Hurdles to New Business
It has been found that the growth of ride sharing services in South Korea is showing little progress due to opposition from taxi companies and the passiveness of the government and the National Assembly.
According to some local startups, the Land & Transport Committee of the National Assembly is currently deliberating on two bills related to ride sharing. The common purpose of the bills is to block the expansion of ride sharing to protect the rights of taxi companies.
The bill that has been tabled by People’s Party lawmaker Lee Chan-yeol clearly stipulates the commuting hours according to the Passenger Transport Service Act as 7:00 a.m. to 9:00 a.m. and 6:00 p.m. to 8:00 p.m. This is to block the expansion of ride sharing, which is being demanded by startups.
The other bill, tabled by People’s Party lawmaker Hwang Joo-hong, is to delete Subparagraph 1, Paragraph 1, Article 81 of the same act. According to this part of the act, cars for non-business purposes cannot be provided or rented, whether directly or indirectly, for transport purposes in return for money with the only exception of carpool for commuting hours. Once this part is deleted, existing ride sharing becomes illegal.
The controversy regarding this issue was triggered in November last year, when local startup Poolus implemented selective commuting hours. The startup previously provided ride sharing only for commuting hours, but the new service was for ride sharing around the clock. Then, Seoul City accused it and startups raised their voices in response, claiming that the local government was hindering innovation.
According to a recent survey answered by 1,000 people, 94.1% of the respondents answered that ride sharing is expected to contribute to social benefits and 59.6% said ride sharing will be helpful in dealing with problems related to existing taxi services like high prices, refusal of passengers and unkindness.
In spite of the result of the survey and startups’ efforts, the controversy is likely to continue for a while given the opposition from taxi companies. The ball is now in the court of the Presidential Committee on the Fourth Industrial Revolution. “The police investigation following the accusation against Poolus has been temporarily stopped and Seoul City is waiting for the committee’s decision as well,” said an industry source.