The Ministry of Transport has blocked an attempt from US company Uber to legalize its ride-hailing service in Vietnam, saying the company needs to set up a branch in the country first.
Deputy minister Nguyen Hong Truong told news website VnExpress that officials could not approve Uber's recent proposal to launch a pilot project to provide transport connection services through its mobile app.
Truong said the proposed plan lacks a legal basis because Uber said its parent firm, Uber B.V. in Netherlands, would be in charge of handling contracts with Vietnamese service users.
This concerns Vietnamese authorities as they are afraid that it would cause difficulties in tax collection and they would not know who would take responsibility in case of disputes, he said.
Dang Viet Dung, general manager of Uber Vietnam, told VnExpress that Uber will set up a legal entity in Vietnam and resubmit the proposal within weeks.
In a meeting with representatives of Uber Asia late last month, deputy minister Truong had already ordered Uber to set up a legal entity in Vietnam, otherwise the transport ministry would not allow it to operate the pilot project.
In October, the government approved a similar project by GrabTaxi to apply connection services to contract based passenger cars with fewer than nine seats in Vietnam (GrabCar).
Under the project, GrabTaxi will “regularly report the list of transportation entities and vehicles” that use its ride-hailing app to help the authorities “manage tax payment and other regulatory responsibilities,” according to a press release.
The two-year pilot project requires participating cars to be equipped with route monitoring devices and have ‘contract-car’ badges.
It will be carried out in Hanoi, Ho Chi Minh City, Da Nang, Quang Ninh and Khanh Hoa.