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

Structure of Analysis 1.Identification of components of competition reform 2.Institutional responsibility in reform implementation and actual performance review ▫Coordination issues across agencies (DOTC, LTO, LTFRB, MMDA) and government units (LGUs) 3.Impact of competition reforms on market structure 4.Impact of competition reform on consumer and producer welfare 5.Assessment of consumer and producer concerns 6.Further suggested reform initiatives and likely benefits

Methodology 1.DESK BASED RESEARCH 2.FIELD WORK 3.ANALYSIS 4.REPORT WRITING

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

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

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

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. Competition Reform and Welfare Analysis: Producer Welfare (cont)

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

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

Competition Reform and Welfare Analysis: Consumer Welfare (cont) TIME DELAYS DUE TO TRAFFIC CONGESTION o Productivity losses of consumers due to time delays o Congestion as the population of vehicles (including buses) grows faster than the capacity growth of roads o 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 o 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

Study Area: Bus Transport Bus transport Intra-city: Metro Manila ▫Muntinlupa City-Makati City-Quezon City- Commonwealth/Lagro via EDSA ▫OR: ▫Baclaran (Pasay City) to Bagong Silang (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

Sampling Frame Bus transportIn-depth InterviewFGD Intra city Input Suppliers (petrol,diesel) Bus Operators: Public & Private* State Government Officials Inter city Input Suppliers (petrol,diesel) Bus Operators: Public & Private* State Government Officials Total *: distribution of 10 samples into public and private operators will vary in accordance to the nature of local transport network.

Field work Data collection - Primary No Field/Perception Survey ▫Manpower and budget constraints In depth interview  Guideline based open ended discussion Focus Group Discussions

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

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