Neoliberalism and the Derailment of Metro Manila's Transport System
Illustrative photo from Unsplash Images Stock
It's 6:32 on a Tuesday morning in February in Metro Manila, and more than 1,000 people are walking along Epifanio de los Santos Avenue (EDSA), the Philippines' busiest thoroughfare, to get to work. They're not walking on designated pedestrian lanes or sidewalks but on the elevated train tracks of the MRT, the main train line servicing the dense Philippine capital and its surrounding metropolitan area with a population fast approaching 15 million. They have just been unloaded mid-journey after their train suffered an electrical failure, and are precariously making their way to the closest station by foot. Only thin steel rails keep the throngs of morning commuters from falling into the mad morning rush on the highway below. As for other oncoming trains — all they can do is to pray that none will come.
Unfortunately, this was not an isolated case. Almost daily breakdowns are well documented by irate commuters on social media, often using #MRTBulok (#MRTRotten). Glitches are so common — an average of about two a day — that the train line made national headlines when it managed to run without mishaps for one whole week in late February.

An inefficient, unreliable MRT is just one of the many moving parts of Metro Manila's complex transport mess. According to crowd-sourced online database Numbeo's Traffic Index 2018, Manila's transportation system scored the 5th worst for traffic, 9th worst for inefficiency, and 4th worst for dissatisfaction among 185 surveyed cities. When filtered for just Southeast Asia, Manila scored the worst on all three indices.

With plenty of players, there's also plenty of fingers pointing, and plenty of blame to go around. Often portrayed as a traffic or congestion problem, discussions of the transportation conundrum usually revolve around the fast growing number of private cars, inadequate road space, undisciplined drivers (particularly of public utility vehicles or PUVs), and the weak enforcement of traffic rules. The mess is also attributed to low infrastructure spending and decades of uneven development concentrated in Metro Manila. There has been a plethora of suggested solutions as well — building more roads and highways, spending more on transport infrastructure, stricter rule enforcement, carpooling and ridesharing, road tolls, fixed wages for PUV drivers, and even on decongesting Metro Manila by relocating main government offices to secondary cities.

While the commonly discussed causes of the mess are not wrong, hardly is Metro Manila's inefficient transport system ever linked to neoliberalism — a testament to its dominance. The ideology influences policy on different levels and is responsible for keeping many of the Philippines' public services market-driven, profit-oriented, and chaotic. The logic of the market has become so pervasive that ordinary citizens and even those in government overlook the possibility that it could in fact be contributing to some of our most persistent urban problems, instead of solving them.

The Market's Midas Touch?

For countries like the Philippines, neoliberalism became especially relevant through the Washington Consensus in the '80s, when the U.S., E.U. and international organizations like the International Monetary Fund and World Bank set forth policy prescriptions for developing countries that advocated free trade and free markets. In a Guardian article, Stephen Metcalf gets to the core of neoliberalism — "It is a name for a premise that, quietly, has come to regulate all we practice and believe: that competition is the only legitimate organizing principle for human activity."

In a neoliberal society, the logic of the market — that of competition and profit — is applied to almost all spheres of life, whether it be the economy or social services like education, health care, or transportation. This is the thinking behind the widely held notion that because of competition, the private sector — specifically big business — is more efficient, innovative, and superior to the government in providing for citizens, who are also seen as consumers. As a result, neoliberal policies usually deal not just with liberalization and deregulation but privatization as well.

In a 2009 paper published in the Philippine Sociological Review, Filipino sociologist and former congressman Walden Bello traced how neoliberalism came to be so widely accepted in the country. Its place as the dominant ideology among Western-educated Filipino technocrats and elites helped neoliberalism thrive during former Presidents Corazon Aquino and Fidel Ramos's terms, but a backlash against the crony capitalism and corruption under former President Marcos made the idea resonate deeply with the Filipino public as well. Neoliberal policies were further institutionalized when the country joined the ASEAN Free Trade Area and the World Trade Organization in the '90s.

Commission and Competition

In local transportation, nothing encapsulates the dominion of competition more than the bus sector. There are at least 12,595 registered buses operating in Metro Manila, and a whopping 3,711 plying the Manila-EDSA route alone. Those numbers don't even include the units operating illegally — and there are many. While the buses — and the iconic Filipino jeepneys — provide transport services to the Filipino public, they are privately owned.

A Philippine Institute for Development Studies (PIDS) report on the bus sector identified its golden years as the mid-70s, when private operators were organized into four consortiums, with a government-owned company serving as the fifth operator. In the late '80s, however, the government deregulated the importation of reconditioned secondhand buses, which resulted in a flood of new players. In 1992, the sector was formally liberalized to encourage competition and address growing demand. As a result of easy entry, the market is now made up of many more operators running much smaller fleets covering overlapping routes.

In a car-venerating public like Metro Manila's, the bus sector often bears the brunt of the blame for the transport and traffic mess, even if they occupy much less road space per passenger compared to private cars. This is because PUV drivers have had to compete ferociously on the road for fares — speeding, running red lights, taking risky shortcuts, and overstaying at stops. Some have even turned to illegal drugs like methamphetamine to stay awake longer to earn more money. For decades, they operated on a commission-based compensation model called the "boundary system" where drivers did not own the vehicles, but instead paid the owners or operators a daily rent or "boundary" to use them. Drivers' take-home pay consisted of only fares they earned after meeting the boundary and paying for fuel, sometimes even repairs. So drivers drove like their lives depended on it — because they did.

Aware of this, the Department of Labor and Employment sought to amend the boundary system in 2012. The new two-tier system set a fixed minimum wage for drivers, but also included a "performance-based" component. In a policy analysis for Action for Economic Reforms, Madeiline Aloria explained that the new system merely mirrors the old one since the second component is still based on the number of passengers picked up rather than good driving behavior or schedule adherence.

"When the fixed income portion is lower than what a driver usually takes home in the old system, he is incentivized by the commission-based portion, where he earns extra for every additional passenger he gets above a certain quota," wrote Aloria.

While there has been recognition of the boundary system's role in the transport mess, the persistence of the commission-based model must be linked to a bigger picture: the imprudent belief in the market's ability to organise and provide — even the most basic of social services — through competition.

This dilemma is not unique to the Philippines. Matteo Rizzo of University of London's School of Oriental and African Studies documents a similar case — that of Tanzania's capital Dar es Salaam — in his recently published book Taken for A Ride. In it, Rizzo discusses how economic liberalization and deregulation led to a system where public drivers paid daladala or minibus owners a daily rent, and took home only whatever profits were left after that. In Dar es Salaam as in Metro Manila, this competition-centric model resulted in chaos on the road and an overall inefficient transport sector — with passengers "taken for a ride literally and figuratively."

Big Business Control

The expansion of the private sector and retreat of the public sector, not only in economic contexts but also in the provision of social services, is part of neoliberal policy. Increased private sector involvement in development was institutionalized in the Philippines through a series of laws from the '80s to the 2010s. Public-private partnerships (PPPs) in particular have been central to almost every administration's economic agenda.

An expanded role for the private sector in development is not in itself necessarily negative or positive. In many cases, it is necessary to some extent. According to the World Bank, PPPs can "[supplement] limited public sector capacities to meet the growing demand for infrastructure development." But problems definitely start to emerge when the government treats PPPs as a panacea and hands over complete control of basic public services to the private sector, who are not accountable to citizens and hold no obligation to look after social welfare.

"The approach to the rail was 'we can't afford to build it, therefore we are going to let private sector companies build it — oh and by the way — plan it,'" said Benjamin de la Peña, a Filipino urban planning expert currently serving as Deputy Director at Seattle's Department of Transportation, about the MRT.

The heavy hand of the private sector has left a visible mark on the MRT — where 9 of the 13 stations are either located near or connected to shopping malls, some of which are owned by members of the MRT private sector consortium, the Metro Rail Transit Corporation (MRTC). Of course, connecting stations to shopping malls is not automatically detrimental to efficiency, but in the case of the MRT, certain concessions have been made to cater to commercial interests.

Take the notoriously inconvenient Ortigas MRT station, for example. De la Peña explained that instead of locating the station at the more central Ortigas Avenue, which would have made the most sense especially in terms of connecting to other modes of transport nearby, the station found itself located on an arbitrary, somewhat isolated stretch awkwardly straddling two malls — Robinsons Galleria and SM Megamall. Although it is a busy station that leads into a central business district, it seems more like an afterthought — the exit taking up more than half of an already narrow, fenced sidewalk. Pedestrians and commuters form a single file line just to get around it.

Playing between commercial interests was also behind the seven-year delay in construction of a common MRT-LRT station after a dispute erupted over which of two nearby malls would serve as location. It was resolved when the government brokered a deal putting the station between the two malls. The project has already broken ground despite critics slamming the now triple cost and claiming the compromise was a collision, which breaks procurement law.

When it comes to the MRT — which was built on a 25-year Build-Lease-Transfer contract between the government and the MRTC — it is the commuters who are on the losing end of the bargain. The arrangement — in which the government pays MRTC monthly rental payments and will only own the system after 25 years — has already cost billions in taxpayer money, and yet the MRT still faces not only frequent breakdowns, but also accidents, a diminished number of running trains, and a 35% fall in ridership.

As an incentive for investing, the monthly rental payments to MRTC included a guaranteed 15% return on equity, which the government had difficulty meeting. To stop these payments, the government eventually bought back 80% of the MRT's economic interests. However, despite being left with minority economic interests, MRTC still has the voting rights.

"The private owners who now only hold 20% of equity are still in control of the decision making in the MRT," said independent think tank IBON Foundation in a recently published mass transport policy study.

Taking Back Transport

Not all private sector involvement results in the utter surrender of public interest to the highest bidder. Curitiba, Brazil; Bogota, Colombia; and Seoul, South Korea all have efficient bus rapid transit (BRT) systems that have been hailed as models for cities like Metro Manila. All involve the cooperation of the private sector — but with the state in a leading role, planning routes and ensuring service even for less profitable ones, and creating a business model that drives performance rather than fares.

A lack of political will and absence of a rational transportation plan has allowed the private sector and other players to fill the gaps left by the government. To balance the excesses of neoliberal thinking and protect public interest from being strong-armed by big business and just defaulting to the logic of market competition, a heavier hand of government is needed particularly in setting transportation policy goals and priorities, and in translating these into planning interventions.

"It's a question of understanding what you want the system to deliver and focusing on that," said de la Peña. "How do we contract with the private sector so that it delivers on the policy goals?"

There must also be a re-examination of the 'user pays' principle, which is based on a belief that costs of public services should be shouldered only by those who directly use them. Instead, increased government spending and creative subsidy schemes — such as having private cars help pay for mass transport — should be considered.

"If you start thinking of transportation as a utility, then you know that it creates other values," said de la Peña. "So as you put money into it, you're actually gaining more on the other side — lower air pollution, shorter travel times, better land values, addressing inequality."
About the author: Liana Barcia's experience in media spans the spectrum – from writing special features for a business newspaper and articles for a global development news website to writing advertisements for fried chicken, banks, and dog food. Having lived her entire life in Metro Manila, Liana is interested in the political, economic, and sociological forces that have contributed to the Philippine capital's problems. Liana is interested in sociology, urban studies, politics, propaganda, and pop culture, topics she hopes to be able to explore further through the Hamburg specialism.

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