Vinasun and Mai Linh have blamed Uber and Grab for causing thousands of drivers to quit while profits take a nosedive.
Vinasun, Vietnam’s largest taxi company, reported losing 2,000 drivers in the third quarter of 2017 and 8,000 during the first half of the year according to VnExpress. The company’s revenue has only reached 58% of its annual profit target, and third quarter net profits dropped 50% compared to the same period last year.
Mai Linh, meanwhile, lost 6,000 drivers in the first half of this year, equivalent to 20% of its employees, according to a company report. The company's earnings dropped VND47.5 billion (US$2 million) over the time period, which is twice as much as they fell last year.
VnExpress notes that as many as 50,000 drivers have now left taxi companies nationwide to work for Grab and Uber because of the ease and flexibility they offer employees.
Vinasun and Mai Linh have complained to the government and shareholders that the ride-share apps represent unfair competition and receive preferential treatment.
The Ministry of Industry and Trade seems to agree with the taxi companies and admits the “app-based ride-hailing services are not regulated by the same laws as transport providers like local cab firms and motorbike taxis."
Uber and Grab are treated as providers of transport software, which means that they do not have to pay the same taxes as traditional taxis nor take responsibility for customer safety.
While conceding the ride-share apps may currently benefit from unfair standards, the transport ministry said people should not to expect any shutdown of their operations. Instead, they urged changes to legal frameworks to promote equality.
Taxi companies have so far responded to the competition in a variety of ways. Vinasun introduced a Facebook chatbot for reserving rides and ensuring fair prices, and they plan to release their own motorbike ride-hailing app. Vinasun has also threatened lawsuits against Grab and Uber to level the playing field.
Regardless of changes to the laws or initiatives by taxi companies and drivers, experts predict the ride-sharing apps are here to stay. Taxi firms will need to evolve and learn to share the market or they will disappear. Huynh The Du, a public policy expert at the Fulbright Economics Teaching Program in Saigon summed it up when he said: “The evolution of technology can’t be reversed, and that’s the brutal truth for traditional taxi firms."
[Photo via Kul]
