[Plaza] Conditions for 'Mobility Innovation'

Choi Seongjin, CEO of Korea Startup Forum

The 'Tada Ban Law,' which was the biggest controversy in the final days of the 20th National Assembly, has been passed. Despite the government's announcement to suspend 'Tada' services, the revised Passenger Transport Service Act is being promoted as the 'Mobility Innovation Act,' with claims that 'Tada will actually increase,' and the government is focusing on policy promotion. The amended law, passed after much conflict and debate, will be implemented in one year. Although numerous conflicts and debates are expected in the future, there is hope that 'mobility innovation' will be achieved as the government has pledged. What is necessary to make that happen?

First, it must be noted that the revised law directly contradicts the current government's 'comprehensive negative' regulatory approach. Most domestic regulations have been 'enumeration-type regulations,' listing only permitted businesses in the law and considering all others illegal, which has been criticized for blocking the emergence of new industries and technologies. The aim is to change this to 'prior permission and post-regulation,' regulating only matters related to public safety and allowing free innovation attempts. The existing Passenger Transport Act was a typical old regulation that broadly prohibited paid transportation except for buses and taxis, allowing only a few exceptions. Although the revised law added 'platform transport business,' the basic framework remains the same, and even the exceptions have been reduced.

Moreover, the revised law fundamentally has the problem of making new mobility services government-regulated permit industries subject to detailed control. 'Platform transport,' where mobility companies secure and operate vehicles, is permitted by the government with limits on total volume and business duration, and companies must pay contributions accordingly. Existing 'platform franchise' services using taxis and taxis themselves remain under detailed regulations by the government and local authorities regarding total volume, fares, appearance, and business areas. Although the government claims to promote 'mobility innovation,' the problem remains that businesses must operate according to government-set rules rather than market competition.

The current crisis in the taxi industry is not due to the emergence of new mobility services but results from policy failures. Over-supply of taxis, license price issues, detailed regulations on fares, appearance, and restrictions, and subsidies due to declining taxi competitiveness have created an over-controlled environment where market competition disappeared and service quality declined in a vicious cycle. As new mobility services like Uber, carpooling, and Tada continued to emerge, the government, feeling the limitations of existing systems, chose this revised law. However, the problem is that instead of flexibly loosening existing regulations to allow market competition, the government chose an anti-market 'government control' approach that places new services under complete government control.

The government's choice seems to be a gradual change rather than an attempt to block 'mobility innovation.' However, one must ask whether genuine innovation for the public has ever occurred within government-controlled permit industries. Globally, the innovation process of digital transformation across all industries, including mobility, is a 'disruptive innovation' where existing industries are dismantled and new demands and markets are created through free market competition and consumer choice. Small, fast, and flexible startups, not existing large corporations, create new value and become new winners. In this process, the government's role is to promote market competition and innovation, provide social safety nets for those who fail in competition, and offer opportunities to challenge innovation. The current government's intention may be to grow the new mobility industry, enhance the competitiveness of the existing taxi industry, and satisfy consumers, but it is questionable whether this can be achieved through detailed government 'control.'

Therefore, paradoxically, the conditions for 'mobility innovation' under the revised law depend on the government's capabilities. The government, which holds the power over the survival of all mobility companies, should guarantee free market participation of diverse services and loosen regulations to promote market competition. The Ministry of Land, Infrastructure and Transport has announced follow-up measures and support such as activating regulatory sandboxes, reducing contributions for early startups, easing platform franchise vehicle limits, and improving taxi regulations, but these are far from sufficient. It is said that nothing has been decided yet regarding the most important total volume and contribution scale. One wonders whether the Ministry of Land, Infrastructure and Transport, which worked hard for the law's passage over the past few months, has not prepared a concrete blueprint for the revised law. The challenging process of future mobility innovation will now be fully evaluated as the government's responsibility. It is time to choose whether innovation will come through market competition or government control.

Choi Sung-jin, CEO of Korea Startup Forum

This content was produced with the assistance of AI translation services.