Concerns over Sandbox - the new way to approaching the supervision on cross-border platforms

Applying the sandbox approach to supervise ride-hailing firms does not address all concerns

According to economist Nguyen Dinh Cung, sandbox would allow fresh sectors to operate without supervision for a certain time to reveal problems by themselves. After the trial period is over, the government will have a better grasp of the underlying issues and will be able to create better policies to resolve them.

Cung also said that this approach suits Industry 4.0 and the rise of new business segments and disruptive technologies and business models. Similarly, Facebook, Google, and Grab are seen as the new segments, and as of the current time, supervision on them in Vietnam still turns corner because no suitable supervising policies.

To resolve one part of the problems, the Ministry of Information and Communications most recently submitted Document No.1485/BTTTT-CNTT to the prime minister about the proposal of arranging platform providers like Grab, and Go-Viet into one, completely separate sector.

The document also aims to contribute ideas to the Ministry of Transport’s (MoT) draft decree outlining business conditions for passenger transport, which will replace the previous Decree No.86/2014/ND-CP.

According to the MIC, business activities for traditional taxies previously depended on taxi firms themselves, authorities, and customers. However, the appearance of ride-hailing platforms has had a remarkable impact on their operation, which makes better supervision of their operations imperative.

The sandbox approach would enable the government to find suitable policies. However, the document only mentioned applying the concept to ride hailing, without touching on other cross-border platforms. Moreover, Grab’s operations go far beyond ride-hailing, as they now include food delivery and e-wallets, which also need to be soon supervised to avoid the risk of tax evasion and issues related to currency security.

Over the past few years, Facebook and Google have been "forgetting" their tax obligations in Vietnam despite earning hundreds of millions from the market annually. Similarly, the supervision of cross-border payments is a sizeable issue, as the State Bank of Vietnam and the tax departments have yet to effectively extend their supervision over these businesses.

The sandbox approach, in its current form, will not be a cure-all for all ails of disruptive technologies and cross-border business operations, but it is a start. However, the unrestricted operation for the initial period poses serious vulnerabilities and it will be a crucial question of how long this time window will actually be.