Franchise of jeepneys only a privilege, DOTr says

MANILA, Philippines — The Department of Transportation on Tuesday reiterated the need to modernize public utility vehicles.

At the first Roads and Traffic Expo in the Philippines, the DOTr lamented how jeepney operators think they own their franchise.

“Unfortunately, a lot of people, a lot of jeepney operators think that their franchise is their right—that they own the franchise,” Mark de Leon, DOTr OIC undersecretary for Road Transport and Infrastructure, said in his keynote speech at the expo.

“We would say to them: their franchise is only their privilege,” he added.

De Leon made the remark a day after major transport groups held a nationwide strike to protest the government’s plan to phase out outdated jeepneys by July 2020.

'Transport operators should be financially capable'

The DOTr official said public transportation operators should be financially capable before they could be awarded franchise.

“One of the requirements of having a franchise is that you operators, public transport operators, should have financial capability,” De Leon said.

“If you’re not financially capable you should not be doing public transportation business. Don’t let people suffer because you are running these dilapidated jeepneys,” he added.

De Leon said there is truly a need to modernize public utility vehicles so it would be "environment-friendly, guided by technology, manned by disciplined and law-abiding drivers, and using rationalized routes."

He said that the Clean Air Act has been in existence since 1999 but the government is only pushing for the compliance to road worthiness standards now. This includes the shift of vehicles to Euro 4 compliant diesel engines.

'PUV modernization program comprehensive'

According to De Leon, the government’s modernization program for the PUV is very comprehensive.

“It’s so comprehensive that we want to rationalize the routes. We want to study how many jeepneys there should be plying on our streets,” the transport official said.

De Leon said that some drivers earn low income because there are several jeepneys in one route.

“So, it’s the tragedy of the commons. They are competing against each other. So that’s why the plan of the government is that all of you operators [should] consolidate so that all you will have economies of scale in your operations,” he said.

As of September 2019, the DOTr said there are 415 authorized routes with 8,528 units authorized to travel. The total operational units are 3,019.

The transport official also stressed that the government is providing financial assistance to PUV operators to help them purchase modern and compliant jeepneys.

'Why can buses comply with modernization and jeeps cannot?'

In his speech, De Leon compared how bus operators managed to comply without financial assistance.

The government’s plan to phase out jeepneys is criticized for supposedly being “anti-poor.”

“The buses that you see in Metro Manila, they modernized into low floor entry buses—compliant buses. Not a single peso, not a single centavo is being given to them by the government. They comply to the government rules, government regulations but these jeepney operators we already provide them financing with Land Bank and DBP (Development Bank of the Philippines),” De Leon said.

De Leon said they call the financial assistance the “5,6,7 formula” which is a 5% downpayment, 6% interest rate and seven years to pay “to make their amortization very low [and] very affordable.”

“We’re also providing them P80,000 subsidy and they still say it’s not enough,” he added.

The transport official urged public transport operators to form cooperatives so that they could have perks such as value added tax discounts and be able to buy modern jeepneys in bulks.

The DOTr said there are 988 transport cooperatives already accredited by the Office of the Transport Cooperatives.

At the Roads and Traffic expo, Philstar.com surveyed modernized jeepney prototypes. These modern jeepneys manufactured by various firms such as Forland, Isuzu, Gtecnicaequipment and Hyundai, among others range from P1.2 million to P2.2 million.

A representative of Forland told Philstar.com that they are charging 10% downpayment for their Persons with Disability-friendly modern jeepneys. Other manufacturers interviewed, on the other hand, said downpayments can be negotiable especially through cooperatives.

'Phaseout of jeepneys to push through'

Despite the opposition to the phase out of jeepneys, the DOTr said it would push through with its plan to modernize jeepneys by July 2020.

“By July 2020, the plan is if you don’t want to modernize, we will open the routes to willing operators who will want to run your route who are willing to modernize your route,” De Leon said.

As of September 2019, the DOTr said 575 units were provided with loan assistance amounting to P1 billion and loan applications amounting to P2.5 billion.