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Taxis in control

Feb 22,2019
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Yi Jung-jae
The author is a columnist of the JoongAng Ilbo.

Socar CEO Lee Jae-woong runs Tada, a surviving ride-hailing service. He has become the latest target of taxi drivers. Lee and the head of VCNC, a unit under car-sharing platform Socar, have been referred to prosecutors by taxi drivers who accuse them for violating the transportation law that bans privately-owned cars from offering paid services. White vans bearing the Tada logo hit the roads in October last year. To avoid conflict with the cab industry, the new ride-hailing service utilizes 11-passenger vans instead of typical sedans.

The Transportation Ministry has found the service to be legal and in compliance of local laws that allow the lease of rental vehicles with a capacity of 11 to 15 seats. The service did not bother taxi drivers at first; but then the white vans became increasingly conspicuous on the roads. That changed things. Some began to find it as big a threat as the Kakao carpool service they recently defeated. After victory over Kakao, they are sure that no new contender will challenge them once they put Tada down.

Lee should not be underestimated. He is among the pioneers of Korean venture industry. He founded Daum Communications, the first home-grown portal, in 1995. He accompanied President Moon Jae-in on his historic hike to Mount Baekdu during his visit to Pyongyang after summit talks with North Korean leader Kim Jong-un. He has the full confidence of the liberal government. He headed the innovation-growth committee under the president. He was bold to criticize Kim Sang-jo, the chief of Fair Trade Commission, for being “arrogant” for his demeaning attitude towards enterprises.

Last week, Lee took a jab at Deputy Prime Minister for the Economy Hong Nam-ki, asking what age he lived in, for his out-of-touch perceptions on the conflict between the taxi and ride-sharing industries. He said a social-consensus body comprised of industry representatives and government was meaningless when it excluded “thousands of taxi users.”

“The body should be called a research group to promote taxi industry,” he snapped.

Lee directly confronted the taxi industry by telling them to stop bullying and harassing new players. He vowed to file a countersuit against the drivers for interfering with legitimate business. The results of the battle cannot be known. Yet if Tada goes down, that would mean the end to the ride-sharing industry in Korea.

The government — or the ministry of transportation, to be more precise — is most to blame for the mess. It has been entirely at the mercy of taxi industry, which attacks every new popular entrant. The ministry gave in to the taxi drivers, citing rules and laws as outdated as those when carriages confronted motor vehicles. All the fledgling services — Call Bus, Poolus, Luxi, and Cha Cha Creation — had to fold their businesses or sell before they could take off.

To build a sharing economy, the minister must show his will by lifting the regulations and changing the laws to lessen the burden on the Blue House or the ruling party. But Land, Infrastructure and Transport Minister Kim Hyun-mee has done the opposite. She said she was against the Uber-like carpool system in Korea. She has not attended a single meeting with ride-sharing industry representatives except during the PyeongChang Winter Olympics a year ago.

The industry thinks the politician-turned-official could be fearful of losing favor with taxi drivers whom politicians depend on for votes. Since the minister is so passive, the ministry can hardly raise its voice.

It sticks to the existing rules, which means prohibiting any changes to the status quo. At this rate, Korea’s sharing economy will die before it can even take off.

Regulations from the days of industrialization 1.0 cannot work in this new digital society that evolves around platform-based services. Wrangling over what regulations to remove or what to keep is a waste of time. President Moon Jae-in said he was shocked that such simple services and products require a new deregulatory law — a sandbox — to take off and asked for more “proactive” administrative action to remove barriers. Prime Minister Lee Nak-yon also demanded that business be allowed if there is no related regulation or if existing rules are ambiguous. The transportation minister, however, remains in a different world altogether. Thanks to the impotent ministry, the taxi industry is triumphant: it has defeated one contender after another. It is now out to take down the last survivor.

JoongAng Ilbo, Feb. 21, Page 30