Grab and Uber as taxi firms: a step back in the Industry 4.0 era?

The heated debate over the regulation of Grab and Uber in Vietnam

At the meeting to discuss the draft decree replacing Decree No.86/2014/ND-CP on March 8, Minister of Transport Nguyen Van The said that Grab and Uber are basically transport services that use technology to connect riders and drivers.

If Grab and Uber conducted hi-tech business alone, it should be the responsibility of the Ministry of Industry and Trade, not the Ministry of Transport (MoT), to oversee them.

He stated that the new decree, which will replace Decree 86, will have to be carefully built, especially the clauses relating to the management of the operations of Grab and Uber as taxi firms.

Minister The’s statement has provoked widespread controversy. Defining tech-based firms as traditional taxi services would be a step back for scientific and information technology development. If Grab and Uber were regulated as traditional taxi firms, it would hinder Vietnam’s progress to become a startup nation in the age of Industry 4.0.

Following the statement of the minister, traditional taxi associations have signed a joint petition to the prime minister, saying that the taxi system has been disrupted by the operations of Grab and Uber.

The number of licenced traditional taxis in the Ho Chi Minh City Taxi Association was reduced to less than half. Other taxi associations also witnessed a 30 per cent decline in the number of taxis.

The associations also blamed MoT on the shrinking business of taxi companies, as the ministry has facilitated Grab and Uber to participate in the ride-hailing pilot programme under Decision No.24/QD-BGTVT.

Traditional taxi firms are suffering from a decline in market share because commuters opt for new services that are faster, cheaper, and more convenient.

Dr Pham Sanh, a transport expert, said that, "The government exerted some control over tech-based companies like Grab and Uber during the ride-hailling pilot programme. However, it is important to develop a management framework for Uber and Grab. In line with global trends, there is no banning or forcing these services to leave."

China manages the ride-hailing firms as a mode of transportation, rather than banning or forcing them to leave the country. When Uber made its foray into China, the firm threatened the market shares of traditional taxi firms. However, after one year, Uber had to withdraw from China as traditional taxis have upgraded services to better serve customers.

He noted that, “The government should develop a legal framework that is fair, equitable, transparent, and competitive. If we ask Grab and Uber to leave Vietnam, it will cause misunderstandings among the locals. Many people are in favour of the services offered by Grab and Uber because of their benefits.”

Jerry Lim, country head of Grab Vietnam, said that, “Working towards a regulatory framework for e-hailing requires careful deliberation and consultation with various stakeholders. The Vietnamese government has always been a consensus-driven government and worked in the best interests of the citizens. Hence, we are very concerned about some of the points Minister of Transport Nguyen Van The has made in public on March 8.”

According to Lim, driver-partners chose to come on board the Grab platform as they enjoy the flexibility and freedom to drive. Those who wish to drive full-time can do so, while those who prefer to drive at their own leisure can do so as well.

People who wish to drive using their own cars can earn additional income opportunities, too. Driver-partners certainly would not wish to go back to the old days, where they were bound by taxi operators to meet sales targets and had to endure long, fixed driving schedules and pay high commission to the taxi operator.

Commuters chose Grab because the firm has improved their lives in significant ways through technology—from faster rides, transparency in pricing, convenience, and comfort to safety. If driver-partners are being impacted, naturally passengers will get impacted greatly too. With less driver-partners on the streets, passengers will have a harder time getting their rides.

"Grab cannot be classified as a taxi company and return back to square one, especially with all the efforts Grab and the government made to drive Vietnam’s digital economy," he stressed.

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