Co-ops gamble on jeepney modernization

/ 04:52 AM October 07, 2019

MANILA, Philippines — Every afternoon, Aries Sales del Mundo, 49, drives his big blue jeepney—a sleek, boxy vehicle that looks more like a minibus—through the congested roads of Manila.

The vehicle, he says, is nothing like the colorful jeepneys he is accustomed to.


Back in his hometown of Calamba City in Laguna province, members of his family run and operate a small fleet of traditional jeepneys that they assembled together using scrap parts from Japan.

“It was a bit disorienting at first,” Del Mundo said, adroitly maneuvering his way through Pasay City at sunset.


“This jeep is wider, more lumbering and has standing passengers. So it’s different driving this jeep as opposed to the regular ones,” he said. “But people seem to like this better because it’s comfortable.”

Del Mundo is one of 35 drivers hired by the Senate Employees Transport Services Cooperative (Setsco), which in 2002 invested in a fleet of jeepneys that would bring Senate workers from Pasay to Manila.

In 2018, Setsco shifted to Euro-4 industry-standard vehicles in compliance with the government’s public utility vehicle modernization program (PUVMP), which seeks to phase out old, dilapidated jeeps.

Leap of faith

The transition itself was a leap of faith for the cooperative, which virtually shuttered its fleet operations in 2017 after sustaining heavy losses.

Remedios Venturina, Setsco chair, said the move was “a high-risk gamble.”

“We fought internally, and some of the original board members even pulled out their investments. But for the rest of us, we understood it was the only way forward: modernization is inevitable,” he said.


Setsco, like other transport cooperatives that have successfully shifted to the new vehicles, was well-positioned in this multimillion-peso gambit.

Capital for cooperatives is more or less stable since members have to pay monthly dues to get a share of the profit.

“In co-ops, there is true equality,” Venturina said. “Each member has a voice and a share in the gains.”

Organizing themselves like this takes the sting out of borrowing millions of pesos from banks to pay for vehicles that each cost between P1.6 and P2.2 million.

For the Taguig Transport Service Cooperative (Taguig TSC), which currently runs a fleet of 88 modern jeeps, such amounts easily swell into a whopping P180 million, said its chair, Freddie Hernandez.

But everything “is shouldered by the co-op,” Hernandez said. “We took out a loan under the name of the co-op and the units are named under the co-op. The drivers and operators themselves do not pay the amortization for the units. They merely earn their monthly salaries.”

Security of tenure

Both Setsco and Taguig TSC pay their drivers P500 to P700 a day.

Drivers like Ronald Siles, 51, and Mario Aggabao, 57, work eight hours a day for five days a week.

They also receive regular benefits and enjoy security of tenure, which before did not exist in this sector that has long been running on the boundary system.

“Before we would work the entire day just to meet the boundary and earn enough as well to take home to our families,” said Siles. “Now we don’t worry as much because you’re sure to bring home something, plus now we have benefits.”

“We also used to be the ones to pay for our units’ maintenance and repair,” Aggabao recalled. “Now it’s the co-op, through our manufacturer (Hino).”

Not all drivers and operators in the country are organized into cooperatives or corporations.

Of the 180,000 jeepney franchises in the country, most belong to small, risk-averse operators, said Transportation Undersecretary for Roads and Infrastructure Mark de Leon.

The fragmented public transport system is partly what makes the PUVMP so challenging, he added.

The cooperatives, which have already bought into the program, also worry that the continued resistance to the PUVMP could sink them.

During a budget hearing for the Department of Transportation (DOTr), it was found that only 2 percent of jeepney franchise holders had acquired new vehicles.

Fleet consolidation

With only nine months left in the transition period, fleet consolidation and route rationalization are crucial to the PUVMP.

Ideally, franchises would be consolidated relative to the ideal number of vehicles assigned to a specific route.

For Venturina, the Department of Budget and Management (DBM) has computed that only 35 vehicles are needed to sufficiently service the Senate route.

Of these, 15 units alone would earn P90,000 in profits every day.

But the DBM estimate “(assumes) that you have no competition. That’s not the case for us right now. So nag-aabono pa rin kami (we still shell out our own money),” Venturina said.

It’s worse for Taguig TSC. The DOTr pegged 279 as the ideal figure for its route, which is currently serviced by 486 vehicles.

“The gains of the PUVMP can only be realized if the routes are fixed, but you cannot rationalize because the units are still under their individual operators who refuse to modernize,” Hernandez said.

“We can all shift to new jeepneys, but without everyone on board, all of us stands to lose.”

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