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The Philippine government and the new phase of public transport

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By Denise A. Valdez

WITH SOCIAL MEDIA brimming with complaints from the riding public, the emergence of ride-hailing apps seemed like a sound solution to the perennial traffic problem. Transport Network Companies, or TNCs, offered services that allowed commuters to use their smart phones to get a ride, be picked up from their location, travel point-to-point and pay a reasonable amount for the service.

But the government says it still has a lot to learn about the technology to properly regulate it.

“The Philippine market was unwelcoming.” — Grab country head Brian P. Cu

“TNCs have found a niche addressing concerns of the riding public by making it easier for them to book a ride while using another sector of society: private car users,” said Land Transportation Franchising and Regulatory Board (LTFRB) board member Aileen Lourdes A. Lizada. “It’s an innovation using technology, and we say we welcome it.”

Previously, the game was dominated by Uber and Grab: the former hailing from United States and the latter from Malaysia.

Recalling the earlier days of Grab Philippines, Grab country head Brian P. Cu said: “the Philippine market was unwelcoming.”

He added, “No one believed in that segment. Everyone had their preconceived notions about how a taxi driver is, how he would behave. All those were negative, so no one wanted to take a bet on improving the lives of this segment.”

ISSUES
Ms. Lizada said LTFRB didn’t initially have policies for TNCs and their transport network vehicle service (TNVS). “Walang proper MCs (memorandum circulars), walang proper guidelines, and we could not understand ano ba talaga yung TNC [There were no proper memorandum circulars, no proper guidelines, and we could not understand what TNCs really were],” she said.

She added, “There was no regulation. It was a cat-and-mouse chase. There was no order. There was no enforcement. There was nothing at all. It was just TNCs and TNVS doing their own thing.”

But the public held on their support for the transportation alternative. When Uber and Grab faced issues with the government in 2017, its users actively campaigned on social media in defense of TNCs, expressing their support for the technology and airing their frustrations on its closest rival — taxis.

For Jose Regin F. Regidor of the University of the Philippines National Center for Transportation Studies (UP NCTS), the growth of TNCs and its eventual issue with the government could be traced to the traditional taxi system.

“We won’t be having this conversation if LTFRB did its job and influenced the taxi industry to improve its services,” he said. “I thought they didn’t do their homework in terms of reading and studying what ride sharing was all about in the first place. It seems they reacted as if they were being protective of the taxi industry.”

Ms. Lizada admits the government is only starting to learn how to manage the technology. “This is new. We are all learning from this experience. We’re not going to say we need to be 100% foolproof because it deals with another component — IT, technology. That’s our challenge,” she said.

She noted the LTFRB has no division whatsoever that is “high-tech enough” to equip the agency with the necessary knowledge to easily know what to do. “That means to say we need to have again plantilia positions for this. That means to say we need budgeting from the Department of Budget and Management to fund a new division, the IT division, to look into all of this. It’s not yet in the horizon,” Ms. Lizada said.

Grab’s Mr. Cu said they see the efforts of the government over the past two years. “When the new administration came in, they wanted to understand us a bit more, and they implemented certain measures which hampered the growth of the industry, but also, I think gave a bit of clarity to take away some of the uncertainty,” he said.

NEW TNCS
In May, the LTFRB allowed for the entry of five new TNCs — three that follow a TNVS framework, meaning they fare only private cars; and two that have a taxi-only fleet. The three that offer TNVS services are Hype, Go Lag and Owto, and the taxi-based ones are Hirna and Micab.

These new TNCs are all local companies looking to compete with Grab after it has dominated the industry when it bought the Southeast Asia operations of Uber in March.

The buyout, according to the Philippine Competition Commission (PCC), resulted in a virtual monopoly of the TNC industry. The antitrust agency maintained this stance even after the entry of local players.

Although they are optimistic, the new TNCs admit they are also worried they may have a difficulty competing in the market.

The chief executive officer (CEO) of Micab, Eddie F. Ybañez, said the exit of Uber left a vacuum in the market because there are still differences in its operations versus Grab which the public supported.

“It’s an opportunity for us. The thing is, we’re not as heavily funded as them. So in terms of logistics, hindi siya ganun kabilis [it wouldn’t be as easy],” he said.

For Owto’s CEO, Joel M. Gayod, the possible entry of more foreign ride-hailing giants is a point of concern. He said the government should give them a fighting chance first before letting in big companies.

“I hope LTFRB will see to it na mag-fly muna itong mga local TNC before they allow other companies to come in [I hope the LTFRB will see to it that the local TNCs fly first before they allow other companies to come in], he said.

Hirna CEO Francisco “Coco” Mauricio shares the same thoughts. “The government can best prepare for the entry of TNCs by having regulations and policies that can make it a healthier and fair business environment. Meaning they really have to place the new TNCs in an environment from which they can prosper instead of being eaten alive,” he said.

But Mr. Regidor of UP NCTS believes that TNCs may not be that huge of a threat to public transportation. “For the commuter, ang number one concern niya is not necessarily comfort and convenience eh. Fare [For the commuter, the number one concern is not necessarily comfort and convenience. It’s the fare],” he said.

“In the next few years, mass transit for Metro Manila will improve. MRT-7, Line 2 extension, Line 1 extension, Subway. Dadami options ng mga tao. Aside from costs, travel time susunod [The people will have more options. Aside from costs, travel time would be the public’s next priority],” he added.

The CEOs of taxi-based TNCs Micab and Hirna agree that the existing transport denominations are enough, as road decongestion remains a problem in the country.

“The reason why Micab is created is to optimize the existing public utility vehicles with our infrastructure. As much as possible, we don’t want to add more cars on the road, because ang liit ng kalsada natin [because our roads are narrow,” Mr. Ybañez said.

Hirna’s Mr. Mauricio said the same. “I’m actually helping public transportation not to become obsolete.

I think the taxi operators realize that. They need to have ride-hailing technology in order to make using taxi much more convenient and much safer, much more reliable, so they won’t become obsolete. As long as the taxi operators do their part in embracing technology,” he noted.

Mr. Gayod of Owto also thinks the use of technology for transportation is necessary to survive nowadays. “Everything now are in this platform. If you will notice, all sectors of the society are going into this kind of technology. So I wouldn’t be surprised if public utility vehicles become obsolete, unless they cope, they adjust,” he said.

NOT A COMPETITOR
But Grab’s Mr. Cu insists that they are not trying to compete with mass transit. Instead, what they want is for people to find the convenience of using a Grab car to get into the inner roads.

“Used correctly, ride-hailing could usher you into a new phase of transport. How you share cars, how you manage traffic, how you build infrastructure, how you commute, how you create income opportunities. Lahat talagang kaya niyang gawin [It can do anything],” he said.

As for the government, LTFRB thinks the future is bright for the ride-hailing technology. Despite all the mess it had recently with regards regulating the transportation innovation, Ms. Lizada said the fact that Congress is crafting legislation for it means they also see its potential.

The convenience it brings to the riding public, she said, is “interesting.”

“Let’s see how it will play out in the near future,” Ms. Lizada noted.