'No startups in Korea if Tada is illegal'
SoCar CEO Lee Jae-woong speaks during a media conference on Tada's new service in Seoul in February. The rental van-hailing service Tada is operated by VCNC, a subsidiary of SoCar. / Yonhap
By Jun Ji-hye
Venture-related organizations here went all out to criticize the prosecution's recent indictment of the heads of rental van-hailing service Tada, Monday, claiming the indictment could put the brakes on ongoing efforts to spur innovation in Korea's economy and develop new growth engine industries.
In their joint statement, the Korea Venture Business Association and 16 other organizations said, “Moves made in the private sector to start new businesses to bring about innovation have been obstructed by the public sector, which has resulted in weakening the nation's global competitiveness.”
The statement comes as prosecutors indicted Park Jae-uk, CEO of VCNC that operates Tada, as well as VCNC parent company SoCar CEO Lee Jae-woong without detention, Oct. 28, declaring the app-based business “illegal.”
The two will face a trial on charges of running an unlicensed transportation business, according to the Seoul Central District Prosecutors' Office.
Launched in October last year, the Tada service, which uses 11-seat rental Kia Carnival vehicles and outsourced drivers, has expanded its presence swiftly over the past year, boasting over 1.25 million users.
The service has faced a fierce setback from taxi drivers who have called it “illegal” because the service transports passengers for money using drivers who don't have taxi licenses.
But VCNC has stressed it offers legal services, citing an enforcement ordinance of the Passenger Transport Service Act which permits companies to offer drivers when using rental vehicles with 11 seats or more.
The venture-related organizations stressed that Tada is a new business model designed based on existing laws and that it already obtained approval from the Ministry of Land, Infrastructure and Transport and the Seoul Metropolitan Government.
The transportation ministry has been working to arbitrate in disputes between the conventional taxi industry and new platform companies, and to enact legislative measures aimed at promoting mutual growth.
“If a court judges the service offered by the innovative company to be illegal, it will be almost impossible to develop new businesses here,” the statement said. “There have already been many cases of companies abandoning new businesses representing the Fourth Industrial Revolution, such as fintech, ride-sharing and remote medical services, due to protests from existing industries and regulations.”
The organizations called on the government and the National Assembly to play a more active role in easing regulations and promoting new businesses.
Amid growing controversy, the prosecution and the government have appeared to be shifting the responsibility to each other.
On Friday, the prosecution claimed it had consulted with related ministries in advance before indicting the heads of Tada. But the transport ministry said it had not been informed of the indictment decision.
The conflict has been settled to some extent after the Ministry of Justice said it had received a report from the prosecution in advance.
Meanwhile, a Realmeter survey showed that 49.1 percent of members of the public regarded Tada as an innovative new service, while only 25.7 percent called the service illegal.