Begin-ups rave about new mobility enterprise regulation

Taxis will be parked in front of Seoul Station in Seoul in March 2021. The amendments to the Law on Transport Services came into force a year after it was passed by the National Assembly on Thursday. Mobility startups aren’t very happy with the changes, however, claiming that they are preventing startups from trying new business strategies while being charged. [YONHAP]

Mobility services legislation went into effect Thursday, and companies getting into the business or considering getting into the business are not at all pleased with it.

They are opposed to setting up an evaluation panel to assess whether a company is qualified to run a “platform taxi” business, and they are also concerned about the money they will have to pay to support their traditional taxi competition.

The amendment to the Law on Passenger Transport was passed a year ago and will come into force on April 8th. It creates a new class of means of transport – the platform taxi – and strictly regulates the participants. Platform taxis are those that are accessed through an app or computer, regardless of whether they are owned, franchised, or simply connected to the service.

The government argues that the legislation does not prevent mobility companies from developing, but actually supports their development. The Department of Land, Infrastructure and Transport says the law will help bring these new operators into the existing system.

Those involved in the deal disagree and say the change is full of landmines, with numerous clauses that are detrimental to mobility startups.

In order to start a mobility service, a company must be reviewed by an evaluation board and receive a score of 60 out of 100.

Of the total, 25 possible points can be earned for the degree of specialization and 15 for the quality of service. Critics argue that the specialization category includes the service of remote areas.

The committee will also consider existing service sector transports, suggesting that no permit will be given for areas already covered by traditional taxis.

“My understanding of the goal of the legislation was to allow startups to conduct various experiments,” said a start-up mobility manager, who asked for anonymity. “But it’s very different.”

The mobility manager said there are too many clauses that put too much pressure on startups that may lack capital or expertise.

The Ministry of Transport emphasized that the checklist only included part of the assessment.

“The verification will take the total amount into account,” said an official from the ministry’s mobility policy department, who asked for anonymity.

Critics argue that the evaluation committee is not qualified to judge startups because one member is from the Department of Transportation, one is an academic or researcher, one represents the work, and one represents the consumer groups.

Companies wishing to operate a platform taxi service must make a payment to the government to support the traditional taxi business.

You can pay 5 percent of annual sales, 800 won per trip or 400,000 won per month per vehicle.

The Korea Startup Forum, which has 1,500 startups as members, sent a complaint to the ministry about this payment in August. It has been argued that startups will struggle to fund their businesses if they have to support traditional taxis.

The government has compromised, stating that services with fewer than 100 vehicles will be exempted for two years, those with 200 vehicles will only have to pay 25 percent and those with 200 to 300 vehicles will pay half.

“The related regulations are ambiguous and do not reflect the reality of startups,” said Jung Mina, policy director at the Korea Startup Forum. “Start-ups are not allowed to get into the mobility business.”

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