Platform and Taxi Industry to Implement Innovative Win-Win Measures Starting April Next Year

[Asia Economy Reporter Yoo In-ho] Detailed measures such as platform transportation business permits and contribution fees (5% of sales) to institutionalize innovative platform businesses will be implemented in April next year.

The government decided not to set a total volume cap on the number of vehicle permits to activate platform transportation businesses. Regarding the controversial contribution fees, platform transportation operators will pay a basic contribution fee of 5% of sales, with differentiated payment rates by segment up to 300 vehicles.

The Ministry of Land, Infrastructure and Transport finalized and announced on the 3rd the policy recommendations for mobility innovation, including amendments to subordinate laws of the Passenger Transport Service Act, made by the 'Mobility Innovation Committee.'

The Mobility Innovation Committee was launched on May 14 with nine experts from transportation, consumer, IT, and legal fields to discuss and propose policy measures related to subordinate laws of the Passenger Transport Service Act and other matters.

After about five months and 13 meetings, including gathering opinions from industry and consumer groups, the committee discussed detailed institutionalization plans for the newly introduced transportation platform business and improvements to the existing taxi system, preparing the 'Recommendations for Mobility Service Innovation.'

The recommendations include detailed institutionalization plans for the newly introduced transportation platform business, such as permit system operation methods and contribution fee calculation methods, as well as improvements to the existing taxi system, consumer protection, and benefit enhancement measures.

First, through the newly established platform transportation business (Type 1) permit system, platform operators can launch various service models tailored to user demand and requirements under a stable institutional foundation.

Permit criteria include minimum requirements for service provision and user safety such as platform functions (call/reservation, vehicle control, fare prepayment, etc.), vehicles (30 or more vehicles with 13 seats or fewer), garages, and insurance.

It was recommended to specify detailed standards for creating new transportation demand, providing differentiated services, consumer protection, and worker management through separate permit criteria (Ministry of Land, Infrastructure and Transport notices) in the future.

Differentiation is possible in vehicle types, operating hours, and additional services (specialized mobility for infants, patients, commuting/school transport, tourism services for foreigners, equipment such as massage chairs, etc.).

To operate the platform transportation business permit system and manage the market, a Platform Transportation Business Deliberation Committee involving experts will be established, and the total number of permits will be managed through deliberation by this committee.

While no separate cap on the number of permits for platform transportation businesses will be set, the permit system will be operated by adjusting the number of permits as needed, considering external environmental factors such as transportation demand in main operating areas and taxi supply conditions.

Additionally, it was recommended to rationally improve the system for platform franchise business (Type 2), platform brokerage business (Type 3), and existing taxis to establish a user-centered service system.

For platform franchise business (Type 2), where transportation contracts are made through the platform of franchise operators combining platforms and taxis to activate branded taxis based on differentiated services, various fare systems will be allowed. Core regulations will be improved, including promoting regional expansion through pilot projects.

The brokerage fee reporting system for platform brokerage business (Type 3) will guarantee maximum autonomy to allow diverse services to be offered in the market.

For existing taxis, to expand consumer benefits, the current fare system for roaming taxis will be maintained, but related regulations on vehicle types, ride-sharing, and eco-friendly vehicles will be reasonably relaxed. However, to enhance user safety and service, it was recommended to introduce a one-strike-out policy for drunk drivers, mandate and expand taxi service evaluations, and study and review improvements to restrictions such as vehicle rotation and local government regulations.

The committee focused on resolving institutional fairness issues that caused conflicts between industries and establishing the fairest possible competitive structure between platform-taxi and platform-platform.

First, for coexistence between industries, the committee referred to and reviewed overseas cases to set reasonable detailed institutionalization plans for the 'Passenger Transport Market Stability Contribution Fee' introduced through amendments to the Passenger Transport Service Act, including its level, payment methods, and utilization. For example, New York charges about 8.8% per trip, and San Francisco charges 3.25% per trip.

To avoid burdening platform activation while preserving coexistence with the existing transportation market, the contribution fee is basically 5% of sales, but operators can choose between 800 KRW per trip or 400,000 KRW per month per permitted vehicle.

Operators with fewer than 300 permitted vehicles will have differentiated payment rates to reduce the burden, and those with fewer than 100 vehicles can defer payment for two years.

The collected contribution fees will be used for purposes such as converting elderly individual taxis to younger drivers, reducing the number of elderly individual taxis, and improving workers' labor conditions. The contribution fee level and utilization plans will be reexamined every three years based on the collection scale.

The Ministry of Land, Infrastructure and Transport plans to proceed smoothly with amendments to subordinate laws by April next year, reflecting the committee's recommendations for system improvement.

Baek Seung-geun, Director of the Transportation and Logistics Office at the Ministry of Land, Infrastructure and Transport, said, "The committee prepared reasonable measures through in-depth discussions over the past five months," and added, "Based on the recommendations, we will steadily promote system improvements so that platforms and taxis can coexist and the convenience of mobility use for the public can be dramatically improved."

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