Transcript Presentation

PHILIPPINES: Diagnostic Country
Report
Current Status and Plans
STAPLE FOODS
Analysis of sectoral reforms
• The rice sector is regulated by the National Food
Authority under a highly interventionist regime
aimed at food security and price stabilization.
• Since 1995, the most significant reform in import
policy was its compliance with WTO rules and
decisions.
• Other competition regulation is guided by
relevant provisions in the Constitution of 1987
and the Price Act of 1991.
Research hypotheses
1. The rice market at the level of paddy trading and
milled rice retailing is highly competitive.
2. There is some deviation from competitive
behavior at the wholesale level for large urban
center (Metro Manila).
3. Protection of domestic suppliers from foreign
suppliers presents a significant deadweight loss
to the Philippine economy.
4. NFA’s price stabilization measures has been
effectively implemented and helped to keep
price of rice low at the consumer end.
Secondary data and preliminary
findings
• To address the research questions, the research team looked at:
– Historical trends in the rice industry (e.g. rice production, yield, area,
volume of imports, and prices).
– Past research studies (which were reviewed to create a clearer picture
of the rice marketing chain).
• In addition, competitions along the chain were assessed:
– Past research on rice industry shows a high degree of competition in
the domestic market, from paddy production to retail marketing.
– Rather than "too few" traders, marketing inefficiency in the Philippines
manifests in too many traders.
– NFA rice distribution has been effective in keeping domestic retail
prices stable. However, the country's protectionist policy prohibits
competition with foreign suppliers, keeping domestic prices
significantly above retail prices.
Primary data and types of analysis
• Rapid appraisal of the state of competition in the rice marketing chain
– The study adopts the rapid appraisal method based on interviews of key
informants. Informants will be selected from each of the nodes of the value
chain, beginning at retail market in Manila, tracing it back to the biggest riceproducing province in the country, Central Luzon, 3 hours north of Manila by
car.
• Ex-ante analysis of free competition with imports
– The study proposes to develop a spreadsheet model for economic surplus
analysis, called the Total Welfare Impact Simulator for Trade (TWIST). The
advantage of the tool is that it permits annually updated figures for calculating
changes in producer surplus, consumer surplus, deadweight burden, quota
rent, and tax revenue, given new baseline data (and possibly elasticities of
demand and supply).
– The model will be applied to 2012 data to analyze changes in economic
surplus and its components due to the following scenarios: 1) repeal of QR
and shift to free trade; 2) restriction of imports to 186,000 tons (the import
level of 2013); and 3) repeal of the QR and adoption of the ASEAN Free Trade
tariff (35%).
Primary data and types of analysis
• Perception Survey
– To align the Philippine DCR with that of the other
countries undertaking the study and gather
primary data for the consumer welfare analysis, a
perception survey will be implemented. The
survey instrument will follow the CREW
questionnaire for all countries.
Bus Transport Sector in
the Philippines
{

What is the state of competition in the bus
transport sector?

What is the regulatory and institutional
framework governing bus transport? How do
they impact competition in the market?

What competition reforms have been
implemented? How did the reforms affect:


the market structure?
the welfare of consumers and producers?
Research Questions

Bus transportation – governed by the DOTC through its
line agencies (LTFRB, LTO)





LTFRB – regulation of entry & exit, bus fares
LTO – implementation of LTFRB & other transport policies
MMDA, PNP, LGUs – other agencies involved in
implementation of traffic laws & transport regulations
NEDA, DPWH – involved in planning and development of
road infrastructure & development policies
Regulatory framework – complicated regime where
regulation and enforcement is shared by several
agencies
Regulatory Framework in
Bus Transport

DOTC Department Order No. 92-587 (1992)


Provided the framework for liberalization reform in
transportation including entry & exit, route-setting
mechanisms, and fare regulation & adjustment
procedures
Reforms imposing moratorium on issuance of new
franchises or certificate of public conveyance
(CPCs)


Moratorium on issuance of CPCs for provincial
buses (2000)
MC 2003-028- nationwide moratorium on new
CPCs (2003)
Reforms in bus transport

Secondary Data
Gathered

Past research and data
on road transportation


Previous literature and
documentation on
policy reforms in the
bus transport sector
Data on operators and
number of buses
(LTFRB)
Number of operators and buses,
Manila Routes
Number of Number of
Route
buses
Numberoperators
of
Number
Manila EDSA Route
266
3,711
operators 128of buses
Route
Manila Non-EDSA Route
1,632
Manila-Provincial
North
Manila EDSA Route
266
3,711
Bound
371
3,684
Manila Non-EDSA
Route South128
1,632
Manila-Provincial
BoundNorth
357
3,568
Manila-Provincial
TOTAL
1,122
12,595
Bound
371
Study SouthArea
Manila-Provincial
Alabang-Fairview
Bound
Baclaran-Novaliches
TOTAL
Manila-Baguio
357
1,122
Manila-Lucena
TOTAL
Study Area
Alabang-Fairview
Baclaran-Novaliches
Manila-Baguio
Manila-Lucena
TOTAL
21
17
10
10
58
Average
no. of
bus/operat
Average no.
or
of
14
bus/operator
13
3,684
21
17
10
10
58
341
3,568
171
12,595
218
132
862
341
171
218
132
862
Analysis of Policy Reform
10
10
11
16
10
22
13
15
14
13
10
10
11
16
10
22
13
15


The bus transport sector evolved from a highly regulated
and concentrated market in the 1970s to a liberalized
market composed primarily of small operators
The market operates under a highly complicated regime
where regulation and enforcement is shared by several
agencies resulting to implementation failures & regulatory
capture



Operation of illegal (“colorum”) buses
Proliferation of “kabit” system where a bus owner enters the
market through arrangement with an operator with
established franchise
Market inefficiency manifests in too many operators and
buses resulting to traffic congestion
Preliminary Findings

Secondary Data




Price data, fare changes
Time series data on market structure
Data on substitute modes of transportation (MRT,
LRT fares, ridership & cost of operation)
Primary Data


FGD
Perception Survey
Next Steps: Data for Further
Analysis


Market Structure Analysis: Herfindahl-Hirshman
Index
Producer and Consumer Welfare Analysis


Qualitative Analysis
Economic surplus analysis using TWIST if data
on demand and supply elasticities can be
constructed
Next Steps: Methods for
Further Analysis
Appendix Slides
Metro
Manila Bus
Route
Network
LRT 1
Bus
MRT 3
AUVs
Jeepneys
LRT 2
Tricycles
Public transportation in the
Philippines
Transportation Planning &
Development
Infrastructure
Planning &
Development
Transport Planning & Regulation
DOTC
Regulatory
Policy Setting
LTFRB
NEDA
Implementation
LTO
MMDA
PNP
LGUs
Regulatory Framework in the Bus
Transport Sector
DPWH