By Sim Chang-hyun
Uber, the leading global car-sharing platform, is having hard time in Korea. The company started business here in 2013. As elsewhere, Korean taxi drivers have been resistant. Unfortunately, Uber Korea was unable to withstand this pushback.
In March 2015 it suspended Uber X operations after facing regulatory setbacks from local and central governments. Since then Uber Korea has been looking for chances to resume its services in Korea.
I will explain why Uber is having a hard time here in terms of regulations and its policy background as follows. Please note that the explanation below is simplified. Finding exact reasons would require deeper analysis and more efforts.
1. Passenger Transport Service Act
Taxi is one of the oldest forms of transportation. The taxi industry in Korea has long been regulated by the Passenger Transport Service Act. According to Article 34 of this law, “No person who rents a commercial motor vehicle from a car rental business entity shall use such motor vehicle for transport with compensation,” and “No person shall arrange a driver for a person who rents a commercial motor vehicle from a car rental business entity.”
It seemed obvious that the Act without amendment would allow little space for car-sharing platforms without. In addition, Korea’s taxi industry has been proven to be influential enough to dissuade lawmakers and municipal officers from making any amendments.
2. Taxi industry regulations
The industry has been bearish because there are too many taxis and a slowdown of the rate of population increase. Each municipal office has adopted a policy to reduce the number of taxis. As such, the offices no longer issue taxi licenses, and the price of taxi licenses bought and sold has soared.
Therefore the cost of authorizing Uber services and thereby shrinking the taxi industry would be huge, economically and socially, so that the government fears it might face a political backlash.
In conclusion, Uber has been stymied in Korea because of these regulatory issues.