BWorld 118, Regulate this, prohibit that: bureaucracies in transportation

* This is my article in BusinessWorld last March 14, 2017.

Traffic congestion is an engineering problem with engineering solutions, not bureaucratic solutions involving increased prohibitions.

The recent plan of the Metro Manila Development Authority (MMDA) to extend the car ban on EDSA to certain hours five days a week is very idiotic and arbitrary. Its plan is (a) the existing one day a week, 7 a.m. to 7 p.m., based on the last digit of the car plate, AND (b) on certain hours of the other four days involving an odd-even ban every two hours.

If there are problems, the first impulse of bureaucrats with dictatorial tendencies is to create ban-this-prohibit-that regulations and restrictions. If previous prohibitions failed, then create another layer of prohibitions.

Based on this new ban proposal, it doesn’t matter if the person has three or more cars because the prohibition is by the hour, not by the day.

Although some people adjust to traffic congestion by buying or renting a condo or dormitory room near their offices, others cannot simply afford that option.

The latter includes parents and guardians who bring their kids to school first then go to their offices and then pick up the kids later and head back to their house.

One day a week car prohibition on EDSA and many streets and cities in Metro Manila is already bad because it forces many households to buy a second car or motorcycle, which further raises the number of vehicles in the metropolis.

If one is caught in a long traffic due to accidents or road construction, one can lose the two-hour window and therefore be subject to fines, penalties, and extortion. And to think that the MMDA already gets huge allotments from taxpayers via their annual appropriation while they get more money from the public via endless schemes of fines and penalties.

More engineering solutions, not more bureaucratic “solutions of more prohibitions” should be pursued by the government. Consider the investments by other governments in big Asian cities.

In the table above, Manila is not included in the study but data from other cities should give us ideas how to provide more engineering solutions. Rail network here includes MRT (Mass Rapid Transit)/Subway/Metro and LRT (Light Rail Transit). The MRT systems in Singapore and Taipei are equivalent to Subway or Metro in other cities. Commuter rail is excluded (see Table 1).

Commuters in Tokyo rely more on rail-based system, those in Beijing rely more on buses. Commuters in Shanghai, Seoul, Hong Kong, Singapore, and Taipei use a good mixture of both. Although the data was collected in 2013, they still reflect current trends.

In Metro Manila, the three MRT and LRT networks are obviously insufficient to serve its 12 million residents plus an estimated four million people from nearby provinces of Bulacan, Nueva Ecija, Pampanga, Rizal, Laguna, and Cavite who go to Metro Manila almost daily for work, meetings and schooling.

If Manila is included in urban transportation comparison with big Asian cities, Manila will likely excel if the main metrics is the number of traffic enforcers and officers on government payroll, not the length of rails and multi-level roads (interchange, tunnel, skyway) constructed and properly maintained.

There are various options for urban mass transportation that the MMDA, LTO, LGUs and other agencies should consider, spend money there instead of hiring more traffic officers who will harass and penalize more motorists with various prohibitions that they have enacted (see Table 2).

The Bus Rapid Transit (BRT) is the cheapest system and has been proposed in both Metro Manila and Metro Cebu but only the latter seems to have prepared for it. MRT/LRT are more expensive but they are faster and can transport more people per hour than BRT.

In the short run, as in doable within a month, the government can consider the following:

1. Allow the current Point to Point (P2P) buses and vans to go to more destinations. Not just SM North to Makati City and Ortigas or BGC. Rather, allow them to pick up passengers from Pasig City, Marikina City, Taguig City, Malabon City, Navotas City, etc. and crisscross to more destinations.

2. Allow the air-con vans to pick up passengers from many subdivisions and villages to various destinations. Commuters will avoid riding tricycles and jeepneys, the most inconvenient urban transportation system and among the major reasons why many people drive their cars just to avoid riding these small vehicles.

3. Allow fare deregulation in buses and vans so that more transport operators will field more modern and convenient vans and buses. They can charge higher fares but lower than driving a car, riding a taxi or uber/grab car. Less modern buses and vans will be forced to charge lower to attract more passengers.

Government should allow, not prohibit, more market initiatives in providing both short- and long-term solutions to the traffic congestion problem. Make people’s commute convenient and safe, “one ride” as much as possible. And many people will leave their cars or motorcycles at home and jeepneys and tricycles will slowly die a natural death.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a Fellow of SEANET. Both institutes are members of EFN-Asia.

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See also:

BWorld 115, Centralization and federalism, March 23, 2017 

BWorld 116, Urban transport myths and the jeepney strike, March 28, 2017 

BWorld 117, Energy bureaucracy, electric cooperatives and NEA, March 28, 2017

BWorld 24, Traffic and Newton's 3 laws of motion

* This is my article in BusinessWorld last November 11, 2015.

Expansion of existing urban centers and urbanization of rural areas is the norm and natural path of many cities and areas in the planet. Congestion is the natural result as people try to squeeze themselves in a limited space where various amenities and work and business opportunities are available; things that they cannot easily find in rural areas.

In East Asia, cities from China and Japan are the biggest in population size. In Southeast Asia in particular, Metro Manila is the biggest. (See table)

Traffic congestion is among the most prominent problems of many big cities, like those with population of 5 million or more people.

In Metro Manila and other big Philippine cities like Cebu, Iloilo and Davao, the growth in number of vehicles is much faster than the growth of new roads and highways being constructed.

This subject was discussed in a round table discussion organized by the Albert del Rosario Institute (ADRi) on “Greater Manila Transport Infrastructure Solutions: Thinking Beyond EDSA” last Oct. 28, at the Tower Club in Makati City.

After the opening message by ADRi President Victor Dindo Manhit, Mr. Eduardo Yap of the Management Association of the Philippines gave a good presentation that compared the Metro Rail Transit (MRT)/Light Rail Transit (LRT) system in Metro Manila to the train systems in Bangkok, Jakarta, and Taipei.

Ours are small and short compared to those three and many other East Asian cities. The population figure that he gave refers to “Mega Manila,” which includes nearby provinces like Bulacan, Pampanga, Rizal and Cavite. (See illustration)

British physicist and mathematician, Sir Isaac Newton (1642-1727) was known for his contributions in classical mechanics and physics. His famous theory is the so-called “Newton’s Laws of Motion.” Upon closer examination, it seems that the laws of motion in physics can also apply in society and economics.

Consider the First law: “A body at rest (or in motion) will remain at rest (or in motion) unless an external force is applied on it.”

Application: Bureaucracy in command and control state will remain in that state unless huge public pressure is applied on it.

There is a culture in the bureaucracy where the officials declare, “No one moves, no one builds anything, unless they get our signatures and permits first.” A state of inertia and inaction should be sustained unless players and stakeholders first get the signatures of officials and regulators.

And that explains how unsolicited proposals to build various MRT lines, skyways, and new tollways via build-operate-transfer (no cost to the government) two to three decades ago never got off the ground.

Second law: “The acceleration of a body is directly proportional to and in the same direction as the force acted on it, and inversely proportional to its mass.”

Application: The acceleration of regulatory prohibition is directly proportional to central planning philosophy and inversely proportional to its intellectual mass.

The Metropolitan Manila Development Authority (MMDA) policy is to keep blaming private players -- the car owners, bus and van operators and drivers, even passengers. Thus, policies like cars number-coding prohibitions and similar rules covering some provincial buses and vans restrict the capacity and mobility of high occupancy vehicles unless they secure a legal franchise which, by itself, is very costly and time-consuming to get. People have to endure three or four rides one way (tricycle then jeep/bus, then MRT/LRT, then jeep or tricycle to final destination), and so many are forced to drive their cars, which exacerbate the traffic congestion.

Third law: “For every action, there is an equal and opposite reaction.”

Application: For every government intervention, there is an equal opposite distortion.

When government prohibits people to drive their own cars on certain day of the week, many people buy a second or third car, especially if their village is far from the main road. And this exacerbates traffic congestion. When government prohibits certain provincial buses to enter key areas in Metro Manila, many of these car-owning probinsyanos take their cars or motorcycles to Metro Manila, and this again worsens traffic congestion.

One alternative that the MMDA and Department of Transporation and Communications/Land Transportation and Franchising Regulatory Board should consider is that instead of segregating between Metro Manila and provincial buses, they should allow those bus companies to choose their routes. Say from Cavite to Fairview or Pasig-Marikina, and these buses can pick up and unload passengers along EDSA or C5. Make the bus-train commute more convenient and cost-effective, and many people will leave their cars at home. In addition, many jeepneys and tricycles will die a natural death, without creating a new law or Administrative Order or local government unit ordinance. And we shall have less traffic.

Traffic congestion is an engineering problem with engineering solutions; it is a result of market failures but can be solved by market solutions. Like those unsolicited proposals to build more urban rails since 20 or 30 years ago. Like those air-con vans that bring office personnel from their houses/villages straight to Makati, Ortigas, Bonifacio Global City, Eastwood, Manila, airport, and so on, with just “one ride.”

Government should learn to step back and allow market players to initiate market solutions to the traffic congestion. Government should focus on securing road right-of-way for important infrastructure projects and enforcing property rights. Enforce the rule of law, like the law against bus hold-uppers, terrorists, murderers, and kidnappers. Transporting people and goods to various destinations is not a crime that requires lots of permits, taxes, and expensive franchises.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers, Inc., and a Fellow of the South East Asia Network for Development (SEANET).

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See also:

BWorld 5, Transportation Bureaucracy and Uber, June 16, 2015  

BWorld 8, Manila's Traffic and Transport Woes, June 27, 2015

BWorld 21, More internet use means lesser corruption?, October 31, 2015 
BWorld 22, WESM, PEMC and search for competitive electricity prices, November 05, 2015 
BWorld 23, ASEAN trade bureaucracies and Doing Business 2016 Report, November 07, 2015

Transport Econ 15, On having 2 cars or more, July 20, 2015 

Transport Econ 16, Stratbase ADR Institute forum on Manila Transport Infra Solutions, October 30, 2015

Transport Econ 14: On the MRT and LRT Fare Hike

The fare hike in MRT and LRT trains in Metro Manila was implemented yesterday. This is a long-delayed move as any government subsidy program immediately creates an entitlement and dependency thinking in the public. People think that they are entitled to various and endless subsidies if not freebies from the government and are less concerned of the trade off or sacrifices somewhere else just to finance the subsidies and freebies that they enjoy.

And that largely suggest that the train fare subsidy is wrong, in theory and practice. 

1. If government should subsidize commuters in Metro Manila (night time population about 12-13 million, day time about 15 million), then it should also subsidize commuters in Bicol, Ilocos, Pangasinan, Cebu, Negros, Iloilo, Davao, Cagayan de Oro, Zamboanga,... People there are also citizens of the country and pay taxes. Double talk.

2. Government taxes and bureaucratizes buses that also transport so many passengers while it subsidizes its own train service. Double talk.

3. Government and activists say Metro Manila should be decongested then it gives many subsidies to residents and commuters of MM that effectively encourages people to flock to the metropolis. Double talk.

My undergrad organization at UPSE, the UP ETC made this poster to elicit discussions in their fb page.

The claim that if train fare subsidy is totally removed, MRT fares will rise to P60 or so is wrong, a bluff. MRT/LRT operators earn a lot from ads -- the whole trains, inside the trains, the train stations, the train posts, etc. -- are all earning revenues for them. This photo I took last December, LRT Divisoria-Santolan route. 

Ads will only come if there is big volume of passengers who can see the ads. Thus, train operators cannot raise the fare too high that will discourage many passengers and hence, discourage the ads.

A zero subsidy to MRT/LRT is possible.

Cong. Colmenares is 5% correct and 95% wrong. He is correct to say that selective subsidy is being done in selective regions or areas in the country but he is wrong to justify such selective favoritism. The train fare subsidy contradicts what many activists are advocating to "spread out" economic activities outside of M.Manila. How can you spread it out effectively when most subsidies are poured on residents of M. Manila? Like this fare subsidy, zero is given to commuters in other regions but P12 billion annualy in MM. See also Manila City, it has the most number of govt hospitals per thousand residents or per sq.m. of land: 3 DOH hospitals + 1 UP-PGH + 6 city-owned hospitals.

A report from Philippine Star yesterday:

From P12 billion, we're lessening the subsidy to 10 billion (pesos)," Lacierda said, adding that the government has to allocate resources away from Metro Manila.

Lacierda said that the P2 billion that will be saved from the train systems will be allocated for projects in Visayas and Mindanao.

"We did not take away the subsidy, the subsidy is still there," Lacierda reiterated.

P10 billion of annual subsidy is still big. It is possible to bring it down to zero. Many regular train commuters will be angry with this of course, but this measure will mean less crowded, more convenient rides for the passengers, and will reduce the animosity of people outside of Metro Manila towards the government and the metropolis residents. The reduction in public debt and reduction in annual interest payment is another positive result  of removing  the  subsidy as the government borrows yearly some P300 B to finance the annual budget deficit.
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See also: 
Transport Econ 8: Removing MRT and LRT Fare Subsidy, March 08, 2013
Transport Econ 10: MMDA and Car Ban, July 18, 2013 
Transport Econ 11: On Fare-Contracting Taxi Drivers, December 13, 2013
Transport Econ 12: Bus Rapid Transit (BRT) and Tricycles, April 21, 2014 
Transport Econ 13: On Prohibiting S. Luzon Provincial Buses to Enter M.Manila, August 30, 2014

Transport Econ 10: MMDA and Car Ban

* This is my article today in thelobbyist.biz
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Metro Manila Development Authority (MMDA) Chairman Francis Tolentino has proposed to raise the prohibition in the use of private vehicles in Metro Manila’s streets from one to two days a week. The goal is to reduce traffic in the national capital region.

Public outcry and disapproval, especially among car owners, and more particularly from those who have only one car, was high. The message is simple: Prohibiting people from using their own car/s two days a week is wrong. Especially if such car is used for business or to transport kids to school.

The  MMDA and many local government units (LGUs) in the country tend to specialize on having more  prohibitions in society: Driving your own car is not allowed on this day and hours, prohibited to drive on yellow lane, prohibited to make a left turn or U turn on certain streets, prohibited to drive your diesel engine car or van unless you pass their arbitrary smoke emission test.

The twice-a-week-car-ban proposal will actually result in more traffic congestion because (a) the rich will simply buy additional cars to go around the coding, and (b) there will be a new problem of lack of parking for many houses and streets.

A proposal like this by the MMDA Chairman is anti-liberal and anti-freedom. He is pulling the liberal PNoy government towards more statism, more prohibitionism and hence, more stupidity. Mr. Tolentino should remember that he is working under a liberal government, not a socialist or fascist government.

In a free society, everything is allowed, except for a few prohibited act -- like murder, stealing, abduction, rape, extortion, arson and carnapping. In an unfree society like a socialist or fascist government, everything is NOT allowed, except those with government permits. We are far from that highly unfree society, but more prohibitions, more regulations and more restrictions thinking by certain government officials can slowly pull the country towards such unfree society. And we pay more taxes and fees to pay for the salaries and perks of people with dictatorial and prohibitionist thinking in  government.

The usual proposal coming from various sectors  is to (a) encourage people to take the bus, jeepney and train more often. Raise the MRT/LRT fare prices and buy more trains. Other proposals include (b) building more covered walkways, (c) suspending the approval of new bus franchises or retiring old public vehicles, and (d) requiring provincial bus lines to stop, load and unload passengers only in areas near the North and South Expressways and prevent them from using Edsa.

One problem of expecting people to leave their cars at home and use the bus/jeepney/train  is that many people live in villages and residential areas far from the bus/train route. So from their houses, they take (1) tricycle, then (2) jeep or bus, then/or (3) MRT/LRT, then (4) jeep again or walk long to destination, especially in major commercial business districts (CBDs). The inconvenient multi-ride system, especially if one is regularly carrying a laptop or important documents or big cash, or in decent corporate attire, is forcing some people to drive their cars, even if they have to endure heavy traffic and difficulty in finding safe parking, or expensive parking fees.

A friend suggested that imposing frequent car bans is attacking the traffic problem on the demand side, when what are lacking are solutions on the supply side. One such solution is to construct more bridges over or across the Pasig River, to provide alternative routes to existing roads and bridges across the river.

I  support this proposal. There are currently about six or seven bridges across Pasig River. If there will be twice that number, then the traffic pressure in existing bridges like those in Pasig, C5, Edsa, Rockwell, Makati Avenue, etc. will be drastically reduced and vehicles will be more dispersed.

Multiple transport transfer is cool if we are talking of bus-MRT-bus transfers. But if we are talking of tricycle-jeepney-bus/MRT-jeep again, the combined fare may be equivalent to the fuel use of a car, not to mention the inconvenience of such multiple transfers.

There is an existing alternative now, the air-con vans. They ferry passengers from residential areas to different destinations, particularly Makati, Manila, Ortigas, Eastwood, Fort Bonifacio and other major CBDs. Just one-ride instead of three or four.

One problem here is that getting a franchise is very bureaucratic and costly, hence the presence of so many unregistered vans or "colorum". These are subject to frequent flag down and extortion by some corrupt elements of the police, MMDA and the Land Transportation Office (LTO). These costs -- high franchise fees for registered and high extortion for unregistered -- make the fare rather high, but still cheaper compared to driving one’s car.

On expanding the coverage and capacity of MRT and LRT in Metro Manila, Peter Wallace once said that the Avenida/Quiapo to Fairview MRT has been submitted to the government at build-operate-transfer (BOT) or related schemes as far as 20 years ago or longer. But the NEDA Board and the Investment Coordinating Council (ICC) bureaucracy, plus changes in administration, have conspired so that such unsolicited proposal from the private sector at little or no initial cost to taxpayers would remain as plain  dreams and never implemented. It is a disease of central planning at the ICC level.

The tricycles are given monopoly routes by the LGUs. Jeepneys and air-con vans  are not allowed to pick up passengers in routes that were assigned  by the LGUs as "exclusively for tricycles." So people who live in these routes have only three options: drive their car, get a taxi, or take the tricycle. The first two are costly.

If such tricycle route monopoly is absent, meaning passengers have a choice  to take jeepneys/vans or tricycles, most likely they will take the former and tricycles will die a natural death, even without national or local legislation. But the LGUs are protecting the tricycle monopoly system as they get lots of votes from tricycle drivers and operators, and these people pay annual registration fee or franchise fee to city/municipal halls.

A complicating situation is that some debt-pusher institutions like the Asian Development Bank (ADB) contribute to such traffic congestion by pushing some lousy programs, like the $300 million e-tricycle loan. Even a small country like Singapore with just 5+ million people has no tricycle, the more that a country with nearly 100 million people should have no tricycles and have more buses and trains instead.  

To recap, this paper is suggesting alternative measures other than the current and expanded car bans:

1.       LGUs should consider removing the monopoly route system for tricycles, allow jeepneys and air-con vans to serve these routes as well.

2.       Build more bridges across Pasig River.

3.       Simplify and reduce the cost of registering air-con vans, encourage corporate branding and competition among them.

4.       Simplify the approval of new or expanded MRT/LRT lines.

There are many other proposals from many sectors. So long as they do not advocate more restrictions, more prohibitions by governments on people to use their own cars, such proposals can be worth supporting.

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See also:
Fat-Free Econ 14: Traffic, Car-pooling and LTFRB, June 21, 2012
Transport Econ 7: Encourage Branding, Deregulate Fares of Taxi, January 02, 2013  
Transport Econ 8: Removing MRT and LRT Fare Subsidy, March 08, 2013 
Transport Econ 9: MMDA Bureaucratism, May 27, 2013

Transport Econ 8: Removing MRT and LRT Fare Subsidy

The MRT line from North Avenue in QC to Taft Avenue in Pasay is the most congested among the three urban train systems in Metro Manila. At rush hours, it is relatively common that passengers in midway stations are “bypassed” once, twice or even thrice and wait for the next train as the trains are so packed with so many passengers.

  

There is a new program by the Department of Transportation and Communications (DOTC) to help decongest the trains. They are fielding buses that will pick up passengers at North Avenue station only and stop only at the last three stations -- Ayala, Magallanes and Taft Avenue. The fare is the same, just P15. The fare in normal air-con buses for this route is at least P35. The government says this is a temporary measure until they are able to get new trains.

Ok, what is wrong with this scheme? Or the MRT/LRT fare subsidy in the first place?

One, government gives fare subsidy to commuters of Metro Manila, but not to commuters in other parts of the country, say the cities in Davao, Cebu, Bacolod, Iloilo, Baguio, Tuguegarao. This is another example of Manila favoritism by the Manila-based government.  Thus, it contributes to tax distortion. Taxpayers from many cities and provinces in the country who do not benefit from the subsidized train fare contribute to the fund.

Two,  it promotes bus line cronyism. Give handsome subsidies to the favored bus lines while slapping lots of bureaucracies, fees and penalties to other bus lines taking the same route. Thus, it distorts bus line competition.

Three, it distorts or defeats moves to decongest Metro Manila. The implicit message of the MRT/LRT subsidy and other government programs is this: "You in the provinces, come to Manila. We give MRT and LRT fare subsidy, housing subsidy and free relocation, lots of government hospitals and PhilHealth cards, etc."

Most subsidies violate the rule of law. The latter says the law (like tax-funded subsidies) should apply to all, no one is exempted and no one can grant an exception. So if government should subsidize commuters in M. Maninla, it should also subsidize commuters nationwide, and this is impractical and impossible.  In most cases, government itself is the single biggest violator of the rule of law. We are not talking about the laws against corruption and plunder, robbery and murder.

Pilipinas Forum 2: Exchanges on MRT

This was posted in inq7.net last February 5, 2001 that I submitted to then EIC Joel Pinaroc. As usual, get your favorite food and drinks while enjoying the debate and exchanges below.
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Exchanges on the MRT

Integration is something they forgot in building the MRT. (Or if they did remember it, they sure have a bad way of implementing it). The Ortigas station is located in the wrong place, away from Ortigas Avenue (where there is a lot of people). There isn't even any station easily serving the gate 5 area. Anyone who has traveled through the area coming from Sta. Mesa and Cainta will tell you that these two areas are where many commuters pass. So this part of the MRT does not integrate well into the flow of people. I've walked all the way from Ortigas-EDSA to the MRT station and it is not a pleasant thing (smoke, heat, lack of walkway).

And then there's the Ayala and Buendia stations, which do not provide any efficient, time-based access to the rest of the Makati area.

For people to use the MRT, especially those with cars, the system must allow them to plan the trip to their destination with a reliable time limit. In the case of the MRT, you can plan up to the Buendia or Ayala station, but when you get there, how long it will take you to get to your ultimate destination within the Ayala-Buendia area is still unsure. There is no "feeder route" which is reliable in the context of the amount of time. It may be difficult to take a taxi (ayaw nila kasi traffic), it may be raining (saan ka sisilong?), the FX may take time to fill up and you don't even know its route, etc. In other words, the transport system does not provide the regularity that a commuter needs.

This is why many people (especially those with cars) are still reluctant to use the MRT--because the system to get you to an Ayala destination is not efficient. The MRT may be, but the system is not. This is a disincentive for a middle-class consumer with his or her own car.

It is in the nature of economics that the system will correct itself in time. Efficient, reliable, predictable, and cost-effective feeder systems may develop. But right now, we the taxpayers are subsidizing the MRT by about P2 billion a year--money that could have been better spent for those who really need it (education, healthcare, environment).

-- Bobby Herrera-Lim

For some reasons, I still think that those who constructed the MRT are ingenious. Inspite of all the flaws that you have mentioned it is still there. It is the only rail system that I've seen intermingling with those flyovers. I have yet to see something like that. Anywhere I went here in the US, maybe even in Hong Kong, the routes of the trains are usually different from the buses or from the main flow of traffic.

The park and ride- they should have big, secure parking spaces allotted for this. They usually have it in strategic points. Not only in one area. The routes of the buses and the railways are always complementary.

-- Genes Marquez

Can I offer an alternative view? The MRT III Project is not a transportation project. It is, above all else, a real estate project.

You will note that the current MRT consortium, the so-called private sector group, is composed of property companies (Fil-Estate, Ayala Land, Anglo-Phil, DBH, Allante, etc.) and firms which have interests in property (Ramcar, Greenfield (Unilab), etc.) None are involved, even somewhat involved, in transportation. The concept is simple - the success of the development of property is dependent on attracting the market or the people traffic. Hence, there was no science to the selection of location of the stations -- the trains will stop at areas where any one of the consortium members' (a) mall; (b) property development; or (c) property owned for future development or sale, are located. The engineers may argue to no avail, that there were too many stations or too-close stations for the trains to run efficiently. The mandate given by the owners of the project was for the technical group to engineer around the selected sites.

Finally, the MRT project is tied-up with such sweeteners as: (a) a grant by the government to the MRT consortium of effective ownership (50+25-year lease) of
the North Triangle, one of the few remaining large and contiguous prime properties in Metro Manila; and (b) the ability to "create" real estate along EDSA through the design of the MRT stations. The rail project is the monster that guards the treasure.

There should be no illusion that the private sector undertook the project with a view of fulfilling its "social responsibility". Right now, that seems to be the accidental result of the prime objective of the project sponsors -- to undertake only projects which yield economic returns and unlock synergies necessary to compete and make money. I say, "right now" and "accidental" because in the future, if things deteriorate and the commercial return expectations of the project sponsors are threatened (they're fully guaranteed by the government, come-hell-or-high-water), then you will see that it can get ugly both for the government and for the commuters and yes, for Juan.

-- Gina

Expats View 1: Some Drastic Government Moves

One of my favorite newspaper columnists is Peter Wallace, an Australian businessman who has been living and working here for more than three decades now. Peter writes a weekly column in Manila Standard.

Today, Peter's article is entitled, "A real to-do list",
http://www.manilastandardtoday.com/insideOpinion.htm?f=/2010/august/6/peterwallace.isx&d=/2010/august/6

Peter suggested the following to President Aquino:

1. Legalize jueteng you’ll never stop it. Bingo is legal, casinos are legal, why is just one form not? Legalize it, you can control it. Legalize it and the crime syndicates go bankrupt.

2. Abolish the National Food Authority use conditional cash transfers. With a debt of P177 billion, it’s a proven failure. Give the poor the cash to buy from a competitive market.

3. Mandate that all pork barrel funds should go to education and health.

4. Revive family planning and sex education in school ask the United States to provide free condoms again.

5. Add carriages to MRT-3 and reduce the number of buses on EDSA by half, controlled into the right-hand lane only LRT-7 will help greatly here.

6. Make English the primary language of learning but retain Filipino as a secondary language.

7. Negotiate power plants we know the cost. We need power NOW. Declare a state of emergency if necessary, because it is an emergency.

8. Order transparency in government a law can follow. All President Noynoy Aquino has to do is order all departments to open their books to anyone who asks.

9. Reduce cigarette taxes to one tier or, reluctantly, two the currently mangled law is depriving the government of billions. we need high taxes on cigarettes, they kill.

10. Increase VAT to 15 percent and greatly reduce personal income tax for salaries below P20,000 per month. I’d far rather pay tax when I spend than when I earn.

11. Scrap the idea of receipts and taxes for sari-sari stores they can come later, if at all. Let those with marginal incomes also maximize the use of what little they get.

12. Create a Department of Information and Communications Technology it’s going to be the biggest sector.

13. Split the Department of Environment and Natural Resources you can’t promote and regulate in the same office. The conflict this develops is emphasized by what’s happening in Tampakan now.

14. Scrap the Comprehensive Agrarian Reform program, 21 years was long enough it hasn’t worked and you need plantations, economies of scale in agriculture.

15. Resolve the Ninoy Aquino International Airport mess within 90 days, not 91 either through a final court decision or a unilateral decision by the Philippine government to just pay a fair price.
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Of the 15 items above, I support all except the following:

12. Create the DICT. It's another bureaucracy in the government, the BPO and ICT sectors grew even without a department in the past. Most new regulation on ICT becomes outdated within a year or less as that sector is very dynamic.

I haven't thought much on no. 4, revive family planning and sex education in public schools.

Transport Econ 1: Public Transpo Regulation

In many countries around the world, public land transportation is either a government monopoly or privately-run but highly regulated. The logic of government monopolizing public land transportation (or air and sea transport or health care or education, etc.) is along socialist and central planning philosophy: prevent “chaos” by the free market and unregulated competition. Thus, government will plan which roads and places will have public buses and/or trains and which ones won’t have; which time of the day the buses/trains will ply, and which time they won’t be available; how much will be charged to passengers as fares and how much to be charged to taxpayers as subsidies to those buses; and so on.

In the Philippines, all those buses, jeepneys, vans and tricycles are not government-owned and controlled. They are privately-owned but government-regulated, so competition is often limited. Here’s how.

One, routes are regulated and certain sectoral monopolies (like tricycles or jeepneys) are created by giving certain routes exclusively for them. Passengers on the monopolized routes have no other option to take other public vehicles unless they take a taxi which is more expensive.

The effect of route regulation and monopolization is this: Some people who live about 20 or more kilometers from say, Makati, take 3 or 4 rides: (a) tricycle from their village or barangay to the main road, (b) jeepney or van or bus to the train station; (c) train (MRT or LRT); then (d) jeepney or van again to designated stops near their offices or schools. Tricycles are monopolies created by the municipal or city government; train is a “natural monopoly” and some routes are often monopolize by jeepneys, like the Ayala-Washington route.

The various transfers alone from tricycle to jeep or van to train to jeep again are already very inconvenient; total fares are relatively high too, and many of those tricycles and jeepneys that were assured route monopolies are ugly if not dilapidated and notorious smoke belchers. They also tend to squeeze passengers, like forcing a 16-seater jeepney to pack 18 passengers. These inconvenience force many people to buy and use their cars from their house to their office, or school for their children.

Two, getting a license or franchise to run and operate public vehicles is highly regulated, bureaucratic and costly. Some businessmen, possibly friends and buddies of those in franchising regulatory agency, get a franchise, others don’t. So some of those in the latter group operate illegally, the so-called “colorum” vehicles.

Three, fares are regulated, like minimum fares for tricycles, jeepneys, taxis, vans and buses. Fare regulation discourages some private bus and taxi operators to introduce newer and more convenient units because there is a cap or maximum fare that they can charge passengers. Some bus operators do introduce newer buses but they have to take in as many passengers as possible to maximize revenues, which results in over-crowding of these new bus units, which discourages some people to ride those new buses and force them again to use their cars or motorbikes.

If fares are deregulated, some bus lines can charge higher fares so that they can give better service to their passengers (like non-crowded and comfortable buses), then many of those car-riding people may be encouraged to leave their cars behind and take the buses. Those bus lines cannot “over-charge” their passengers because the latter have the option to take other bus lines that are cheaper, or ride their cars or motorcycles. Budget-conscious or poorer passengers will patronize cheaper bus lines which may have older and non-air-con units, and tend to pack their buses with squeezing passengers.

Fare regulation in taxis work against passengers. Petroleum prices have increased several times over the last few months yet the fares have remained unchanged, because the government’s franchising and regulatory board has not approved any fare hike yet. One can conclude that fare-setting is not a function of the price of petroleum products and other operating costs, but of approval by the government regulatory office. That is, fare-setting has become politicized, something that should not be done. So some taxi operators do not maintain their units well to save on operating costs, and their taxis are ugly and dilapidated. Also, some taxi drivers always ask for “additional charge” on top of the fare reflected in their taxi meter to reflect the higher cost of gasoline, which makes taxi fares less transparent and subject to arbitrary setting by some taxi drivers. If the passengers will not agree with this, the taxi drivers can opt not to take them in. And so some people are again forced to bring their cars to avoid “over-charging” taxi drivers.

It is evident that it is the government – through its various regulation and monopolization plicies – that force many people to buy and use their cars more frequently, which worsens traffic congestion, which increases gas emissions, and which worsens global warming situation. And government says it wants to “fight” global warming too, something that is improbable because all it does is resort to more regulation, if not more monopolization and more taxation.

Public transportation is essentially a “contract” between passengers and public utility operators and drivers. Those that offer bad service (including frequent incidence of passenger hold-up) or unreasonable fares will lose their passengers and they will go bankrupt naturally. Those that offer good and safe service even at higher fares will keep their passengers and their business will naturally expand.

Let there be less government monopolization, regulation and intervention, and more enterprise competition, in public land transportation.