The prosecution indicted the operator of Tada, a ride-hailing service using rented vans, its parent company and their top executives on Oct. 28.
Business circles, particularly from startups, criticized the indictment for blocking innovation. Following this, high-ranking government officials too joined the criticism.
Prime Minister Lee Nak-yon said that a new industry must not be stunted even though it may conflict with an existing one.
Deputy Prime Minister and Finance Minister Hong Nam-ki said it is regrettable for the Tada issue to be left up to the judiciary before win-win solutions are tried.
Minister of Land, Infrastructure and Transport Kim Hyun-mee said approaching the issue judicially is hasty.
Minister of SMEs and Startups Park Young-sun described the indictment as a move “fixed on a very traditional thought” and added it harkens back the Red Flag Act in the 19th century.” The UK act required a man carrying a red flag to walk in front of vehicles on the road to assist with the passage of horses and carriages.
Generally, the officials were critical of the indictment. In view of their remarks, the prosecution should be blamed for obstructing the business of the government. But that’s not the case. Rather, the indictment in question reveals the irresponsibility and incompetence of the government and problems in its internal communications.
When taxi drivers strongly opposed ride-hailing services, senior government officials were busy trying to appease them and eventually took their side. In May, Choi Jong-ku, then chairman of the Financial Services Commission, criticized Lee Jae-woong, CEO of Socar, which is the parent company of Tada operator VCNC, for being rude and selfish. Now that the service has been subjected to a much-criticized indictment by the prosecution, they have abruptly switched sides, describing the self-styled mobility platform as an innovative business model.
More than a year has passed since Tada was launched in October last year. Its app has attracted more than 1.2 million subscribers. What did the government do in the meantime to prevent the issue from leading to a legal battle? High-ranking officials now say words like regret and undesirable like news commentators. They seem to have forgotten it is their job to mediate conflicts over the new mobility service.
Regarding the Tada issue, the government does look a sight. It was revealed that related ministries were out of step with one another.
In February, the taxi industry asked the prosecution to indict Socar and VCNC and their chief executives for operating a passenger transportation service without a government-issued license unlike them. The prosecution viewed Tada as an unlicensed call taxi service and decided to indict it.
Facing criticism on the indictment, the prosecution revealed that it had let the Justice Ministry know its decision in late July. It said Cheong Wa Dae instructed the prosecution through the ministry to put the decision on hold for one month.
The prosecution also said it consulted Cheong Wa Dae between late September and early October and was told to indict the service. And it did so after waiting for three months from July as it received no further requests or opinions.
But Cheong Wa Dae denies this, saying the prosecution never consulted it before indicting Tada. One of the two sides is lying.
The Transport Ministry first argued there was no prior notification of the prosecution’s decision or prior consultation with the Justice Ministry. Then the prosecution revealed that it had inquired with the ministry about the service in writing twice, in May and July, and that related documents specified Tada. The Transport Ministry admitted receiving the documents but noted the prosecution just asked what legal clauses applied to the service, not whether it was illegal. The ministry seems to argue it did all it could and that it did nothing wrong. But its attitude raises questions if it tried actively to resolve the conflict over Tada.
Regarding high-profile policy issues, close consultations between related ministries are indispensable. But they are nowhere in sight.
The point is not whether the indictment was desirable or regrettable. Aloofness and incompetence of government officials are the problem. They should have sought agreements actively. A tsunami of conflicts will sweep the economy if the “fourth industrial revolution” accelerates. As long as the government dawdles and makes disjointed responses, the nation can hardly expect to stay competitive.