Some regulatory challenges arising from the operation of foreign investors providing ride hailing service under the sharing economy model in vietnam, british experience and recommendations

HO CHI MINH CITY UNIVERSITY OF LAW FACULTY OF INTERNATIONAL LAW *** TRAN BAO NGAN Student ID 1651101030091 SOME REGULATORY CHALLENGES ARISING FROM THE OPERATION OF FOREIGN INVESTORS PROVIDING RIDE HAI[.]

HO CHI MINH CITY UNIVERSITY OF LAW FACULTY OF INTERNATIONAL LAW -*** TRAN BAO NGAN Student ID: 1651101030091 SOME REGULATORY CHALLENGES ARISING FROM THE OPERATION OF FOREIGN INVESTORS PROVIDING RIDE-HAILING SERVICE UNDER THE SHARING ECONOMY MODEL IN VIETNAM, BRITISH EXPERIENCE AND RECOMMENDATIONS BACHELOR’S THESIS School Year: 2017 – 2022 Supervisor: Dr Nguyen Thi Hoa Ho Chi Minh City – Year 2022 DECLARATION I hereby declare that the thesis "Some regulatory challenges arising from the operation of foreign investors providing ride-hailing service under the sharing economy model in Vietnam, British experience and recommendations" is the result of my research, conducted under the scientific supervision of Dr Nguyen Thi Hoa, ensuring honesty and compliance with the rules on citation and annotated bibliography I take full responsibility for this declaration Ho Chi Minh City, June 29, 2022 Tran Bao Ngan LIST OF ABBREVIAITONS CIEM Central Institute for Economic Management Civil Code Civil Code No 91/2015/QH13, dated November 24, 2015 Decree 10/2020 Decree No 10/2020/ND-CP on Auto Transport Business and Conditions for Auto Transport Business Dated January 17, 2020 Decree 126/2020 Decree No 126/2020/ND-CP Elaboration of the Law in Tax Administration, dated October 19, 2020 Decree 31/2021 Decree No 31/2021/ND-CP Elaboration of Some Articles of the Law on Investment, dated March 26, 2021 Labor Code Labor Code No 45/2019/QH14, dated November 20, 2019 Law on Investment Law on Investment No 61/2020/QH14, dated June 17, 2020 UK United Kingdom VAT Value-add tax WTO World Trade Organization TABLE OF CONTENTS INTRODUCTION CHAPTER 1: AN OVERVIEW OF THE SHARING ECONOMY AND ITS CURRENT STATUS IN VIETNAM 1.1 Overview of the sharing economy 1.1.1 Definition and characteristics of the sharing economy 1.1.2 Some forms of business in the sharing economy 13 1.2 An overview of business activities of business entities under the sharing economy concept in Vietnam 18 1.2.1 Operational status of business entities under the sharing economy concept in Vietnam 18 1.2.2 The impact of the sharing economy on the overall economy 21 CONCLUSION OF CHAPTER 23 CHAPTER 2: MARKET ACCESS CONDITIONS FOR FOREIGN INVESTORS PROVIDING RIDE-HAILING SERVICE 25 2.1 An overview of market access for foreign investors 25 2.2 Business line identification 28 2.3 Specific market access conditions for foreign investors providing the road passenger transport services 29 2.3.1 Holding of charter capital by foreign investors 29 2.3.2 Investment methods 30 2.3.3 Scope of investment 30 2.3.4 Capacity of investors and partners participating in investment activities and other conditions 31 CONCLUSION OF CHAPTER 33 CHAPTER 3: SOME REGULATORY ISSUES ARISING FROM THE OPERATION OF FOREIGN INVESTORS PROVIDING RIDE-HAILING SERVICE 35 3.1 The essentials of a legal framework for the sharing economy model 35 3.2 Some regulatory issues arising from the operation of foreign investors providing ride-hailing services in Vietnam and the UK 37 3.2.1 Employment issue 37 3.2.2 Tax issue 46 CONCLUSION OF CHAPTER 55 CONCLUSION OF THESIS 57 INTRODUCTION Rationale “The sharing economy phenomenon proved to be more than just a frail and temporary trend and has been capable of overturning competition across the globe Within the wide variety of organizations that have flourished based on the concept of “sharing” underutilized assets, a group of internet-based platform businesses have been thriving in many different industry sectors and internationally.”1 According to a Pwc’s survey, five major industries, including tourism, transportation, finance, human resources, online music and video, which apply the sharing economy model, have the potential to increase global revenue from $15 billion in 2014 to approximately $335 billion by 2025 One-third of Europe's population and seventy-two percent of North America's population have used services via shared platforms This demonstrates that the potential for future global growth of the sharing economy is enormous In Vietnam, according to a recent study by the Department for National Economic Issues under the Ministry of Planning and Investment, sharing economy is a new trend that goes hand-inhand with the revolution in information technology, becoming one of the key pillars of the digital economy, and is the primary concern of entrepreneurs and start-ups in many countries Initially, the sharing economy concept has begun to attract attention from 2014, as a result of Uber and Grab’s market entry In 2019, there were approximately sixty sharing economy businesses currently active in Vietnam, providing services ranging from transportation to lodging, finance, and labor For instance, Airbnb, an accommodation sharing platform firm, registered 1,000 rooms to be shared in Vietnam Belk (2014) and Möhlmann (2015), as cited in Parente, R C., Geleilate, J M G., and Rong, K (2018), “The sharing economy globalization phenomenon: A research agenda”, Journal of International Management, 24(1), p.1 in 2015; by 2018, this number had risen to 40,800 rooms, accommodating over 400,000 people annually.2,3,4 Although there are numerous foreign investors operating and thriving under the concept of the sharing economy in Vietnam, and the government also encourages this growth,5 the absence of a suitable legal framework for the operation of foreign ridehaling platform providers results in many regulatory challenges such as tax, employment, etc Therefore, the author deems it necessary to address these issues and propose recommendations based on experience from foreign laws Literature review The concept of sharing economy piques the interest of various academics, thus, there are a great number of documents have been written about this topic, both in Vietnam and throughout the world Some notable research is summarized in the below section 2.1 Vietnamese materials Phạm Khánh Nam (2021), “Mơ hình kinh tế chia sẻ: vấn đề quản lý Việt Nam” (The Sharing Economy: Governance Issues in Vietnam), UEH Digital Repository: This article provides the definition of the sharing economy, how it functions, and how to limit its unwanted effects while promoting its growth to contribute to the development of Vietnam in the context of the Industrial Revolution 4.0 Particularly, the article focuses on the analysis of the passenger transport business of technology firms to Phạm Khánh Nam (2021), “Mơ hình kinh tế chia sẻ: vấn đề quản lý Việt Nam” (The Sharing Economy: Governance Issues in Vietnam), UEH Digital Repository, p 79 Trần Thị Hằng (2019), Development of sharing economy in Vietnamese in the context of the industrial revolution 4.0 and some recommendations, Journal of Science and Technology - Hanoi University of Industry, No 54, 2019, p 89 Đỗ Thị Nhung, “Phát triển mơ hình kinh tế chia sẻ Việt Nam số đề xuất” (Developing sharing economy model in Vietnam and some recommendations), Financial Journal Online, dated May 19, 2018, https://tapchitaichinh.vn/nghien-cuu trao-doi/trao-doi-binh-luan/phat-trien-mo-hinh-kinh-te-chia-se-o-viet-namva-mot-so-de-xuat-139063.html, assessed on May 20, 2022 On August 12, 2019, Prime Minister Nguyen Xuan Phuc signed Decision No 999/QD-TTg giving approval for Scheme for Development of Sharing Economy highlight the common issues associated with the sharing economy model and recommend appropriate management strategies Hà Thị Thanh Bình (2021), “Kinh tế chia sẻ điều chỉnh pháp luật” (Sharing economy and the regulation of laws), Vietnamese Journal of Legal Sciences, 02(141): This article analyzes the characteristics of the sharing economy and advocates the need for the regulation of this business model In addition, the author examines and provides suggestions as to the content and extent to which the law should control the sharing of underutilized resources Also, the article analyzes and proposes certain legal solutions for participants’ obligations, tax administration, and worker protection in the sharing economy The recommendation from this article is a good source for legislators to improve the law to catch up with the development of the economy Chu Thị Hoa (2021), “Kinh tế chia sẻ quyền tự kinh doanh” (Sharing economy and business freedom), Electronic newspaper of the Ministry of Justice: In this paper, the author introduces and analyzes the realization of business independence in the sharing economy model, thereby fostering the growth of this industry in Vietnam Dương Kim Thế Nguyên and Huỳnh Thiên Tứ (2021), “Kinh tế chia sẻ dịch vụ kết nối: Nhu cầu điều chỉnh mặt pháp lý bối cảnh chuyển đổi số Việt Nam” (Sharing economy and connected services: legal adjustment needs in the context of digital transformation in Vietnam), Vietnamese Journal of Legal Sciences, 04(143): The study analyzes various trends in the growth of the sharing economy and makes a compelling case for the necessity to enact rules on these subjects The authors then recommend amending Vietnamese law to cover the sharing economy development trends and intermediary service providers' activities Lê Thị Thúy Nga (2021), “Hoàn thiện pháp luật thuế kinh tế chia sẻ Việt Nam” (Perfecting tax laws on sharing economy in Vietnam), Economy & Forecast Review Online, 16(770): In the context of industrial Revolution 4.0, accessing and mastering the application of science and technology, especially information technology, to the management, exploitation, and operation of sharing economy activities is an inevitable tendency However, the current issue is how to properly manage and "stimulate" the development of the sharing economy, which is a difficult issue for many nations, including Vietnam The article focuses on clarifying several aspects of tax legislation and tax administration in Vietnam for the sharing economy model Trần Thị Việt Hà (2020), “Một số vấn đề pháp lý đặt quy định phát triển mơ hình kinh tế chia sẻ Việt Nam nay” (Several legal concerns raised about Vietnam's current sharing economy legislation), Vietnamese Journal of Legal Sciences, 04(43): The article provides an overview of sharing economy as well as its current status in Vietnam Based on that, the author demonstrates the necessity of completing the legal framework for the sharing economy model in order to foster its development and limit its possible negative effects on social life, participants of this model, and the overall economy Trần Thi Hằng (2019), "Phát triển kinh tế chia sẻ Việt Nam bối cảnh Cách mạng Công nghiệp 4.0 số khuyến nghị” (Development of the sharing economy in Vietnam in the context of the Industrial Revolution 4.0 and some recommendations), Journal of Science & Technology, No 54.2019: This article examines several aspects of the sharing economy, including its theoretical foundation and the current state of its development in Vietnam, and provide some suggestions for developing the sharing economy in the context of Industrial Revolution 4.0 Lê Huy Khôi (2018), “Xây dựng hồn thiện hạ tầng sách phát triển mơ hình kinh tế chia sẻ Việt Nam” (Building and completing the policy infrastructure to develop the sharing economy model in Vietnam), Financial Journal Online: The article discusses the current state of the sharing economy around the world as well as in Vietnam On the basis of an analysis of the limitations of this model in Vietnam over the past few years, the article proposes orientations to build and complete the infrastructure policy in order to create a driving force for the development of sharing economy 2.2 Foreign materials Frenken, K., and Schor, J (2019), “Putting the sharing economy into perspective”, A research agenda for sustainable consumption governance, Edward Elgar Publishing: The paper contextualizes the sharing economy by providing a conceptual framework that allows the author to define the sharing economy and its close relatives and understand its sudden rise from an economic-historical perspective It also evaluates sharing economy platforms in terms of their economic, social, and environmental impacts and considers current regulations and alternative platform architectures It concludes with research questions for future study Sundararajan, A (2017) “The sharing economy: The end of employment and the rise of crowd-based capitalism”, MIT press: The book outlines the shift toward what the author calls "crowd-based capitalism," which is a new form of organizing economic activity that has the potential to supersede the traditional model that is centered on corporations The author explores not just the origins of this new style of working but also its repercussions, as well as how the concept of "sharing" shapes the political economy of the "asset-light" age The book also highlights crucial policy options and recommends possible new approaches for self-regulatory organizations, labor law, and funding our social safety net Ranchordas, S (2015), “Does sharing mean caring: regulating innovation in the sharing economy”, Minnesota Journal of Law, Science and Technology, 16(1): This article examines the issues of governing the sharing economy from the perspective of "innovation law," claiming that these innovations should not be strangled by regulation, but neither should they be left unregulated This article concludes by proposing that innovation in the sharing economy necessitates fewer but broader rules that not stifle innovation but impose a minimum set of legal requirements that take into account the ... that the thesis "Some regulatory challenges arising from the operation of foreign investors providing ride- hailing service under the sharing economy model in Vietnam, British experience and recommendations" ... analyzing the market access for foreign investors providing ride- hailing service in Vietnam Third, analyzing some regulatory issues arising from the operation of foreign investors providing ride- hailing. .. operation of foreign investors providing ride- hailing service CHAPTER 1: AN OVERVIEW OF THE SHARING ECONOMY AND ITS CURRENT STATUS IN VIETNAM This chapter explains the notion of the sharing economy,