* My column in BusinessWorld last June 14, 2019.
Passengers and commuters want convenient, safe, and faster mobility to reach their destinations. There is great inconvenience for people who take multiple rides (tricycle, jeep or bus, MRT/LRT, jeep again to destination, reverse the process going back home). Taking a taxi is good but there are many complaints like choosy drivers, robbery, or sex molestation inside the cab, etc.
I made a small experiment, I Googled “robbery inside _____ in Philippines” for regular taxi, jeepneys, city buses and Grab. I counted the top 8 entries that refer only to my subject search, and stories like “robbery of a bank” or “taxi/jeepney accident” are not included. I was surprised by the result (see table 1).
And that explains why many people choose taking the transport network vehicle service (TNVS) or transport network companies (TNCs). Cost should not be a factor because passengers know that Grab cars are more expensive than a regular taxi but they still choose the former. It’s like parents know that Ateneo and La Salle are more expensive than other private universities but they still enroll their kids at these two schools. People value the brand, their service quality, etc.
My little experiment is consistent with the findings of 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, by Ma. Sheilah G. Napalang (UP School of Urban and Regional Planning) and Jose Regin F. Regidor (UP College of Engineering). The authors cited a study by de la Pena and Dizon (2016) on passenger preference between Grab taxi vs regular taxi (see table 2).
So if many people prefer TNVS or TNCs, how come that the Land Transportation Franchising and Regulatory Board (LTFRB) is further bureaucratizing and even deactivating many TNVS cars and drivers?
See these three reports in BusinessWorld this week, I quote portions of the stories:
1. “Grab drivers seek amnesty for uncertified operators” (June 11):
“the process to secure a CPC is difficult for drivers to follow after the LTFRB added new requirements… produce a bank certificate of conformity… Many operators cannot comply, some banks will ask for thousands of pesos in fees, plus an increase of monthly amortization… proof of financial capability… has been increased to P50,000 from P15,000 previously”
2. “Grab calls on LTFRB to allow deactivated drivers temporarily” (June 12):
“‘The best scenario for the Filipino people, is to have more drivers which results in passenger convenience, and less traffic as car owners will just need to hail a ride… If LTRFB will allow the deactivated drivers to resume work while it processes the application of 10,000 new drivers, that would be the best win for the Filipino people,’ Grab Philippines President Brian P. Cu was quoted”
3. “LTFRB won’t ease driver norms for ride-sharing industry” (June 13):
“LTFRB said it will not ease its accreditation requirements to deal with a potential shortage of ride-share drivers, despite appeals to temporarily allow TNVS operators with pending documents to stay on the road.”
Reports #1 and #3 show that LTFRB seems to violate its own mandate — to help ensure passengers safety and convenience. Why has it imposed new strict requirements that will effectively ease out many TNVS cars that passengers precisely want?
Report #2 is true, it is basic economics. If LTFRB and passengers want lower, cheaper price per ride, just allow the supply of service to rise relative to demand. The “equilibrium point” of supply-demand dynamics will lead to a decline in price while the supply of service will increase.
The market-oriented reforms for efficiency (MORE) that LTFRB can take is to allow more TNVS cars and drivers, not reduce them. If it is more convenient, waiting time to book a ride is shorter, price or fare is lower due to competition, then more people will leave their cars at home and that will help reduce traffic.
BWorld 336, Inflation target below 2% is possible, June 10, 2019
BWorld 337, Smart energy: Use more conventional sources, June 11, 2019
BWorld 338, MORE employment and labor productivity, June 12, 2019