The five localities are Hanoi, HCM City, Khanh Hoa, Danang and Quang Ninh.
The move came after the company submitted a request to broaden their business in localities including Ninh Thuan, Dong Thap and Gia Lai.
The ministry said it welcomes the application of science and technology to support business development because it improves service quality and convenience for customers.
However, the ministry ruled that such application should only operate in designated localities by transport firms with business licenses and with vehicles registered to the ministry.
The rules aim to ensure fair competition and fulfilment of tax obligations to the State, the ministry said.
The ministry also requests the five localities’ Transport Departments, as well as authorised agencies, work with transport units and transport associations to make sure that all local transport companies compete fairly and fully fulfil their tax obligations.
Earlier this year, the ministry asked GrabTaxi Vietnam Co Ltd not to deploy the technology to transport passengers by car in Thua Thien Hue, Ba Ria - Vung Tau and Lam Dong.
At that time, the company’s communication manager Nguyen Thu An said GrabTaxi was one of the services in its app, which was registered with the Ministry of Industry and Trade as an e-commerce platform. The company argued that e-commerce is allowed nationwide and that they were in compliance with government decrees regulating it.
GrabTaxi was an alternative to connect passengers and taxi drivers, An said, adding that this service does not interfere with the operation, management and fares of taxi companies.
Grab is one of the most frequently used online-to-offline commerce mobile platforms Southeast Asia, operating in 195 cities in the region. It is estimated that more than 5 million people use the combined platform daily.