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2020 – stormy year for ride-hailing app drivers



Ride-hailing drivers throughout the year 2020 were hit hard by the effects of the pandemic, which led to a sharp fall in clients at the beginning of the year, and by the new policy on required higher discount rate.

As the number of their rides to the airport decreased step by step and stopped completely, Ngo Van Hai, a Grab driver, finally decided to give up the job.

2020 – stormy year for ride-hailing app drivers

“2020 was a terrible year,” he said.

He had been working as a Grab partner for two years before he quit the job. He mostly received and picked up international travelers at the airport. Ride-hailing was once a good job which brought a stable income after he left a construction company.

However, everything changed because of Covid-19. The sharp fall in the number of clients caused his income to drop by 50 percent. During the social distancing period, the temporary suspension of traditional taxi and e-hailing services pushed most drivers to the wall.

“Sometimes I could not earn any dong during a whole week. I needed money to pay debts,” he said. He decided to sell the car.

Tran Van Hien from Thanh Xuan district said at first he could earn VND20 million as a Grab driver. But the income began decreasing one year later.

As the income was not high enough to pay bank debt, he sold the car at a loss of VND100 million.

Hien affirmed that many other ride-hailing drivers are facing the same problem. They borrowed money from banks to buy cars and now have to sell the cars because the income is too modest.

According to Nguyen Hoai Nhan, a driver from Thai Binh, the income from his job was high enough to feed his family. But now he receives 2-3 orders a day and earns about VND50,000 a day, which is not enough to pay room rent.

“If the pandemic continues, I will have to give up the job,” he said.

Ride-hailing firms are also facing difficulties. Grab’s founder and CEO Anthony Tan said Covid-19 has posed great challenges for the largest ride-hailing startup in Southeast Asia. The firm has had to made difficult decisions on cost cutting and capital management.

Ride-hailing drivers throughout the year 2020 were hit hard by the effects of the pandemic, which led to a sharp fall in clients at the beginning of the year, and by the new policy on required higher discount rate.

“Covid-19 is the largest crisis affecting Grab in its history of eight years of operation,” the CEO wrote in a message to investors and partners.

The crisis has had an unprecedented impact on the company’s business and partners.

Ride-hailing firms had to suspend operation as requested during the lockdown earlier this year. Car drivers had to stop working temporarily, while motorbike drivers shifted to delivering goods and providing shopping services to earn a living.

The high unemployment rate explains the rapid increase in the number of ride-hailing drivers. Meanwhile, consumers are tightening their purse strings, which affected drivers’ incomes and led to a high proportion of drivers leaving the market.

Meanwhile, Decision 146 has put an end to the program on the application of technology in managing and connecting electronic contract-based passenger transportation, paving the way for ride-hailing firms extending their services nationwide.

Since April 1, ride-hailing services have been covered by the newly issued Decree 10.

Under the new regulations, traditional taxis and ride-hailing apps have the right to choose either to mount a light box with the word ‘TAXI’ or a reflective light logo instead of the only choice of a light box.

As a new type of business, ride-hailing apps once raised controversy. Traditional taxi firms complained they were unfairly treated and accused ride-hailing apps of evading tax.

In Hanoi, the number of traditional taxis was fixed at 19,000 and they were prohibited to circulate on some streets in rush hours. Meanwhile, ride hailing cars could travel on all streets.

While ride hailing drivers were complaining this year about the sharp fall in number of passengers, they received another blow in the last month of the year: Grab changed the policy on required discount. The firm cited the new policy on VAT by the government in Decree 126.

Grab has several times changed its policy on discount rate since it arrived in Vietnam. With the latest adjustment, the required discount rate has become very high for partner-drivers, which prompted them to go on strike.

The board of directors of Grab had an online dialogue with partners on the implementation of the Decree 126. The dialogue ended with disappointment for drivers as Grab stated the changes in the policy on discount rate would be implemented.

Meanwhile, the General Department of Taxation affirmed that the new decree only guides tax declaration and payment, but it doesn’t change the tax rate.

Nguyen Xuan Thuy from the Ministry of Transport said the sharing economy means mobilizing idle instruments and assets for production and business, thus improving the efficiency of usage of resources.

However, Grab doesn’t just use idle instruments to make money. Agreeing with Thuy, Pham Xuan Hoe from SBV also said Grab is a variation of the sharing economy. 

Duy Anh



Stability sought for Thu Duc City prices



The just-established Thu Duc City is already witnessing skyrocketing property prices, with hikes of around 30 per cent reminding local authorities of the need for special policies to manage the market.

Stability sought for Thu Duc City prices
Property prices have been spiralling out of control since the establishment of Thu Duc City. Photo: Le Toan/ VIR

Nguyen Minh Tuan, a resident in Phuoc Long Commune of the former District 9, was interested in a land plot in Dong Tang Long New Residential Area. However, this plot’s price has increased by more than 40 per cent compared to mid-2019 when Thu Duc City was yet in the pipeline.

“The prices in this area have increased a lot; however, local landlords still predict that the prices will even further increase towards the end of the year. That is why buyers will certainly make a profit if they buy land plots right now,” Tuan told VIR.

Prices in the area could sit anywhere at VND30-40 million ($1,300-1,750) per square metre depending on the location in 2019, but are now usually around VND50-70 million ($2,200-3,000) per sq.m.

In Tam Da Street in the former District 9, a 50-sq.m land plot is now quoted at $3,000 against the $1,750 at the end of 2020.

This January, when Thu Duc City was officially established on an area spanning across the old districts 2, 9, and Thu Duc, apartment prices at the King Crown Infinity – a project developed by BCG Land located – soared to over VND95 million ($4,100) per sq.m – the highest valuation ever for an apartment in the area.

A general trend of appreciation was also observed in land plots and houses in the area of the former District 9 with outstanding increases of 20-30 per cent compared to mid-2020.

The most buoyant area was Truong Tho Commune, the centre of Thu Duc City, where property prices are quoted at more than VND160 million ($7,000) per sq.m.

This 500-hectare area is close to major transport facilities such as Metro line No.1 and Hanoi Expressway, and is planned to become a new residential area.

According to Nguyen Huong, general director of Dai Phuc Land, the price increases in areas with good planning and improved infrastructure are nothing extraordinary. Mirae Asset Securities also ascribed the recent surge in Thu Duc’s prices to the continuous infrastructure developments.

Of the total VND350 trillion ($15.2 billion) spent on infrastructure in Ho Chi Minh City since 2010, as much as 70 per cent has gone into what is now called Thu Duc city.

“These price hikes take into consideration the market’s expectations for the future of the area in the next 10 or even 20 years,” Huong said.

Concerns rising 

Skyrocketing real estate prices steadily exceeding realistic valuations are concerning interested parties, and could cause untenable development trends in the newly established city.

Huong from Dai Phuc Land also warned of realtors or brokerage agencies that are potentially driving prices higher to increase profits on properties in the area.

“Buyers must carefully consider all aspects of a project, including location, nearby infrastructure, facilities, and construction progress,” Huong added.

Right after official establishment of Thu Duc City, Ho Chi Minh City Party Secretary Nguyen Van Nen warned of prices spiralling out of control, requesting local authorities to halt all brokerage activities which could destabilise the market.

The party secretary also suggested increasing the proportion of affordable and social housing, as well as publishing information related to housing projects so that buyers can make fully informed decisions.

According to Ho Chi Minh City People’s Committee, Thu Duc City will be developed in three phases. The first lasts from 2020 to 2022 with the target of creating land funds and setting up usage plans, while the second phase to 2030 will see the approval of projects in transport improvement, digital infrastructure, and urban design. Developers will implement projects based on these plans from 2030 to 2040 in the final phase.

According to Phan Cong Chanh, a freelance real estate consultant, the formation of the city will take a long time, during which urban planning might change and adjustments could take place.

“Therefore, if land prices rise too quickly, they could pose many risks for investors and disrupt capital mobilisation for projects in the area,” Chanh said. “Buyers and sellers are all very excited. However, land prices in different areas could be subject to different dynamics and could even decrease with time, depending on factors like planning.”

In addition, climbing land prices would also make it difficult to attract investments in Thu Duc City later by affecting business plans and reducing profitability for those buying for investment purposes.

According to Colliers International, more than 40,000 apartment units will be finished and handed over to customers in Ho Chi Minh City in the next year. Of these, Thu Duc occupies roughly 76 per cent, positioned mainly in the mid- and high-end apartment segments.

Special polices required 

Thu Duc City, according to experts, should enjoy its specific jurisdiction to better implement Ho Chi Minh City’s specific mechanisms, with the new administrative unit set to be more active and innovative to fulfil the assigned establishment goals.

“Since a merger of small administrative units into a larger one means a jurisdiction upgrade, it is nonsensical for such a city with over one million residents and a surface area of more than 210 square kilometres to merely have the same jurisdiction as District 4 with 200,000 residents on an area of 4.2,” said major General Phan Anh Minh, former deputy director of Ho Chi Minh City Police Department.

“The new jurisdiction should allow Thu Duc city to implement special policies, preferential methods, and to simplify business forming procedures to create a friendlier environment for startup activities and the innovative economy. This could, in turn, transform the city into the startup centre of the whole country,” Minh said.

Proper policies for financial promotion and tax exemption could also be considered to boost the growth of high-tech and scientific parks and automatic manufacturing centres.

“The customs-related procedures should be simplified to better exploit the strengths of Cat Lai Port. The use of traffic facilities, infrastructure, and land should be boosted to build an innovative centre inside Thu Duc City,” Minh added.  VIR

Kevin Hawkins – Partner, DFDL

The establishment of a city within a city is an unprecedented development in Vietnam. Long-term advantages can be achieved through improvements in digital governance, sustainability, and infrastructure, as well as through the creation of opportunities in investment and real estate. Enabling the local population and businesses to reap such anticipated benefits is of paramount importance.

Notably, the accumulation of financial, educational, and alternative energy high-tech hubs along with the existence of industrial parks in neighbouring areas creates favourable conditions towards sustainable development and the provision of state-of-the-art services and products. This could create an innovative ecosystem capable of attracting top talents, enhancing professional and educational opportunities for local youth, and supporting Vietnam’s Industry 4.0 ambitions.

Peter Hong – General secretary, Association of Vietnamese Entrepreneurs Abroad

Every year overseas Vietnamese send more than $5 billion of remittances to Ho Chi Minh City, and this is a remarkable financial source for it to invest in its development. Many overseas Vietnamese are keen on contributing to the country, but they do not know how to do it in detail. The city authorities can appeal to these businesspeople to invest in infrastructure and projects.

Transforming Thu Duc into a successful urban project is not just a matter of vision, planning, and district merging but also of an appropriate implementation roadmap and specific mechanisms in socioeconomic management, urban areas, and investment attraction.

With such an implementation strategy, it is necessary to determine the overall investment infrastructure and calculate total capital needs. From there, the plans to mobilise investment capital for each project should be determined.



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HCMC Transport Department proposes stopping bus advertising



Buses on a street in HCMC display advertisements. The HCMC Department of Transport has proposed stopping bus advertising – PHOTO: VNA

HCMC – The HCMC Department of Transport has proposed that the city stop bus advertising due to low demand.

Since 2017, only one business won the bid for the right to advertise on buses in the city. The three-year package worth VND162 billion has just expired. All other tenders for bus advertising in the city failed to attract businesses although the Transport Department has lowered the charges, relaxed the requirements and offered flexible payment options.

According to the head of an advertising company, the demand for outdoor advertising, including bus advertising, in the city was high 10 years ago, but has dropped drastically as clients are switching to online advertising.

Besides this, many buses in HCMC have become old and worn out, while the prices of bus advertising are higher than that of online advertising.

Moreover, the HCMC Transport Department said the Covid-19 pandemic has severely affected the operations of the city’s bus system.

HCMC now has over 2,300 buses running on 137 routes. The city spends more than VND1 trillion to subsidize its bus system every year. If businesses advertised on all of the buses, the city would earn more than VND100 billion from bus advertising annually.


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HCM City seeks private investors for metro lines



HCM City wants to attract more private investment instead of relying on official development assistance (ODA) to build its remaining metro lines, but experts have said that it faces a difficult challenge.

The inside of a passenger train carriage for Metro Line No.1 in HCM City. The city is seeking more private investment to build its metro lines. 

Dr. Vu Anh Tuan, director of Viet Duc Transport Research Centre, said the city was facing hurdles finding private investors for the metro lines.

“Investors are hesitant because these metro projects are all done on a massive scale and require a huge amount of capital, while revenue from ticket sales is not enough to cover operating costs,” he said.

Moreover, a lack of a legal framework on private-public partnership (PPP) investment in traffic and railway projects has added to the problem, according to Tuan.

Dr. Huynh The Du, lecturer at Fulbright University, said it was important to learn from the experience of other countries such as South Korea and China, which initially relied on advanced technology and foreign loans for their first railway lines. Later, they focused on domestic private investment and technology, which lowered the costs greatly.

Most of the metro lines in HCM City are being funded by ODA loans.

For example, the first metro line with a total investment of VND43.757 trillion (US$1.9 billion) is being built with an ODA loan from Japan of VND38.265 trillion, and reciprocal capital of VND5.492 trillion.

Total investment for metro line 2 is VND47.891 trillion, of which ODA is VND37.487 trillion from the Asian Development Bank (ADB), German KfW Development Bank (KfW) and European Investment Bank (EIB). The reciprocal capital is VND10.404 trillion.

The first phase of metro line No 5 will be funded by ODA loans from the ADB, KfW, EIB and the Spanish government.

“The problem with the use of ODA loans is the delay in disbursement procedures, which prolongs the projects and increases the public debt,” he said.


Tuan said that administrative procedures must be minimised and favourable conditions created for investors both at home and abroad under public-private partnerships.

Because of the massive investment needed, the state must undertake the construction of infrastructures such as tunnel structures, elevated roads, stations and depots.

It will need to raise capital by selling bonds and creating a public transport development fund from various sources (such as fee collection for driving in the downtown area, and tolls for road use, fuel charges and others).

The private sector could purchase train carriages and the operating systems.

Over the next decade, HCM City will need about VND924 trillion ($42 billion) for 85 transport infrastructure projects, including 55 roads and bridges, seven waterway transport, eight railway and 15 road works.

In particular, the city needs $833 million in private investment for its metro lines.

This includes the sections of metro line No 2 between Ben Thanh Market and Thu Thiem and between Tham Luong and Tay Ninh Bus Terminal.

Metro line No 3A extending from Ben Thanh Market to Tan Kien Terminal in Binh Chanh District will require $3.02 billion.

Metro line No 3B from Cong Hoa Crossroads to Hiep Binh Chanh will cost $1.88 billion, while metro line No 4 between the Thanh Xuan and Hiep Phuoc urban areas will also run through multiple districts and cost $3.53 billion.

Line No 4B between Gia Dinh Park in Binh Thanh District and Lang Cha Ca Terminal in Go Vap District will require $1.33 billion.

All of them are expected to be built under the public-private partnership investment mode, but the city has yet to find private funding for them.

According to HCM City’s Management Authority for Urban Railways (MAUR), the Export-Import Bank of the Republic of Korea has recently asked the city government for permission to conduct an investment study for the second phase of Metro Line No 5.

This line will connect the Bay Hien intersection with the new Can Giuoc Bus Station and Da Phuoc Depot, under the PPP mode.

The bank said it would provide funding for the project’s pre-feasibility study, which will cover technical, financial and legal aspects, according to MAUR.

The city plans to build a total of eight metro lines running a total 220 km with total investment of nearly $25 billion. It also wants to build urban areas along the metro routes and underground spaces around metro stations to save land and ensure public transport.

With a population of about 13 million, the country’s largest city has been struggling with traffic congestion for years.

The number of personal vehicles has surged, with 825,000 cars and more than 8 million motorbikes, while public transport remains underdeveloped. — VNS


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