Prosecutors hit for indicting Tada
Concerns are growing over the prosecution’s latest indictment of the head of van-hailing service Tada as it deals a blow to Korea’s ongoing efforts to find and nurture new growth engines amid the decline of manufacturing and other traditional industries, according to industry analysts Tuesday.
They said multiple regulatory setbacks and resistance from traditional industry sectors will eventually hinder the development of new businesses.
Lee Sang-jin, a professor at Korea University’s Graduate School of Information Security, said the move will hinder the Moon Jae-in administration’s plan to actively adopt what is referred to in Korea as a “negative regulatory system.”
“The indictment of CEOs of SoCar and VCNC could be a sign of backpedaling of the government’s move to encourage companies to be more creative, because such legal restrictions will hold back the development of the country’s economy,” Lee said.
The negative regulatory system simply means companies will face fewer regulations when they invest, develop and launch new products or services. Under the “positive regulatory system,” firms have to comply with a slew of regulations and anything outside of those regulations is prohibited, while the negative system encourages and enhances creativity in organizations by detailing only what is legally prohibited and allowing for everything else.
A car-sharing service user also criticized the prosecutor’s decision to indict the CEOs of SoCar and VCNC, saying the move completely disregards consumers’ wishes to opt to use Tada.
“Car-sharing service users expect the court would recognize that Tada has been received well among many users for its convenient service when compared to taxis. We don’t know what kind of judgment the court will make, but indicting Tada could bring a negative impact on the country’s sharing economy model,” Kim Kilrae, a leader of Ride Korea, a group of advocates on car sharing service, said.
On Monday, the prosecution indicted Lee Jae-woon, CEO of car-sharing app operator SoCar, and Park Jae-uk, CEO of VCNC, an affiliate of SoCar and operator of Tada, claiming Tada service was illegal.
The two CEOs will face a trial without physical detention on a charge of operating the van-hailing service without taxi licenses.
VCNC has faced a fierce setback from taxi drivers as taxi unions have called Tada “illegal” because VCNC transports passengers for money without taxi licenses.
For its van-hailing service, VCNC uses Kia Motors’ 11-seat Carnival minivan and outsources drivers. The company operates 1,400 vans and employs 9,000 drivers. About 1.3 million users are registered with the service even though the fares are slightly higher than for taxis.
VCNC claimed that it provides legal services saying its service complies with the Passenger Transport Service Act that permits companies to provide drivers for rental vehicles with 11 seats or more.
SoCar CEO Lee condemned the prosecutors’ sudden move saying “the prosecutors indicted us when the President vowed to adopt the negative regulatory system for the development of the country’s artificial intelligence technology.”
VCNC said the company “will try to be well-prepared for the trials” adding “the world is changing in response to public demands and new technologies.”