A National Assembly committee on Friday passed a revision bill on effectively outlawing the controversial taxi business of Tada, a South Korean ride-hailing service operator.
The revision to the passenger transport service act, approved by the parliamentary transportation panel, restricts the outsourcing of drivers for the use of rental vans with 11-15 seats to tour purposes only. Cars must be rented for at least six hours and users are required to possess boarding passes if vehicles are rented or returned at airports or seaports.
If the bill is passed at the plenary session of the National Assembly and signed into law, it would drive Tada out of its current app-based business.
If that happens, Value Creators & Company, operator of the Tada service which is owned by the car-sharing firm SoCar, will be given one and a half years to exit the business or stay in the market with the acquisition of a taxi service platform license to be introduced under the revised legislation. In the latter case, VCNC would face various regulations equivalent to those for traditional taxi services and would have to donate some of its profits for public interest.
The revision bill stipulates that it will take effect a year after promulgation with punishments suspended for six months.
SoCar expressed regret over the passage of what it called the "Tada-banning" bill at the standing committee.
"(We) believe that lawmakers will make a wise decision in the remaining process of handling the bill from a broad perspective for the benefits of the people and the future of the nation," it said in a statement.
A senior Cheong Wa Dae official refused to label it anti-Tada legislation.
Kim Sang-jo, chief of staff for policy, told a forum in Seoul that what will be discussed in the National Assembly is a "law to explore how to institutionalize an attempt at innovation like Tada."
It makes no sense for Tada's operator to continue its business in the current format going forward, Kim said.
"We can't neglect the damage that hundreds of thousands of cab drivers will suffer," he added.
The revision bill is not meant to prevent innovative Tada-like businesses but to establish a "systemic framework" for innovation-based platform taxis to operate legitimately, Kim stressed.
The government plans to map out the relevant enforcement ordinance in consultations with the Tada operator, he said.
Supporters of Tada have advocated people's right to a choice of services and voiced concern about the possible negative impact on South Korea's response to the fourth industrial revolution.
The members of the National Assembly panel, however, cited the urgency of minimizing social confusion and conflict over the Tada service.
The company launched a ride-hailing service in October 2018 using 11-seat rental minivans and outsourced drivers. Tada means "to ride" in Korean.
Local cab firms have ferociously accused it of running "illegal" and "unlicensed" services.
In late October, state prosecutors indicted Lee Jae-woong, chief executive of SoCar, on charges of violating legislation banning services carrying passengers for commuting with rented vehicles. VCNC's chief Park Jae-uk has also been indicted.
A related court trial began in Seoul earlier this week. (Yonhap)