* This is my column in BusinessWorld last October 15, 2018.
The Duterte economic team aka “Dutertenomists” composed
of the DBCC, the Secretaries of DoF, DBM and NEDA and Governor of BSP have been
peddling the “6.7% inflation rate will be the peak” statement after the
September inflation was announced. They are daydreaming, of course.
Not included in their calculations and projections is the
granting of huge fare hikes for public land transportation any day from October
to December. And this will have a big inflationary pressure in the last three
months of the year.
Here is a summary of various fare hike petitions that I
gathered from various sources. The provincial air-con buses seem to have a
minimum fare of P50 to encourage many short-distance passengers to take the
non-aircon ordinary buses instead. The last fare hikes granted by the Land
Transportation Franchising and Regulatory Board (LTFRB) were March 29, 2011 for
Metro Manila buses and December 15, 2008 for provincial buses.
Not included in these fare adjustments are
under-recoveries for zero fare adjustments in 2018 nine months alone, and 12
months of 2017.
The LTFRB is among the dinosaur agencies, outmoded 1960s
thinking bureaucrats who still think until now that fare adjustment is a
function of politics and bureaucracy, not of changing world oil prices, peso
exchange rate, and supply-demand dynamics.
In the transport network companies (TNCs) sector for
instance, LTFRB has been engaged in two forms of command and control policies:
(1) franchise control (limiting or capping the number of franchise units), (2)
fare control via surge price control to 2x maximum, and abolition of P2/minute,
which it later retracted.
While TNCs fare control has been partially addressed,
LTFRB has not lifted its franchise control, which may be construed as favoring
the big taxi companies.
When Uber left Southeast Asia in April 2018,
Singapore-based Grab became the dominant player in the region and in the
Philippines. Shortly after, many new local TNCs sprouted in the country like
HirNa, GoLag, Iparra, MiCab, Mober and U-Hop.
Now a new but big regional TNC player, Indonesia-based
Go-Jek, wants to enter the Philippines. Most if not all local TNCs are worried
when Go-Jek initiates a ‘price war’ as its entry promotion, which Grab can
easily match.
Is Go-Jek entry good for the Philippine economy?
From the perspective of passengers and the public, the
answer is Yes. This means more competition, more choices, shorter waiting time.
Which means many car owners will consider leaving their cars at home and take
any of the competing TNCs going to work, which can help reduce Metro Manila
traffic.
From the perspective of local TNCs, the answer is No. The
likelihood that they will be eased out and might go bankrupt is high. Unless
they will consolidate and merge with each other, pool their capital and
technology resources and possibly invite foreign investors and players.
From the perspective of dominant player Grab, the answer
is likely Yes. This will dispel or disprove lousy accusations by the public and
even by some government agencies like the PCC that they are a “virtual
monopoly” and hence, must be constantly monitored if not be over-regulated and
over-bureaucratized.
From the perspective of government, it is a mixed
challenge. To accommodate a new big player and allow existing players to adjust
and expand, LTFRB must lift the 65,000 cap for TNCs franchise, either double it
or abolish the cap altogether. This will diminish the bureaucrats’ power to
harass both TNCs and individual car franchise applicants but at the same time,
they will be praised by the public for easing the supply gap of TNCs.
The fear of “more TNCs = more traffic” can easily be
countered by the fact or possibility of “more TNCs = more car owners leaving
their cars at home.”
The nationalism card or “have more local players, reduce
foreign competition” does not hold water always. The Philippines auto industry
is composed of 100% multinationals — Toyota, Mitsubishi, Hyundai, Kia, BMW, GM,
Ford, etc. and we are okay. The same for buses, there is not a single local
auto firm.
Bottom line, there should be more competition, more
capitalism, and less politics and bureaucratism.
-----------------
See also:
BWorld 255, Improving passenger convenience, innovation vs regulation, October 03, 2018
BWorld 256, Mandatory and coercive welfarism by private enterprises, October 07, 2018
BWorld 257, Inflation king of Asia, world’s second worst stock market, October 12, 2018
BWorld 258, Corrupted science to justify renewables cronyism, October 13, 2018
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