MANILA, Philippines — Senator Grace Poe called on the Land Transportation Franchising and Regulatory Board (LTFRB), Land Bank of the Philippines and the Development Bank of the Philippines (DBP) to reduce the interest rate on public utility vehicle (PUV) modernization loans to four percent from the current six percent.
“If we want to really help our public transport sector transition to PUV modernization, all support must be extended to our operators and drivers who have been among the hardest hit by the pandemic,” Poe, chairperson of the Senate public services committee, said in a statement Wednesday.
She said reducing the interest rate can lessen the financial burden of operators and drivers.
Poe issued the call after Confederation of Drivers and Operators in Central Luzon Chairman Danilo Yumul stressed that drivers and operators cannot afford to borrow because of the six-percent interest rate and the loan term length.
During Tuesday’s hearing of Poe’s committee on the proposed Just and Humane PUV Modernization Act, Yumul said that even before the pandemic, drivers could not afford the P40,000 monthly payment for the new PUV, and more so in this time of pandemic.
“Hindi kami liability, asset kami [We are not a liability, we an asset],” Yumul said, adding that they have yet to receive any subsidy for the PUV modernization.
Poe then asked Yumul and other stakeholders to furnish the committee the same letter that they will submit to the LTFRB that will outline their concerns.
According to the senator, the six-percent interest rate could still be reduced to four percent, as the two-percent reduction can serve as a “subsidy” for the drivers and operators.
“Ang Land Bank at DBP… kung mayroon silang interest na kahit four percent, okay na ‘yun, parang subsidiya na ‘yung extrang two percent na matitipid ng ating mga driver imbes na six percent ang babayaran nila,” she added.
(For the Land Bank and the DBP… if there’s an interest of four percent, that’s okay because the two percentage that was decreased can be sort of a subsidy to our drivers, instead of them paying the six percent interest.)
Under the PUV modernization bill, the government will be tasked to provide financial assistance of not less than 10 percent of the price per unit.
The interest rate on loan amortization should also not exceed four percent diminishing annual interest, considering the nature of PUV services.