at that time, came to Vietnam, but it unexpectedly left the market in 2015.

Regarding Uber and Grab’s legal status, Grab will have to operate as taxi firm, not  technology firms. 

“If Uber and Grab agree to operate under the management model applied to traditional taxi firms, they will be permitted to maintain operations, otherwise, they have to leave Vietnam,” said Minister of Transport Nguyen Van The.

US$1=VND22,000

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