Micromanaged

There is always peril when bureaucrats interfere with market forces.

For instance, should government, to fulfill a campaign promise, insist on rice retailed at P20 per kilo, there will be starvation in the farms. Rather than lose money, rice farmers will stop planting the staple crop. There will be shortages and rationing. We will import all we need.

This is not even the worst case scenario. The worst case happens when the rest of the world runs out of rice to sell us.

Heavily subsidized, rice is being retailed at P40 per kilo in a few outlets. This is pure showmanship. Unless we reverse the fragmentation of farmland and pursue economies of scale, we court a rice crisis.

We have entered the season of Carmaggedon. Traffic flow is choked. There are few rides available at any price.

In the face of our annual mobility crisis, bureaucrats at the Land Transportation Franchising and Regulatory Board (LTFRB) could not resist interfering with market forces rather than offering a solution to the gridlock. Chasing brownie points, they propose to slash TNVS surge rates by 50 percent.

If they enforce this, we court an absolute shortage of transport.

Years ago, the matter of surge rates seemed clear enough. If there are no provisions for surge rates, TNVS drivers will avoid the roads during rush hours. They will lose money if they do. At precisely those hours when the most commuters need a ride, transport will be scarce.

That realization years ago seems to have escaped the minds of LTFRB bureaucrats. They forget their agency signed agreements with the TNVS drivers to keep them on the road when traffic is tightest. Surge pricing was the only mechanism to ensure TNVS services remain available during peak hours.

Gio Tingson, Grab Philippines’ head of public affairs, explains that over 80 percent of earnings from surge pricing goes to the drivers. With traffic hardly moving, they need this incentive to continue plying.

TNVS Community Philippines (TCP), representing commuters, warns that slashing surge pricing will be a financial hit on drivers. They will avoid going out if the economic returns are negative, spending more on fuel than they get for fare.

In the end, cutting surge pricing might sound like it will please commuters. In the end, it will be the commuters who will suffer the consequences of inadequate transport available during the rush hours.

LTFRB should not tamper with market forces that actually work.

Disconnect

Meanwhile, the Land Transportation Office (LTO) seems helpless solving problems with an errant contractor that failed its delivery targets for 70 months running.

For the fourth consecutive year, the Commission on Audit red-flagged the LTO’s Land Transportation Management System (LTMS). State auditors found layers of issues related to this P8.2-billion project. They found incomplete system utilization, delays and contract breeches despite full payment for the system’s core processes.

The COA report notes that more than 70 months after this project was awarded to a joint venture led by German biometrics company Dermalog, the LTMS remains incomplete, unresponsive and tainted with controversies – including an internal dispute among the joint venture partners.

There is a glaring disconnect between the LTMS’s functions and the actual needs of the LTO on the ground. While the seven core applications were completed, some are not fully utilized due to nagging system issues. These include 41 critical items and 49 enhancements to ensure smooth driver’s license application and motor vehicle registration. The system could benefit from better design adapting to the changing needs of the land transportation sector and prioritizing the motoring public’s welfare over greed.

Just last month, the LTMS went offline for an entire day due to an intentional internet cable cut at the LTO Central Office in Quezon City. This inconvenienced motorists who often had to take a day off work to register their vehicle.

According to the COA report, Dermalog violated the LTMS contract when it delivered three redundant internet lines to the LTO Data Center with a total capacity of only 240 mbps. The contract specified a bandwidth of 600 mbps. This made the system prone to the disruption that indeed happened.

As in previous outages, the public received no apology from Dermalog. The company never admitted to any shortcoming despite the chronic audit observations.

The contractor even found the audacity to insist on the five-month long maintenance contract extension that will cost taxpayers another P24.8 million. Dermalog enjoys continuous access to the LTO database even as the agency sent about 10 demand letters that remain unaddressed. Imagine, a foreign company accessing information about millions of Filipino drivers.

Despite repeated requests, too, Dermalog has not turned over to LTO the source code that runs the whole system. The errant contractor limits motorists to only its own payment gateway provider Paynamics. This payment system charges users P60 to P80 in convenience fees for each transaction, higher than the industry average of P12 to P15.

Should the LTO gain control of the source code, the agency could introduce changes in the system to better serve clients. The system can, in fact, be run in conjunction with the DICT at no extra cost to our taxpayers.

President Marcos Jr. recently spoke about broadening digitalization of government as a means to combat corruption. In the case of the LTMS, the opposite might be true.