Uber Viet Nam CEO resigns amid growing competition

Tuesday, Oct 03, 2017 16:07

Competition in the transportation market was growing fiercer with the participation and expansion of ride-hailing services firms. — Photo tinnhanhchungkhoan.vn

Uber Viet Nam has confirmed that CEO Dang Viet Dung stepped down from his post on October 1 after three years of running the ride hailing service firm in the country.

Information on the reason for Dung’s departure or the new CEO has not been disclosed, till date.

The company said it would still operate normally in the country.

Dung, 32, quit from a Harvard University master course to take the position at Uber in 2014 when the ride hailing firm penetrated Viet Nam.

Dung’s departure comes at a time when Uber is struggling with a numerous challenges, including tax scrutiny by the authorities and increasingly harsh competition in the tech-driven transportation market in the country with a population of more than 90 million.

Besides the crisis faced by Uber globally, Uber Viet Nam, which reportedly has four million users, is faced with complaints from users and objections from drivers following a decision to increase transportation fees from VND7,000 (US$0.3) to VND8,500 per kilometre in August, together with an increase from 20 per cent to 25 per cent in the amount it collected from drivers.

In September, the HCM City Tax Department decided to collect VND67 billion in tax arrears from Uber Viet Nam, which triggered a rumour that Uber has ceased operation in the country. However, the company immediately denied the rumour.

Services of Uber in Viet Nam include UberX, Uber SUV, UberBlack, uberMoto and uberDelivery.

Fierce competition

Uber entered Viet Nam along with Malaysia-based Grab, which received massive funding from SoftBank Group Corp. and China’s ride behemoth Didi Chuxing.

With a more “localised” development strategy in Viet Nam, which was evaluated to be more suitable to the demand of a majority of Vietnamese users, Grab pushed aggressively in Viet Nam and won significant market share over Uber.

In addition, Indonesia’s first billion-dollar startup Go-Jek was reported to be looking to expand its ride-hailing services in three to four countries in Southeast Asia. While the targeted countries were not specified, Viet Nam was anticipated to be among Go-Jek’s preferred countries

The penetration and aggressive expansion of tech-driven transport services firms in Viet Nam ended up pushing traditional taxi firms into a lot of difficulties, who called for more intensified management measures against Uber and Grab.

Traditional taxi firms said the rapid increase in the number of Uber and Grab vehicles was creating pressure on the country’s transport infrastructure, which was already overloaded, and causing tax losses to the State budget.

Traditional taxi firms said they faced unfair competition from tech-driven firms, calling on passengers to use their services as they paid taxes to the Government budget.

Recently, the Ha Noi Taxi Association proposed to stop the implementation of a pilot project to apply technology in passenger transportation, adding that Uber and Grab vehicles outnumbered 50,000 in the country. The association also estimated that Uber and Grab sent some VND36 trillion ($1.58 billion) abroad each year, causing losses in tax collection.

A representative from the Ministry of Transport, however, said there were no grounds to ban the operation of Uber and Grab in the country. Businesses were allowed to do anything that the laws did not ban, and this was fair competition.

The ministry said operation of firms such as Uber and Grab was under their own management.

Regarding reports of tax evasion by Uber, the ministry said that the company must pay taxes in line with established regulations.

New effort

Mai Linh Mien Bac, a major taxi company in Viet Nam owned by Mai Linh Group, is reported to be preparing for the launch of motorbike transportation services M.Bike and M.Bike Premium to compete with GrabBike and uberMoto.

The company recently sought approval from its management board for adding passenger motorbike transport to its business line.

In an announcement, Mai Linh Ha Noi said its charge for the M.Bike will be VND11,000 for the first two kilometres and VND3,800 for each subsequent kilometre.

The charge for the M.Bike Premium is some two times higher.

The planned motorbike transportation services fees of Mai Linh is similar to that of Uber and Grab.

However, competing with Uber and Grab will not be easy for Mai Linh, which is facing financial difficulties.

Mai Linh Mien Bac reported increasing losses from 2014. The company incurred a loss of VND5 billion in 2014, VND13 billion in 2015, VND45 billion in 2016 and VND37 billion in the first half of 2017, according to its financial reports. — VNS

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