On 17 January 2020, the Government issued a new Decree (Decree 10/2020) to replace Decree 86 dated 10 September 2014 (Decree 86/2014) regulating road transportation services by cars. This new Decree introduces updated regulations to govern a growing number of ride-hailing platforms in Vietnam (or at least the parts of such platforms associated with automobile transportation).

Previously, Grab Company Limited (Grab VN) is permitted by the Ministry of Transportation to act as an intermediary connecting automobile transport business entities and passengers to provide its automobile ride-hailing platform (i.e., GrabCar). With the new Decree 10/2020, if Grab VN (and other entities conducting similar business) directly manages vehicles or chauffeurs, or determines the transport fare, they would be considered as conducting transportation by automobile business instead as “conducting business of transport by automobile” (kinh doanh vận tải bằng xe ô tô) is defined as: the act of performing at least one of the main steps of transport activities (being directly managing vehicles and chauffeurs, or determining the transport fare) in order to transport passenger or goods on road for profit.

According to Decree 10/2020, depending on the specific implementation of each platform, the businesses providing automobile ride-hailing platforms (such as Grab, Uber, be) could be considered as “doing business in passenger transportation by taxi” (kinh doanh vận tải hành khách bằng xe taxi) or “doing business in non-fixed course passenger transportation in accordance with contract” (kinh doanh vận tải hành khách theo hợp đồng không theo tuyến cố định) or providing “software application to assist with connection in transport” (cung cấp phần mềm ứng dụng hỗ trợ kết nối vận tải). This is because:

· “Doing business in passenger transportation by taxi” (Taxi Business) is defined as the use of automobile having under 9 seats (including the chauffeur) to transport passenger(s) in accordance with the route and schedule requested by the passenger(s); using taximeter to calculate the fare for the trip or using software to book, cancel, calculate the fare for the trip and connect directly with the customer via electronic means;

· “Doing business in non-fixed course passenger transportation in accordance with contract” (Contracted-car Business) is defined as conducting passenger transport business in accordance with the written transport contract (either in hard copy or soft copy) between the entity conducting passenger transport business in accordance with contract and the transport hirer wanting to hire the [car for the] whole trip (including hiring the chauffeur); and

· “software application assisting with connection in transport” is defined as the software application providing the protocol to connect the entity conducting transport business, chauffeur with the customer or the transport hirer – all of which happens in a digital environment. And the entity providing software application to assist with connection in transport is indirectly defined as the entity providing such application but not (i) directly managing the vehicles or chauffeurs, nor (ii) determining the transport fare. Since this does not directly deal with transport business, we will not discuss this approach any further.

Under Decree 10/2020, the operator of a ride-hailing platform either in form of a Taxi Business or Contracted-car Business will need to, among other things:

· obtain a business licence from the provincial department of transportation; and

· sign labour contracts with its employees including chauffeurs. Alternatively, the chauffeurs could sign the employment contract with another transportation company instead of the operator of the ride hailing platform.

Additionally, the cars used for passenger transport on such platforms must install:

· camera(s) recording the chauffeur and the car doors (effective from July 2021); and

· vehicle tracking system.

These requirements appear to be stricter than those under current regulations.

The definitions of Taxi Business and Contracted-car Business are quite broad, and both can be describing the operation of a ride-hailing platform. However, the requirements to conduct each business are different. And the Taxi Business might fit the current operation of GrabCar (and similar platforms) more than the Contracted-car Business using electronic contract. This is because, among other things:

· Contracted-car Business requires for a list of passenger(s) to be attached to a transport contract, and the chauffeur must not pick up passenger(s) who is not included in the list of passenger(s). When in reality, a Grab user can book a ride for other persons (riding with or without such user) and there is no way for the user to register the passenger for such ride with Grab VN. Meanwhile, Taxi Business does not have such limitation; and

· Taxi Business is given priority in transporting customers in airport, train stations, commercial centres, tourist areas, and city transportation.

This post is written by Le Thanh Nhat and edited by Nguyen Quang Vu.

Vietnam Business Law