Korea’s ride-sharing sector would be killed if govt stays short-sighted: Tada CEO

Park Jae-uk

The South Korean government must draw up a comprehensive and sustainable mobility outline and rules for fair play so that both traditional players and new entrants can coexist as startups cannot survive under current barriers, said the CEO of Korea’s rental van-hailing startup Tada.

The recent conflict with the taxi industry is not just a problem for Tada but for the entire mobility platform industry, said Park Jae-uk, head of Value Creators & Company (VCNC) that operates Tada during an interview with Maeil Business Newspaper.

He accused the government of adding to confusing instead of refereeing to level the playing field for both existing and new players.

The Ministry of Land, Infrastructure and Transport lately denounced Tada’s bold plan to expand its presence in the country.

VCNC announced last Monday that it will increase its fleet to 10,000 units and the number of drivers to 50,000 to expand its services nationwide beyond current Seoul and its surrounding areas by the end of next year.

But the ministry immediately barked at Tada’s move describing it as an “improper” move because it could rekindle the conflict with taxi drivers and bring a halt to the ongoing negotiations to establish a new set of measures for the mobility industry.

The cab drivers’ unions also released a statement last Thursday, demanding the government take a strong action against Tada’s “illegal” operation and exclude the company from the talks.

But Park argued that the company needs “at least 1,000 units of vans to seamlessly offer our service across the country to meet the rapidly growing demand.”

Park founded VCNC in 2011 to run Between, a chatting application for couples, that rapidly gained attention in the country achieving more than 26 million downloads. The company went under local car-sharing platform SoCar in July last year and launched van-hailing service Tada three months later.

Tada provides a new type of ride-hailing service where users can rent an 11-seat van with a driver around-the-clock. It has achieved more than 1.25 million subscribers, 1,400 vans and 9,000 registered drivers in just a year since its launch.

Its fast ascent in Korea has met diehard resistance from the country’s taxi industry. To mediate between the taxi industry and the mobility platform industry, the transport ministry came up with legislative measures in July.

Under the proposal, the ministry will allow ride-hailing operators including Tada to achieve licenses to operate their business, but the number of ride-hailing services would be capped within the boundary of total taxi driver licenses. The government plans to repurchase more than 1,000 taxi licenses a year to keep the quota on the roads under control.

In return for legitimate perform for their business, car-hailing services must shell out a portion of their earnings to a state-managed fund that would be used to assist the taxi industry, such as buying taxi driver licenses and improving drivers’ welfare.

Rental cars also can expand business to ride-hailing and carpool.

The ministry is working to take administrative procedures by the year-end.

Park said putting a cab in the number of taxi licenses would hinder the growth of the overall industry. He advised the government to let the market work out instead of taking preemptive regulatory actions. He also called for more differentiated business model for platform business as car-sharing companies would not be able to provide various car models including electric vehicles or compact cars if they are required to pay equal amount of contribution per license.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]