Jeepney Phaseout and Public Utility Buses Modernization

I. Introduction

On June 19, 2017, Department of Transportation (DOTr) launched the Public Utility Vehicle
Modernization Program. The program had 4 goals: 1.) Safe and comfortable transport. 2.) Predictable
travel time. 3.) Disciplined and competent drivers. 4.) Fair regulations.

In order to meet the goals set, all public utility vehicles (PUV) would have to be replaced; jeepneys
and buses aged 15 years and older would be replaced with newer, environmentally friendly
counterparts. Under the modernization program, an estimated amount of 180,000 jeepneys would
be replaced according to Land Transportation Franchising and Regulatory Board (LTFRB) Chairman
Martin Delgra III. The new jeepneys would be powered by a Euro 4 engine or an solar powered
electrical engine instead of the current Euro 2 engine jeepneys use today. In the earlier plans, jeepneys
were also planned to have 1.) Closed-circuit television (CCTV) cameras 2.) GPS navigation system. 3.)
Automatic Fare Collection System (AFCS). 4.) Speed limiters. 5.) Dashboard cameras. 6.) Wi-Fi.

The phaseout plans to follow the Omnibus Franchising Guidelines (OFG) of LTFRB. The OFG
(department order 2017-11), enacted by secretary of the Department of Transportation, Arthur P.
Tugade are guidelines for the system where PUVs operate. The content in the OFG includes the routes
assigned to the PUVs, as well as the standards set for the franchisers.

The jeepney phaseout also comes with plans to update the current system in the franchisers.
According to LTFRB Chairman Martin Delgra III, there are "hundreds of franchisers" who handle
varying numbers of PUVs, making it difficult for the Land Transportation Franchising and Regulatory
Board (LTFRB) to regulate. Thus, it is planned for the franchisers to form “cooperatives and
corporations” with the help of the LGUs. As for the routes, the local government units (LGU) are
required to propose an update which the LTFRB will review, which will be consolidated into the Local
Public Transport Route Plan.

Included in the phaseout program are the updates to the transportation routes. LGUs have been
ordered to modernize their current transport plan of local public transport routes for the LTFRB to
check. Major cities such as Metro Manila and Cebu were planned to be studied by experts for the
optimal modes of transportation in accordance with the existing and projected use of commuters.
According to Department of Transportation (DOTr) Assistant Secretary Mark de Leon, the
implementation of the phaseout is dependent on the results of the studies, thus the route
rationalization studies must be completed first before the jeepneys can be phased out.

The financing of the program is handled by the Department of Finance (DOF) and Department of
Budget and Management (DBM).

The modernization of the public utility buses (PUB) is upheld from Department of Transportation
and Communications (DOTC) Order No. 2002-30 which states that buses older than 15 years must be
replaced. LTFRB Resolution No. 2013-001 which is the strict implementation of the order.

II. Discussion

The phaseout program not only intends to update the vehicles, but also the drivers. Under the
program drivers will be required to undergo further training under an academy from the LTFRB.

DOTr cited a study stating jeepneys are the second most used mode of transport.

Models
 Figure 1. One of the Proposed New Jeepney Looks.

Prototype jeepneys have been shown in the expo by DOTr and Department of Trade and Industry
on October 12, 2017.

Figure 2. One of the proposed changes to the jeepneys is an automated payment like the light rail
transits.

Performance

The modern jeepneys were promised to reach double the distance with the same amount of fuel
as the old jeepneys, thus allowing the drivers to save in costs. Aside from the reduced cost in terms of gas,
the new jeepneys will also emit less pollution, helping the environment in the process. In terms of
maintenance, instead of needing to be off-service for at least 10 days a month, the jeepneys need only to
be off-service for 6 days a month.

Financials

On September, DOTr signed a Memorandum of Understanding (MOU) with the Development

Bank of the Philippines for a P1.5-billion loan facility for PUV cooperatives which aims to finance the new
jeepneys. DOTr also signed a MOU with the Land Bank of the Philippines on April 2017 for a P1-billion for
individual jeepney operators.

The financing program, as handled by the Department of Finance, has rates low as 5% equity, 6%
interest rate, and a repayment period as long as 7 years, as well as P80,000 subsidy per unit from the
government to cover the equity payment according to DOTr. At June 2017, the proposed payment method
was of a Hulugan system where the drivers would pay the loan every day to be not covered in debt. This
system allows the drivers to be able to use the vehicle early on. Department of Finance Undersecretary
Karl Kendrick Chua said in an interview that the payment system plans to make use of the electronic
payment system. Through the electronic payment system, the amount the driver makes will be seen, thus
collection will be easier.

On the other side of the coin, Piston claimed that jeepney drivers and operators will have to pay
as much as P800 daily or P27,000 monthly.

Fare

A contested point is the fare hike once the program is implemented. National president of Piston
George San Mateo, claims that the fare price will increase up to P20, however, LTFRB chairman, Martin
Delgra assured that the jeepney fare won’t reach P15 once the program is implemented. He stated that
research performed for the implementation of the program used the current fares as basis.

Issues

One of the issues of the jeepney phaseout is the opposition from Pinagkaisang Samahan ng mga
Tsuper at Operator Nationwide (Piston) who have conducted multiple transport strikes in the past year.
The stand of Piston is that the proposed changes are “anti-poor.” Leftist group Bagong Alyansang
Makabayan (Bayan) said that under the new system, 10 units must be bought per franchise, stating only
big companies will be able to purchase the new units. Aside from the program catering to the big
companies, Bayan also voiced complaints against handing over the public transit system to the big
corporations, stating that the light rail transit is an example why it should be avoided. Piston believes that
the modernization program only benefits corporations and may damage the livelihood of the small
operators, however, the group is not against modernization itself, just the current plan from DOTr.

Issues were also seen from the side of the government. During the House of Representatives
committee of transportation’s interpellation of LTFRB chairman Martin Delgra on July 6, 2017, it was
known that the LTFRB had a lack of manpower. One of the plans stated in the Omnibus guidelines is the
coordination with the LGUs for the implementation of the system. However, LTFRB only had 10 people to
coordinate with at least 1,400 LGUs, making it seem like an impossible task. Another noted issue are the
complaints of the stakeholders’. The stakeholders stated that some concerns were still unanswered.

III. Summary

The implementation of the modernization of the jeepneys and buses aims to provide
improvements to the public transport system in the Philippines. Not only will the public utility
vehicles be replaced with improved versions, but the routes the vehicles take will also be
improved upon. However, the program brought forth pressing concerns which caused nationwide
transport strikes from the operators. On the side of the operators, the main concern were the
costs that come with the implementation of the program. While the DOTr has addressed the
concerns, both parties have not agreed to a resolution. On the side of the implementing body,
there are problems with the logistics which is slowing down the implementation process.

Appendix

Appendix A: Maximum Distance Policy Section in the OFG

Appendix B: Local Public Transport Route Plan Section in the OFG

References
Francisco, K. (2017, October 16). EXPLAINER: What's the reason for the 2-day transport strike? Retrieved
from Rappler: https://www.rappler.com/newsbreak/iq/185435-explainer-philippines-transport-
strike-october-2017

Juan, R. T. (2016, March 08). Yes, Pedro, we need to modernize the jeepney. Retrieved from
Rappler.com: https://www.rappler.com/views/imho/125056-modernize-jeepney

Paz, C. D. (2017, September 11). https://www.rappler.com/business/181809-public-utility-vehicles-

modernization-program-dotr-tugade-dbp-loans. Retrieved from Rappler:
https://www.rappler.com/business/181809-public-utility-vehicles-modernization-program-dotr-
tugade-dbp-loans

Rappler.com. (2016, July 26). Court of Appeals approves phaseout of 15-year-old buses. Retrieved from
Rappler: https://www.rappler.com/nation/140971-court-appeals-phaseout-15-year-old-buses-
dotc-ltfrb

Talabong, R. (2017, June 25). Is the PUV modernization program 'anti-poor?'. Retrieved from Rappler:
https://www.rappler.com/nation/173888-puv-modernization-program-anti-poor

Tugade, A. P. (2017, June 19). Omnibus Guidelines on Planning and Identification of Public Road
Transportation Services And Franchise Issuance. Retrieved from Department of Transportation:
http://ltfrb.gov.ph/wp-content/uploads/2017/11/DO-2017-011.pdf