Leave the economy aloneVan-hailing service Tada, used by 1.7 million people, is one presidential signature away from being outlawed. The anti-Tada law, a revision to the Passenger Transport Service Act, passed the National Assembly last Friday. The legislature went ahead with the act even as allegations that the service is illegal were turned down at the first trial. Its operator announced it will stop the ride service.
There has been a dispute over whether the Tada platform falls into the innovative service category. Still, outlawing the van-hailing service underscores why Korean stocks and market are undervalued. The so-called Korea discount refers to the undervaluation of Korean companies despite their worth. Korea has two chronic weaknesses — geopolitical risks posed by the North Korean threat and unreliable and inconsistent public policies. All governments promise regulatory reform, but action is slow. The Ministry of Transportation proposed the revised bill and the legislature passed it. It shows how fluid public policy is in Korea.
Few can understand why ride-sharing services, commonplace in every corner of the world, fail to gain acceptance in Korea. Tada used legal loopholes to launch its service. Its users are all content with the quality service. Yet the government and legislature stopped it. There is no other excuse aside from the upcoming election, as the ruling party cannot afford to lose votes from taxi drivers.
Over 12,000 Tada drivers could be out of their job. Start-ups and venture enterprises fear a drought in funding as investors will become hesitant about putting their money in new businesses after seeing lucrative business models like Tada go out of business. Some even liken the new law to the coronavirus, a disease in the venture capital ecosystem.
The Moon Jae-in administration vowed to promote venture enterprises as a means to generate new growth and jobs. It boasts about record funding in ventures. Drawing liquidity into venture businesses can also help stabilize real estate prices. But outlawing Tada has thrown cold water on venture promotion. Politicians have endangered our future economy and industry to win a few more votes in the parliamentary elections. The opposition United Future Party also voted in favor of the bill.
The economy is stumbling. Policies favoring unions have hurt business sentiment, the virus outbreak worsened it and politicians have rubbed salt into the wounds. Korean achievements in business, industry, soft power and sports have all been undermined by politics. When will politicians leave the economy alone?
JoongAng Ilbo, March 6, Page 30