Think tank: Scrap limit on Uber, Grab

Martin Delgra —JUNJIE MENDOZA

A group of prominent economists under the Foundation for Economic Freedom (FEF) urged the Land Transportation Franchising and Regulatory Board (LTFRB) to do away with restrictions on permits issued to drivers of ride-sharing services like Uber and Grab.

FEF — an advocacy group for good economic governance and market-friendly reforms — said Uber, Grab, Easy Taxi, Wunder carpool, Angkas and similar ride-sharing services were doing the riding public a service that regular public utility vehicles had been unable to provide.

The benefits come from on-demand service, ability to provide feedback and choice despite the lack of visible markings, as well as safety and peace of mind due to thorough screening and training provided by the ride-sharing services and feedback from the riding public, the group said in a statement on Wednesday.

FEF said it was therefore “untimely and inappropriate” for the LTRFB to curtail the service by capping the number of permits issued to the drivers of these ride-sharing services.

It stressed: “Limiting the number of vehicles allowed to do ride-sharing is not only anticompetitive, but it also forces the riding public to use their own cars on the road to add to the traffic congestion and also compels them to bear with the abuses perpetuated by regulated private utility vehicles, such as taxis.”

FEF is chaired by former Finance Secretary Roberto de Ocampo, with Romy Bernardo as vice chair and Calixto Chikiamco as president. Its senior advisers are former Prime Minister and Finance Minister Cesar Virata and UP Economics Professor Emeritus and former Economic Planning Minister Gerardo Sicat.

Market forces, public good

Board members include Anthony Abad, Art Corpuz, Eduardo Gana, Felipe Medalla, Vaugh Montes, Simon Paterno, Perry Pe and Gloria Tan-Climaco.

The group added that recent discussions on minimum working hours for drivers and other comments demonizing surge pricing should be reconsidered by looking at this from the perspective of how market forces could serve the public good.

Surge pricing during peak hours, it said, encourages drivers to make themselves available when they are needed most. From the point of view of riders, it encourages them to plan their trips to avoid the busy, more expensive periods.

“Surge pricing, therefore, creates behavior that self-corrects fares to lower levels.  In contrast, minimum working hours only fill the street with additional cars when less needed, adding to traffic congestion, wasting fuel and oversupply,” FEF said.

The group said there’s a clear need to update and modernize the Public Service Act to account for this wave of technology-enabled transport services with the objective of serving and protecting the public.

The regulators must incorporate the principles of technology and the market to improve public transport services in cities around the country, FEF said.

In addition, FEF said Congress should review Executive Order 202, which created the LTFRB, to clarify the mandate and regulatory powers of the agency “in light of new technology and the need of the public for safe, affordable, and convenient public transport services.”

‘Shocked’ at House hearing

The group issued the statement three weeks after the LTFRB imposed a P5-million fine each on Uber and Grab for violating its year-old moratorium on the acceptance of new partner drivers. When it ordered the ban in July 2016, the board said it had to review guidelines concerning surge pricing, passenger security and drivers’ accountability, among others.

In a House committee hearing on Wednesday, the two TNCs disclosed the current size of their driver memberships and vehicle accreditations—figures that “shocked” LTFRB chair Martin Delgra.

Uber government relations and public policy head Yves Gonzalez said the company had 66,000 partners “who have taken at least one trip in the past year.” Of this number, only 2,500 drivers have provisional authority to operate while another 1,000 have pending motions for extension, he said.

Meanwhile, Grab country head Brian Cu said the company had 52,398 accredited vehicles, of which 3,000 to 4,000 had provisional authority to operate.

Delgra said the huge figures came as a shock to him and the agency. “During the July hearing (at the LTFRB),” he recalled, “they said they have 28,000 more or less each. Today, they’re saying twice or more than twice as many. That’s why we say we are shocked.”

“It is good you were able to solicit the numbers directly from them,” Delgra told the House transportation committee. “These are the data we have been trying to get since last year to exact accountability as well as address the issue of price surging.”

But Uber’s public policy director Damian Kassabgi said policymakers should not put too much weight on the number of drivers, as only a small proportion of them actually plied the road at any given time.

“Sixty percent of our drivers do not see themselves as full-time drivers. Many drive for less than 10 hours a week. [To say that] one taxi car is equivalent to one ride-sharing car is simply not true,” he said. “It’s important not to get stuck on the numbers here.”