The South Korean government is set to adopt a sharing economy model in the second half of this year and map out relevant laws and policies.
The financial ministry recently said it is set to apply business status of rent lodging to the regulation-free special law due to be proposed to the National Assembly in June. The ministry also plans to back information technology infrastructure to allow rent car companies to automatically share vehicles through mobile apps.
The latest move is part of the government's attempt to keep pace with the global trend of sharing economy. Industry watchers said Airbnb, a rent lodging service which has grown even to threaten global hotel chains such as Hilton and Hyatt, as well as car sharing service Car2Go were not able to settle down in Korea due to strict regulations.
"We are going to relax the laws to foster high-tech and service industries,” the Financial Ministry’s official said.
However, Airbnb and Car2Go are still facing other obstacles such as ethical issues rather than systematic issues as the services are not completely free from the possibility of criminal activities.
How Airbnb has become lodging giant
Airbnb, which initially started out with a small B&B with three beds only, has grown into the best innovative company.
On a day when an international conference was held in 2007, two American men Brian Chesky and Joe Gebbia, who suffered from financial hardships, offered breakfast and beds to the participants and earned $1,000 during the period. That was the start of Airbnb where hosts offer their houses and food for travelers via a website.
Within a decade, the service has grown into a company valued at $20 billion with over 60 million users in 34,000 cities of 190 nations.
The service is still illegal in Korea and may follow footsteps of Uber
Although Airbnb jumped into the Korean market in January of 2013, the service is currently an illegal activity here. In September, the court sentenced one Korean surnamed Jung to 700,000 won in fine for violating Public Health Control Act. Jung had offered his house to seven travelers and received 100,000 won per day.
Under the current law, the lodging businesses should register to regional governments as city lodging service. However, among local Airbnb hosts, only less than 30 percent abides by the law because the requirements are very rigid.
Under the nation’s construction law, the house should be row houses - not apartment buildings - the applicants should reside there, only foreign travelers can lodge and a fire alarm system should also be installed.
There is also resistance to the adoption of the system. Ride hail company Uber pulled out of its business due to conflicts with local taxi companies.
Industry watchers say there should be more flexible and clear policies to boost the sharing economy.
It turns into profit-making business and creates privacy infringement
Amid growing concerns over privacy infringement, multiple victims claimed their privacy was infringed and some sales activities obscuring the original intention of the sharing economy were reported.
Recently, one student at Emerson College in Massachusetts was caught after sharing her dormitory room to travelers three times. In California, one female traveler sued a lessor and Airbnb, claiming she was damaged due to the high-performance remote control camera installed in the apartment unit.
Government announces road map of sharing economy
The governments in multiple countries have mapped out regulations on commercial use of Airbnb in Netherlands, France and Germany since 2014. To keep pace with the global trend, the Korean government has also pushed ahead with devising policies for the rent lodging service.
The government is set to announce its road map on the sharing economy at the trade and investment promotion meeting hosted by the Blue House.