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[Herald Interview] Regulation, resistance put Korea‘s ability to compete in future mobility in question

Research head of Kakao Mobility calls for flexibility in policymaking, says open to partnership with Hyundai Motor

LEIPZIG, Germany -- Korea is a leader in information technology, which has led its economic growth for the last decade, but when it comes to mobility services -- often touted as the center of a paradigm shift in the “fourth industrial revolution” -- the country faces uncertainty.

“It is clear that the world is going through a paradigm shift from manufacturing to mobility services in connection with development of autonomous driving,” said Lee Jae-ho, director of the digital economy research institute of Kakao Mobility, in an interview with The Korea Herald.

“When that transition to future mobility is done, the country, which has no leadership in autonomous driving and electrified vehicles, will find itself having lost its competitiveness as well in mobility services that could thrive on the grounds of Korea being a top IT powerhouse, mainly because of regulations and opposition from stakeholders,” he said.

Lee was participating in an annual summit of transport ministers hosted by the International Transport Forum in the German city of Leipzig, as a corporate partner.

Lee Jae-ho, director of the digital economy research institute of Kakao Mobility (Kakao Mobility)
Lee Jae-ho, director of the digital economy research institute of Kakao Mobility (Kakao Mobility)

Like Grab, which started as a platform for taxis, Kakao Mobility’s goal was to provide ride-hailing services in hopes that the government might someday lift regulations that ban transport services provided by vehicles registered for noncommercial use.

However, the government has showed no sign of opening the sector that has been dominated by taxis for decades. In addition, fierce resistance from stakeholders – mainly taxi drivers -- has frustrated the company’s attempts to expand the new mobility service market. Two taxi drivers even took their own lives in protest of Kakao’s trial carpooling services late last year.

“Even though (carpooling services) were on trial, and we had no legal issue, but the resistance was serious, and that shook us,” he said. “We will let carpooling services rest for the time being.”

Despite facing unexpectedly fierce opposition, the mobility service unit under IT giant Kakao will pursue new services within the boundaries of the taxi industry.

“We have never been an enemy to taxi drivers. We run business based on partnership with them. What we could do, for now, is to encourage taxi drivers to join our new services that cater quality service to customers who dislike taxi drivers’ attitude and the dirty interior of the cars,” he said, adding that a series of customized taxi services have been introduced in other countries, such as taxis that transport customers with pets.

Another alternative could be to cater to children traveling short distances to schools or hagwon for private lessons, without their parents.

The director also pointed out that there has been no significant progress in a multilateral communication platform launched to modernize the country’s taxi industry. He urged the government to help come up with a way to enable taxi drivers to embrace the tide of change in the mobility sector.

“The government should be able to adopt flexible ideas in transport-related policies and make gradual changes, instead of seeking parliamentary approval on a bill on revision of transport law at once,” he said of the six measures being pushed for the National Assembly’s approval, including offering stable monthly incomes for drivers and introducing an innovative platform for taxi services.

Stakeholders who are part of the communication platform have discussed ways to add technological features to taxi services. It has been reported that Kakao is mulling services similar to Tada, operated by its rival SoCar, and seeking a price hike in taxi services.

Tada offers ride-hailing services via rental cars with more than 11 seats, outside the four-hour window to which smaller vehicles must adhere. Lee said the company has never said “no” to such possibilities.

Asked about the possibility of partnership with Hyundai Motor, Lee said the company is open to such a scheme, though both Kakao and Hyundai remain uncertain of which areas the two could work with.

“Hyundai, too, invested in Luxi, a carpooling service company, years ago but withdrew its investment amid protests by taxi drivers,” he said.

Under its new vision of becoming a top-notch mobility service provider, Hyundai has been investing in ride-hailing services abroad, including Grab of Singapore and Ola of India.

“Because of regulations that prohibit carpooling services here, we both have little to work with, although we know that we would see considerable synergy of partnership in the area of mobility services.”

Launched in 2017, Kakao Mobility reported 53.6 billion won in revenue last year. Lee is the author of a book on social transformation on the rise of the sharing economy, “Smart Mobility Society.” 

By Cho Chung-un, Korea Herald correspondent