Transcript Rijit Sengupta, Director, CUTS International

Bus Transport Sector in
the Philippines
{
CUTS-CREW
Philippine Institute for Development Studies
Philippines
Population
92,337,852
Land Area (square kilometer)
Population Density (people/sq km)
Poverty Incidence (2009)
Per Capita GDP (2011; current US$)
Passenger cars (2010; per 1,000
people)
Selected Statistics, Philippines
343,448
269
20.90%
2,370
9
LRT 1
Bus
MRT 3
AUVs
Jeepneys
LRT 2
Tricycles
Public transportation in the
Philippines
Transport and
Storage
a. Land
a. Water
a. Air
a. Storage &
services
incidental to
transport
Total
2008
2009
2010
2011
2012*
92,311
92,835
89,331
93,051
100,675
13,816
11,059
12,337
13,781
15,453
16,516
16,418
17,978
18,592
19,120
32,841
31,711
34,443
39,673
43,503
165,097
178,750
155,484 152,023 154,089
Gross Value Added in Transportation,
2008-2012 (million pesos, 2000 prices)
Source: NSCB, PSY 2013
Percentage of Motor Vehicles, by Type
(2008-2013) Source: LTO, NSCB PSY
2013
Year
Number
of PUBs
Total Number of
Motor Vehicles
2008
49,381
2,181,330
2009
60,488
2,265,643
2010
55,674
2,682,643
2011
55,540
2,457,874
2012
40,787
2,216,945
% share of PUBs to
Total Number of
Vehicles
2.3%
2.7%
2.1%
2.3%
1.8%
Number of PUBs traversing Metro Manila
(2008-2012) Source: MMDA

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
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

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
Number of operators and buses, Manila Routes
Route
Number of
operators
Number of
buses
Route
Manila EDSA Route
Manila Non-EDSA Route
Manila-Provincial North
Bound
Manila-Provincial SouthBound
TOTAL
Number of
operators
266
128
Number of
Average
no. of
bus/operat
or
14
13
Average
buses no. of
3,711
bus/operator
1,632
Manila EDSA Route
266
3,711
371
3,684
10
14
Manila Non-EDSA Route
Manila-Provincial North
Bound
Manila-Provincial SouthBound
TOTAL
128
1,632
357
1,122
3,568
12,595
10
13
11
3,684
21
17
10
10
58
341
171
218
132
862
16
10
Study Area
Alabang-Fairview
371
Baclaran-Novaliches
Manila-Baguio
Manila-Lucena
TOTAL
10
22
13
15
357
1,122
3,568
12,595
Study Area
Alabang-Fairview
21
341
16
Baclaran-Novaliches
Manila-Baguio
Manila-Lucena
TOTAL
17
7
8
58
171
240
132
862
10
34
17
15
Analysis of Policy Reform
10
11


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
Findings

Herfindahl-Hirschman Index (HHI)


2
𝐻= 𝑁
𝑖=1 𝑠𝑖 , where si is the market share of firm
i in the route, and N is the number of bus
operators. The higher the HHI is compared to
1/N, the less competitive is the bus market in the
route
Suggested classification:
1
𝐻𝐻𝐼
≤ # 𝑜𝑓 𝑜𝑝𝑒𝑟𝑎𝑡𝑜𝑟𝑠

Substantial competition:

Mild competition: 1.4<𝐻𝐻𝐼 < # 𝑜𝑓 𝑜𝑝𝑒𝑟𝑎𝑡𝑜𝑟𝑠
1
Market Structure Indicator
Route
HHI
1/HHI
(a)
Number of
operators
(b)
Level of
competiti
on
AlabangFairview
0.087
11.5
21
substantial
BaclaranNovaliches
0.070
14.3
17
substantial
Manila-Lucena
0.220
4.5
8
substantial
Manila-Baguio
0.405
2.5
7
substantial
Market Structure of the Bus Transport
Sector, Study Area

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

CUTS-CREW matrix
Next Steps: Data for Further
Analysis
Appendix Slides
Metro
Manila Bus
Route
Network