More politics than economics

It would all seem to be coming straight from a political script, with the end view of earning brownie points. The policy decision to suspend the newly approved fare hikes was personally announced by President Ferdinand “Bongbong” Marcos (PBBM). The President issued the fare hike suspension order to Department of Transportation (DOTr) “acting” Secretary Giovanni Lopez.

In turn, Lopez handed down the President’s order “to defer for now” fare hike approval to Land Transportation Franchising and Regulatory Board (LTFRB) chairman Vigor Mendoza II. Supposedly to start March 19, the LTFRB chief had no choice but to face the wrath of enraged public transport groups to comply with the presidential stand down order.

Militant drivers and operators groups like PISTON and Manibela proceeded last Thursday and Friday with their mass transport strike threat if no fare adjustments are allowed. They denounced the “measly” P1 fare hike granted for traditional jeepneys. The irony – as it turned out – is that the P1 fare hike became “dagdag-bawi” until further notice.

Taking populist moves, the 20th Congress speedily approved to grant “special powers” to PBBM to suspend excise taxes on imported crude oil products. The proposed law was approved before Congress adjourned session last week. Demands were also pushed for stopping the collection of 12 percent value added tax (VAT) on the sale of gasoline, diesel and other refined petroleum products.

Barely a few months when he took office Malacañang Palace in July 2022, PBBM laid down this policy guideline to his Cabinet members: “The right hand should know what the left hand is doing.” The original ones in the Marcos Cabinet will best remember this policy reminder.

Now in the middle of his six-year term, half of PBBM’s original Cabinet members have already been replaced by new ones. In fact, Lopez is PBBM’s third DOTr secretary. Incidentally, Lopez, along with eight other Cabinet members, were all appointed in “acting” capacity.

As required by our Constitution, the Office of the President (OP) must submit new ad interim appointments of all line department secretaries for approval by the Commission on Appointments (CA). None of the nine “acting” secretaries were submitted to CA for confirmation after it adjourned last week.

Thus, questions were raised during the last plenary session of the CA. The Senate minority bloc took potshots at Cabinet members who were technically by-passed since no action was taken by the CA on their nominations. The 25-man bicameral CA chaired by Senate President Vicente “Tito” Sotto III assured the body the CA secretariat will ensure the OP will comply with this constitutional requirement.

Since the LTRFB is one of the attached agencies of the DOTr, the President’s eldest sister Sen. Imee Marcos took the chance to heckle the Marcos Cabinet: “Don’t you have any group chat?” This refers to message exchanges to individual participants included in the chat group using the mobile apps Viber or Facebook Messenger.

The presidential intervention came even though the LTFRB undertook due diligence of the economic implications of the 20 fare hike petitions earlier submitted by various public transport groups. These pending petitions were filed long before the Middle East (ME) conflict erupted to full blown military attacks on Iran and counter attacks on the rest of the oil-producing Gulf states. The closure of the Strait of Hormuz triggered the ensuing oil price shocks in oil-dependent countries like the Philippines affected by the oil supply disruption.

“In a move to strike a good balance between welfare of millions of commuters and the interest of those in the public transportation sector,” the LTFRB announced the approved petitions of transport groups in a carefully worded public statement.

The presidential directive though came two days after the fare hike announcement.

Mendoza cited the LTFRB’s approved fare revisions on all land-based public utility vehicles (PUVs) were done under the close guidance of the DOTr chief, his immediate head. According to him, the computations for the fare hikes were thoroughly deliberated upon and were supported by data and analysis, including that of the Department of Economy, Planning and Development (DEPDev).

At our Kapihan sa Manila Bay news forum last Wednesday, Mendoza presented the detailed computations done by the LTFRB in consultation with the DEPDev economic analysts. Mendoza stressed the LTFRB studied each and every position paper of various stakeholders, the series of public consultations and land public transportation cost analysis since the last fare hike for passenger buses in September 2022. For traditional jeepneys, he cited, the LTFRB granted the last P1 fare hike provisional authority in 2023.

Mendoza explained the LTFRB decision reflects a 15 percent increase in fares vs wage increase of 19 percent. Based on economic analysis, he noted, the fuel subsidy and suspension of excise tax will reduce the impact of double-digit increases in the pump prices of diesel and gasoline. He, however, conceded this might be offset by the projected increase of maintenance and other operational costs.

Other factors include the geopolitical tension that still exists in the war in Ukraine and the recent ME conflict, as well as the wage increase for workers across the country since the last fare hike in 2022, Mendoza added.

“These compelling circumstances prompted the Board to allow a reasonable rate of increase,” the LTFRB decision read.

In fairness to Mendoza, he just assumed office as LTFRB chairman in October last year following the initial Cabinet shake-up that saw the appointment of Vivencio “Vince” Dizon from DOTr to become the new public works secretary.

Now they dangle one-time fuel subsidies and cash “ayuda” to public transport drivers and operators. Not all but a few selected beneficiaries, PBBM disclosed he ordered the immediate release of as much as P120 billion worth of subsidies. Yet, government budget surplus as of January reached only P165.4 billion. Is there enough fiscal space?

Whether perceptions were right or wrong, the abrupt turnaround in the approval – then immediately suspension the next day – of the fare hike petitions was obviously a politically-driven decision.

‘These compelling circumstances prompted the Board to allow a reasonable rate of increase,’ the LTFRB decision read.