Economists oppose caps on ride-sharing permits

A group of prominent economists under the Foundation for Economic Freedom (FEF) urged the Land Transportation Franchising and Regulatory Board (LTFRB) to do away with restrictions on permits issued to drivers of ride-sharing services like Uber and Grab.

FEF – an advocacy group for good economic governance and market-friendly reforms – said Uber, Grab, Easy Taxi, Wunder carpool, Angkas and similar ride-sharing services called Transport Network Vehicle Services (TNVS) were doing the riding public a beneficial service that the regular public utility vehicles have been unable to provide.

The benefits come from on-demand service, ability to provide feedback and choice despite the lack of visible markings as well as safety and peace of mind due to the thorough screening and training provided by the ride-sharing services and to the feedback and reviews of the riding public, FEF said in a press statement on Wednesday.

Thus, FEF said it’s “untimely and inappropriate” for the LTRFB to curtail the service by capping the number of permits issued to the drivers of these ride-sharing services.

“Limiting the number of vehicles allowed to do ride-sharing is not only anti-competitive, but it also forces the riding public to use their own cars on the road to add to the traffic congestion and also compels them to bear with the abuses perpetuated by regulated private utility vehicles, such as taxis,” FEF said.

The group said these ride-sharing services had shown the way on how public transportation should be managed: through the use of technology and the market.

“The market gives the riding public the power of choice. Technology gives the riding public information and matches demand,” FEF said.

The group added that recent discussions on minimum working hours for drivers and other comments demonizing surge pricing should be reconsidered by looking at this from the perspective of how market forces could serve the public good.

The group pointed out that surge prices during peak hours encourage drivers to make themselves available when they are needed most.

In the case of consumers, such surge in pricing are seen to encourage riders to plan their trips to avoid the busy, more expensive periods.

“Surge pricing, therefore, creates behavior that self-corrects fares to lower levels. In contrast, minimum working hours only fill the street with additional cars when less needed, adding to traffic congestion, wasting fuel, and oversupply,” FEF said.

The group said there’s a clear need to update and modernize the Public Service Act to account for this wave of technology-enabled transport services with the objective of serving and protecting the public.

The regulators must incorporate the principles of technology and the market to improve public transport services in cities around the country, FEF said.

In addition, FEF said Congress should review Executive Order 202, which created the LTFRB, to clarify the mandate and regulatory powers of the agency “in light of new technology and the need of the public for safe, affordable, and convenient public transport services.”

FEF chaired is chaired by former Finance Secretary Roberto de Ocampo. Its vice chair is Romy Bernardo while the president is Calixto Chikiamco. Its senior advisers are former Prime Minister/Finance Minister Cesar Virata and UP Economics Professor Emeritus and former Economic Planning Minister Gerardo Sicat. Board members include Anthony Abad, Art Corpuz, Eduardo Gana, Felipe Medalla, Vaugh Montes, Simon Paterno, Perry Pe and Gloria Tan-Climaco.