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Transportation Regulation: The LTFRB versus Free Enterprise

Does the LTFRB hotline for complaints even work for the benefit of passengers? I doubt it.

Public transportation in Metro Manila is horrid; you do not have to look far. Tricycles and jeepneys are the crudest pieces of transport machinery you will ever ride. Their construction is a manifestation of not just the creativity and ingenuity of the maker given the unideal resources and the practical design but also the utter prioritization of practicality over safety and comfort. The provincial buses are more respectable and comfortable but many city buses don’t have these traits for they are usually overloaded with passengers and their windows are wide open for the circulation of all that filthy urban air. And the white taxis are treacherous because the drivers might murder, kidnap, molest, extort, rape, deceive, deny you or all of the above. And let’s not even start describing the driving techniques of public utility vehicle drivers because they are just simply unsafe and that is an understatement. And these are vehicles and drivers that are usually “regulated” by the Land Transportation Franchising and Regulatory Board (LTFRB).

The Alternatives

It should be no surprise why Uber and Grab are appealing to Filipino commuters when it comes to transportation services. In the face of these persistent and brutal transport conditions, they are willing to find alternatives for better quality and actual security. Thanks to the internet and app technology commuters have the liberty on their smartphones, through these two enterprises, to choose their desired destination, driver, vehicle of transport and the price they are willing to pay. Obviously this is more efficient than hailing random cabs and asking drivers if they are willing to go that far or to that place given the traffic volume and the number of passengers only to be denied in the end. But to be fair I will not sugarcoat these two enterprises for they have their flaws in the perspective of consumers.

Surge pricing from these businesses is a major complaint of consumers: fares that shoot up higher than the ones they are used to. According to the service providers, the rationale behind surge pricing is to give a larger incentive to their drivers to go out in search of passengers during peak hours of transportation or when undesirable traffic conditions exist. A well-founded justification to be fair but this has not stopped the LTFRB from trying to regulate their prices for the well-being of consumers. Another annoyance is the presence of sexually aroused drivers who end up intruding on the sexual dignity of passengers verbally or even physically. Testimonies on this issue are very common on social media with the perpetrator’s identity and vehicle publicized for all to see and avoid. Apparently, social media and consumer feedback in the apps that allow clients to include ratings and concise passenger experiences are better outlets for consumer sentiment than any LTFRB hotline.


However, this did not stop the LTFRB from pressing its coercive thumb against Uber and Grab. Back in March, the agency reminded vehicle owners of Uber and Grab to register their vehicles in order to reduce the number of “colorum” or illegal public transport vehicles on the streets. Given the illegality of the operations of these free enterprises, the agency has proceeded to fine each for P5-million just recently in July but that was not enough of a punishment. The agency further proceeded to end the accreditation of new drivers when it claimed that Uber was still hiring thousands of drivers and soon publicly declared that these enterprises should take their business elsewhere given many of their vehicles are not registered with the agency.

Strangely, the LTFRB relented and proceeded to fast-track the renewal of thousands of expired permits for drivers and vehicles under Grab and Uber but warned that it will still proceed to arrest transport drivers who operate without issued permits. In response, the two enterprises proceeded to appeal their alleged colorum violations in order to lift the apprehension order against their unregistered drivers. But hope for free enterprise turned to frustration with the government when the agency added insult to injury by actually and accidentally losing the accreditation papers of both Uber and Grab in the agency’s own building even if there were many copies of the documents given to the agency’s high-ranking officials.

Bureaucracy: A Barrier To Entry

This episode of government regulation versus free enterprise has to be the most intrusive and ridiculous one so far. Here is an agency that is not just ignorant and skeptical of the successful business models of Uber and Grab but also tied down to enforcing laws that do not adapt to the continuously changing economic circumstances. The LTFRB is forcing itself on free enterprises that generate more value for many Filipino commuters than the transportation bureaucracy itself and social media can attest to that.

There have been rants on the internet about how LTFRB is incompetent in protecting passenger welfare. A woman was rejected by five white taxis she hailed in a row and she caught all these experiences on her smartphone. A netizen has posted an album of memes portraying all of her negative experiences with white taxi drivers: the excuses they make to reject a potential passenger and the deceptions that they perform to earn more than what their meters showed. Another social media user posted about how the LTFRB has not stopped a smoke-belching bus from operating on a major transportation route. And the most common of all: commuters complaining about the overcrowding of city buses beyond maximum capacity and decreasing comfort and security. Does the LTFRB hotline for complaints even work for the benefit of passengers? I doubt it.

So given the ineffectiveness of the agency in reaching its goals for the consumers they are supposed to help, especially when it comes to regulating white taxis, why should the LTFRB mandate that the vehicles operating under Uber and Grab be forced to register with the agency or else be arrested and fined? What difference does the issuance of the document make for potential passengers? Is value generated? No. In fact, value is taken by the state as it is spent by providers on complying with LTFRB regulations and that is both long and costly.

Free Enterprise as The Way Out

In this episode, Uber and Grab generate more value for many Filipino passengers than the LTFRB and to regulate and fine them out of the country will only damn commuters in substandard public transportation vehicles. What must be done to help them is to allow these free enterprises to operate freely since they can regulate themselves thanks to their user-friendly interfaces that allow passengers to rate their services. An additional solution on the part of the agency would be to review and reduce the number of regulations in order to not only allow more providers into the transportation sector for the benefit of many consumers but also to lighten the regulatory burden that transport providers have to face.

If there is one thing that we can learn from this episode of regulation versus free enterprise, then that is the fact that legal documentation and certification does not necessarily reflect consumer gains.