Vietnam legalizes car-hailing services after years of debate

Ride-hailing cars can either install a taxi roof-sign or carry a decal bearing the word “taxi” or “contract car.”

After years of heated debate, Vietnam’s Prime Minister Nguyen Xuan Phuc has signed off on a decree on transportation businesses to legalize car-hailing services.

Currently, ride-hailing services for cars are only permitted in five cities and provinces under an ongoing pilot scheme implemented by the Ministry of Transport in 2016.

This piece of legislation was four years in the making as regulators were caught up in the battle between taxi and ride-hailing companies. Ride-hailing apps have become an indispensable part of Vietnamese urbanites’ daily travel.

Effective from April 1, ride-hailing cars can either install a conventional taxi roof-sign, or place a decal bearing the word “taxi” or “contract car” on the front and back windscreens of vehicles. This also applies to regular taxis, which means that they are not obliged to have taxi roof-signs and can opt for the cheaper solution of decal only. Regulators believe that this solution will result in fairness for both taxis and ride-hailing cars.

This can be considered an acceptable outcome for Grab and other providers of car-hailing services in the country instead of the initial proposal that mandated roof-signs similar to those used by taxicabs.

Ride-hailing companies will have to store the data of all transactions conducted on their platform for at least two years for necessary inspections if needed.

According to the 2019 Google-Temasek-Bain report on Southeast Asia’s digital economy, Vietnam’s ride-hailing sector is expected to be worth USD 4 billion by 2025, growing at an average rate of 38%.

Grab has about 73% market share in terms of the ride volume in Vietnam, while GoViet (a subsidiary of Gojek) only holds 10.3%. A slew of local ride-hailing apps have also popped up, such as FastGo and Be. GoViet has yet to roll out car-hailing services.