EDITORIAL: Jeepney Modernization, Social and Economic Cost

Jeepneys in the Philippines are considered the “Kings of the Road”. They can be found everywhere in the country, from the busy streets in the cities to the far-flung villages; hence they have been cultural icons famous all over the world.

Jeepneys first hit the roads in the 1950s, or immediately after the second world war. They were founded on the military jeeps left behind by US soldiers after they left the country. Some entrepreneurial Filipino mechanics and welders took those US Jeeps and modified them for family use. An entrepreneurial Filipino named Leonardo S. Sarao was the first to modify the jeep by extending the body to accommodate more passengers. He revolutionized the jeepney industry into the burgeoning transport business, and henceforth changed the life of post-war Filipinos. Leonardo Salvador Sarao became the founder and president of Sarao Motors. He made the company a multimillion-peso conglomerate.

Today, the jeepney industry and its transport community are at the center of a national issue with the passage of the Public Utility Vehicle Modernization Program in 2017. The program calls for the phasing out of Public Utility Vehicles (PUVs) that are at least 15 years old replacing them with safer, more comfortable, and more environmentally-friendly units.

Replacement vehicles are required to have at least a Euro 4-compliant engine or electric motor. In addition, there are proposed requirements for CCTV cameras, an automated fare collection system, speed limiters, and GPS monitors. Currently, there are reportedly about 220,000 jeepney units operating throughout the country that stand to be affected by the program. It also raises alarm to the jeepney-riding public who might be suffered from the adjustment of fares due to the high cost of vehicle acquisition and compliance with the program.

This modernization requirement may cost the jeepney owner around ₱1.4 million to ₱1.6 million. Based on an interest rate of 6% per annum and a payment period of 7 years, the actual cost of a jeepney will reach ₱2.1 million, a huge financial burden for poor jeepney operators. The Philippines does not have a modern vehicle and parts manufacturing industry; hence they will be imported from other countries, namely China.

The government must make strategic assessment of the larger scale effect not only on the issue of safety, comfort, and environmental effects but also on the social cost to the operators and on the economy. There must be a way to solve the capacity of jeepney owners to buy the new expensive units and the consequence on fare hikes to the riding public. There must be a study on the of popular issues of irregular importation, smuggling, after-sales service, and price manipulation of importers, and local distributors.

THERE MUST BE A WAY FOR THE LOCAL MANUFACTURING INDUSTRY TO GRAB THIS GOLDEN OPPORTUNITY TO PARTICIPATE IN THE LONG-TERM PLAN OF THE VEHICLE MODERNIZATION PROJECT. OUR POLICIES MUST FOCUS ON PRODUCING, NOT ON BUYING. THEY MUST RESULT TO THE BENEFIT OF THE FILIPINO MASSES, AND DOMESTIC BUSINESSES, NOT TO FOREIGN ENTREPRENEURS.