Features
1 Jan 19

Motorcycle ban announced in Vietnam

Imagine a country of (give or take) a hundred million people, where a factory worker makes USD 200 per month and a regular employee in a bank about the double of that amount. Add to the equation a strong urbanisation trend towards the 2 main cities, Hanoi and Ho Chi Minh, and, consequently, rising real estate prices (rent and purchase), making it impossible for the people who come from the countryside to live close to work.

Then, make sure cars are expensive due to import taxation and take your time in developing infrastructure for public transport. For example, ask the Chinese to develop your metro in the capital and ask the Japanese to do the same in your economic major city. Then, delay both projects with at least 2 years.

The Vietnamese worker

This is the situation that the Vietnamese workers are facing. They all work in an environment where mobility is essential, be it to go to work or deliver goods or services to consumers; the employers don’t provide for a solution and therefore, owning your own transportation is a condition to find a job. As there are no alternatives, the only way to be mobile is to own a motorcycle.

It’s therefore not a surprise that one in every two Vietnamese people own a bike, usually Vespa lookalikes that allow a family of 4 (!) or a driver with up to a cube meter of goods to meander through the leafy streets of Vietnam’s buzzy cities.

Government illusion

Nevertheless, and according to the principle that it’s better to tackle the symptom than the cause, Hanoi has decided to ban motorcycles by 2030. The decision is motivated by the fact that the middle class is growing and will be able to buy cars. Also, public transport will miraculously emerge and be providing sufficient mobility for every Vietnamese person across the country.

In no terms has the Government taken any position towards developing public-private initiatives to enhance public transit, nor has Hanoi communicated a vision of how the country would deal with an overload of cars. Unsurprisingly, a strategy to reduce noise and pollution by making electric bikes and vehicles more attractive, has not appeared either.

Mobility gap

The Government’s decision is met with disbelief across the country. It is already obvious that the urbanisation will continue and, due to Vietnam’s economic success on the Asean and even global markets (Vietnam is successful in producing goods that are uncomplicated and for which the volume/pricing ratio is key, a bit like China a couple of years ago), the average income will rise. With urbanisation and rising income comes an increased need for mobility.

It is also demonstrated that Government’s infrastructure initiatives are unable to cope with this raising need for mobility. The country’s public transport backlog is huge and it seems that Hanoi doesn’t know where to begin.

GRAB

The Singaporeans at GRAB have understood that there’s money to make in Vietnam. GRAB offers a multitude of services in Vietnam: ride hailing (car and bike), car hire by the hour, with driver, deliveries, food, mobile payments… The Vietnamese love it; similar to China, most of the Vietnamese have skipped the home computer stage and became digital thanks to the smartphone. It is no surprise that GRAB became popular with the young and educated first, before being adopted by entire city populations.

But again, the Vietnamese regulators are intervening in the success of South-East Asia’s main ride hailer. GRAB Vietnam has released a document complaining about the pushback from local (Khanh Hoa, where the popular holiday destination Nha Trang is located) authorities allowing other companies to offer ride hailing services, but not GRAB.

For the Fleet Manager

Taking into account the infrastructure gap (both roads and public transport), the messy way in which ride hailing companies are being integrated and Vietnam’s high car cost, it’s quite a challenge for Fleet Managers to provide for mobility to employees in Vietnam. In addition, there are very few leasing companies that offer services across the country, most of them being local businesses operating less than 50 cars with driver.

Taking into account another major factor, safety, the best solution so far is to operate a leasing scheme with a major supplier, but at the same time assess the job content of each employee. Vietnam is becoming a highly digitised country on user level, but not yet on corporate level; this means that many of the jobs that can be done digitally, are done manually today. This is where mobility truly starts in Vietnam: discovering if your employee really needs a car.

Authored by: Yves Helven