* This is my column in BusinessWorld last Monday, October 01, 2018.
People are rational, they seek convenience and safety for themselves, their families and friends. Thus, if it is very inconvenient and unsafe to take multiple rides from house to work and vice versa, say tricycle from house and village, jeepney or bus, MRT/LRT, jeep again to office, repeat the 4 rides going back home, then people would rather drive their cars or motorcycles even if they have to endure heavy traffic, high parking fees, and occasional street flooding during the rainy season.
But when it is easy, safe and inexpensive or competitively-priced to get a ride-sharing vehicle, taxi or transport network companies (TNCs), people would leave their cars or motorcycles and relax or do work while inside the taxi or TNCs, which increases their productivity per day and hence, their income while reducing vehicle volume on the roads.
It is important therefore, that government regulations like those implemented by the Land Transportation Franchising and Regulatory Board (LTFRB) should expand and not restrict the supply of competing ride-sharing vehicles so that passengers will have more choices.
In a paper, “Innovation Versus Regulation: An Assessment of the Metro Manila Experience in Emerging Ridesourcing Transport Services” (2017) published in the Journal of the Eastern Asia Society for Transportation Studies, Vol. 12, authors Ma. Sheilah G. Napalang (UP School of Urban and Regional Planning) and Jose Regin F. Regidor (UP College of Engineering) cited the result of a survey made by Uber Philippines in 2016 that covered 1,450 respondents.
They also cited a study by de la Pena and Dizon (2016) on passenger preference between Grab taxi vs regular taxi. The two results are shown in table 1.
There, the two surveys show that people’s trips are work- and household-related and they value a lot convenience, reliability and safety.
In addition to the above-stated convenience, the presence of multinational players like Grab and previously Uber also enable the passengers to use their account whether they are in the Philippines or Malaysia, Singapore, Indonesia, Thailand, other ASEAN countries. That is one advantage of multinationals compared to country-specific services and companies like regular taxi and buses.
The Metro Manila Development Authority (MMDA) also made a study last year on the busiest and often most congested roads in the region, and composition of traffic volume by type of vehicles. EDSA is the busiest and 67% of all vehicles there are private cars. These are people whose houses and offices are far from EDSA and hence, must take multiple rides if they do not drive their cars or motorcycles (see table 2).
So when the LTFRB further bureaucratizes and makes it difficult for existing and new players in ride sharing to expand their services, people will experience (a) longer waiting time to get a TNVS or taxi, and (b) higher prices as these vehicles and drivers deal with high demand but supply is limited. And so many of them will have to drive their cars more often. Which further worsens the traffic congestion in EDSA and many other roads in Metro Manila.
The LTFRB and other government agencies (MMDA, city governments, LTO, etc.) must realize that their eagerness to “protect the commuters” and “reduce traffic volume” very often result in more bureaucracies, less players and hence, an outcome opposite to what they wish to achieve.
Competition leads to innovation – in pricing, convenience, safety — and hence, better choices for customers and passengers. But some players lobby for more regulations that tend to disadvantage new players, like big taxi operators who dislike the competition by new TNCs.
From the perspective of consumers and passengers, more players, more competition via innovation is better than regulations that limit competition. Limited competition means limited innovation, and hence, limited passenger choices.
Bienvenido S. Oplas, Jr. is the President of Minimal Government Thinkers, a member of Economic Freedom Network (EFN) Asia.
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