CUTS-CREW Philippines Diagnostic Country Report

1. CUTS-CREW Philippines Diagnostic Country Report Methodology for the Passenger Transport Sector (Bus)

2. Structure of Analysis • Identification of components of competition reform • Institutional responsibility in reform implementation and actual performance review • Coordination issues across agencies (DOTC, LTO, LTFRB, MMDA) and government units (LGUs) • Impact of competition reforms on market structure • Impact of competition reform on consumer and producer welfare • Assessment of consumer and producer concerns • Further suggested reform initiatives and likely benefits

3. Methodology • DESK BASED RESEARCH • FIELD WORK • ANALYSIS • REPORT WRITING

4. Step 1: Desk-based Research • Thorough literature review, discussion with expert of competition policy, reform initiatives, previous studies • Collection and analysis of secondary data • Stakeholder identification • Selection of impact/welfare issues to be covered , hypothesis formation • Selection of variables on which data to be collected, identification of data sources • Development of questions and discussion points for Focus Group Discussion (FGD) • Development of guidelines for in-depth interview

5. STEP 2: FIELD WORK • Data collection on price, routes, alternates, etc. • FGD • In-depth interview STEP 3: ANALYSIS • Quantitative PLUS Qualitative • Impact of reform • Changes over time • Comparison across city/ routes STEP 4: REPORT WRITING

6. Competition Reform and Welfare Analysis: Producer Welfare • EASE OF ENTRY FOR PRIVATE OPERATORS • At policy level as well as industry structure level (e.g. issues like “colorum” operators) • FREEDOM AND TRANSPARENCY IN OPERATIONAL DECISION • Process of fare determination • Process of route identification • Decision on number of buses to ply on each route, across different time points, etc. • Price adjustment in response to input cost (fuel price, financing cost, etc.) changes

7. Competition Reform and Welfare Analysis: Producer Welfare (cont) • COMPETITIVE NEUTRALITY • Whether level playing field exists for all players • PREDICTABILITY OF REGULATORY ACTIONS, GOVERNMENT POLICY FORMULATION AND INTERVENTION, ETC. • EASE OF DOING BUSINESS • Whether the business is subject to significant regulatory, procedural, etc. burden hampering the productivity • ACCESS TO ESSENTIAL SERVICES • E.g. road infrastructure, finance, etc.

8. Competition Reform and Welfare Analysis: Consumer Welfare • AVAILABILITY OF BUS TRANSPORT • Coverage by bus transport as a share of total passenger movement • Overall as well as frequency across different hours of the day/week • Certainty of availability • Demand-supply gap • PRICE SETTING MECHANISM • Evaluation of the price setting mechanism in terms of its fairness towards the end consumers vis-à-vis the transport operators’ interest • PRICE DYNAMICS • The bus fare dynamics in actual/historical experience and its welfare impact

9. Competition Reform and Welfare Analysis: Consumer Welfare (cont) • PRICE-QUALITY INTERACTION • Choice to consumers in terms of alternate bus transport modes available • Comparative evaluation of pricing structure of alternate modes • SERVICES AVAILABLE TO CERTAIN SECTIONS OF THE SOCIETY • ENVIRONMENTAL STANDARDS FORMULATION AND IMPLEMENTATION • PASSENGER SAFETY STANDARDS

10. Competition Reform and Welfare Analysis: Consumer Welfare (cont) • TIME DELAYS DUE TO TRAFFIC CONGESTION • Productivity losses of consumers due to time delays • Congestion as the population of vehicles (including buses) grows faster than the capacity growth of roads • Current situation of oversupply of buses: evaluation not just by assessing the total number franchises issued but also by looking at oversupply "where" and "at what time" • e.g., oversupply in EDSA during the morning peak periods and afternoon peak periods • Comparative evaluation of alternate mode, i.e., MRT-3 • Erosion of the time-saving advantage of the alternative as passenger growth outpaced the capacity of the rail system

11. Study Area: Bus Transport Bus transport • Intra-city: Metro Manila • Muntinlupa City-Makati City-Quezon City-Commonwealth/Lagrovia EDSA • OR: • Baclaran (Pasay City) to BagongSilang (Quezon City) via EDSA • Inter-city: City in CALABARZON to Metro Manila • Origin (Rizal): Antipolo City- Pasig City- Makati City and • Origin (Cavite): Dasmarinas City-Paranaque City- Makati City

12. Sampling Frame

13. Field workData collection - Primary • No Field/Perception Survey • Manpower and budget constraints • In depth interview • Guideline based open ended discussion • Focus Group Discussions

14. Analysis • Competition Policy Reforms: • 2005 Moratorium on issuing bus franchises (DOTC Department Order No. 2005-57) • Coordination issues among DOTC, LTO, LTFRB, MMDA and LGUs

15. Analysis • Quantitative (estimate producer surplus and consumer surplus) • Comparison across time: impact on select variables pre and post reform • before and after the 2005 moratorium on issuing bus franchises • Comparison across city, route • Impact comparison across different reform initiatives • Possible Cost-benefit analysis (?) • Qualitative • FGD • In depth interview of relevant stakeholders