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Privatize MRT, LRT; NO to State Subsidy!

August 8, 2010
A runaway train of mass injustice! How the government spends billions of your tax money...

A runaway train of mass injustice! How the government spends billions of your tax money...

It’s very clear that these hypocritical advocates of state subsidy and “right to transport” are merely looking at the interest and welfare of over 500,000 daily commuters in Metro Manila. How about the rest of our 90 million population who don’t get the chance to enjoy a daily state subsidy? Why not subsidize the whole nation to be fair with other people?

What would you do if you saw a heavily injured victim in a highly secluded place? For a kind-hearted and compassionate individual, it is very possible that he would rescue the victim by giving him first aid order to prevent blood loss and then bring him to a certain place where he could get proper medical assistance. If it were a question and answer period, contestants would readily have the same answer. But reality is not as simple as a “question and answer period”.

Let me change the situation: what if the injured victim were our nation, Philippines, which now suffers a fatal blow owing to the mistakes of our past and present political leaders?

The difference between the first and second situations is that the injury inflicted to the individual victim is visible to the human eye. Any person in his right mind clearly knows that a badly injured person needs immediate medical assistance. However, in the second situation, the kind of injury or wound inflicted to our nation is not readily perceptible to our human senses. Most of our career politicians are aware that we currently have an ailing nation that needs urgent medical attention, but the problem is that they tend to give the wrong medical advice. There are also some instances wherein some intellectuals give the wrong type of medicine.

If the proper role of a doctor is to treat a sick patient by giving him the right medical attention, the most practical and moral responsibility of a statesman is to guide a whole nation in the right direction.

In regard to solving some of our national problems, there are a lot of “quack doctors” who try to administer poison to a very important patient, which is our nation. They tend to give the wrong medical advice that could even aggravate the condition of our country. And if analyzed closely, their prescription also gives the wrong type of medicine that could harm the deteriorating physical health of their patient. However, there’s no tinge of doubt that these “quack doctors” are motivated by good intention. They want to save our country. They want our people to reap the many benefits of a healthy nation. They want our country to progress. But when a nation dies because of improper medical assistance, good intention or good faith is no defense.

We now see a lot of “quack doctors” who try to promote their frivolous ideas to the people, as we now witness a socio-political farce: the controversial issue concerning LRT fare increase. A number of lawmakers argue that the government can prevent the “inevitable” LRT fare hike by maintaining its multi-billion subsidy on the Metro and Light Rail Transits.

The government recently announced that around half a million MRT commuters should get ready for a fare increase. Transportation Undersecretary Dante Velasco said that “there’s no stopping a fare hike” because of growing operational costs and government subsidies.

“The new government’s policy is to reduce these subsidies which are hurting the nation,” Velasco said.

The LRT authority came up with a statement that they need to impose a fare hike due to rising operation and maintenance costs. Administrator Melquiades Robles of the LRT Authority, which operates Line 1 and 2, said, “there is an urgent need to increase fares. We just have to set a board meeting and discuss the new rates.”

Robles added that the last time they had an increase was seven years ago. It was said that the MRT only earns around P1.8 billion a year, while it spends over P5 billion on operations and maintenance costs. MRT operators plan to peg the fare, at the maximum, to P25 from the current P15.

So this issue now reveals the dark secret behind the so-called ‘cheap’ price of our light railway service. Right now, the most the MRT can charge each commuter is P15 for a single trip, making it one of the cheapest and most efficient ways to travel around the metro. We now know that instead of paying the amount of P60 per trip, we only get to pay P13 or P15 depending upon our destination thanks to the generosity of our government, especially those who proposed and fought for this altruist scheme. Yes, the difference of about P45 is being shouldered by the government or, to be very specific, by every taxpayer in this country.

The government said that there are around 500,000 MRT/LRT commuters everyday. Now multiply that by P45 and you get a fantastic figure of P22,500,000 daily subsidy! This simply means that the government is paying about P22.5 million so to serve the welfare of less than .5 percent of our over 90 million population. Thank goodness I’m one of the lucky .5 percent who get to enjoy an LRT/MRT ride. But let me make it very clear that I’m not a regular MRT/LRT commuter. This means that I’m stealing around P40 to P45 from every Juan and Pedro every time I go to Gateway Mall via LRT.

Subsidy is simply one of the magical powers of the government to cheat reality. The government has been subsidizing all mass transit systems because of the evil belief that the government must provide our basic needs. There’s also this very crude notion that since all mass transit systems in the world are being subsidized by their governments, we should also adopt the same scheme. After all, it is the primary duty of the government to look after the basic needs of its people.

One of the most popular arguments against the total scrapping of government subsidy is the notion that most people can’t afford a very high transport cost. Take for example the following argument made by an Inquirer columnist:

“If these transit systems were to charge their passengers what it costs to transport each one of them, they wouldn’t be able to afford it or they wouldn’t be willing to pay it. For example, if the LRT or MRT were to charge each passenger what it costs to transport each of them, which is, according to them, P50 per, that would cost each passenger P100 round trip, almost half of the day’s wages of a laborer. This laborer would be working only for the light rail transits, leaving little for his family.”

So based on the reasoning of this Inquirer columnist it would be very cruel or inhumane to totally scrap government subsidy on all mass transit systems in the country. If MRT/LRT were to charge their passengers P50 per trip, a daily wage laborer wouldn’t be able to keep enough money for his family. This is actually the main argument being used by the advocates of government subsidy and “right to transportation”.

For example, there’s this commuters’ rights group that is fighting for the rights of every Juan, Pedro and Kulas to transportation. They’ve been calling on the President to stop the plan of the Department of Transportation and communications (DOTC) to increase MRT and LRT fares.

This commuters’ rightists group, composed of Militant group Bagong Alyansang Makabayan (Bayan) and the National Consumer for Commuters Protection (NCCP), criticized the move of the administration to reduce subsidy on MRT fare.

Bayan secretary-general Renato Reyes told Sun.Star that they would not hesitate of going out to the streets if the Aquino administration implements the maximum fare hike in the MRT.

“Bayan strongly objects to any fare hike in the MRT and the LRT. The problems arising from the fiscal crisis left by the Arroyo administration should not be passed on to commuters. This is exactly a good example of public-private partnership wherein the public is at the losing end,” Reyes said.

Militant youth groups, such as the League of Filipino Students (LFS) and Anakbayan, also expressed their opposition to the planned fare hire.

“Instead of burdening students and working people further by increasing its rates, the LRTA should petition the government to increase subsidies to the LRTs and the MRT,” said Terry Ridon, secretary-general of League of Filipino Students (LFS).

“This is not a daang matuwid, but rather a literal daang mahal. Increasing the MRT, LRT fares will defeat the very purpose of mass transportation systems,” said Anakbayan national vice-chairperson Anton Dulce.

But what’s the proper purpose of transportation system? Is it a charitable project, the goal of which is to perpetuate the continued loss of too much taxpayers’ money? Where will the government get money to subsidize the daily fare of more than 500,000 commuters? It’s very clear that these hypocritical advocates of state subsidy and “right to transport” are merely looking at the interest and welfare of over 500,000 daily commuters in Metro Manila. How about the rest of our 90 million population who don’t get the chance to enjoy a daily state subsidy? Why not subsidize the whole nation to be fair with other people? However, the truth is the government is not a productive agency. It only survives from collecting taxes, asking donation from developed nations, and borrowing money from foreign sources.

The issue of fare hike is just one of the inevitable results of too much government intrusion or intervention  into the economy. Both LRT and MRT were created, owned and operated by the government. LRTA was created on July 12, 1980, by virtue of President Ferdinand Marcos’ Executive Order No. 603, with First Lady Imelda Marcos as its first chairman. The country’s first metrorail was funded through loans, most of which came from the Belgian government (US300 million) and a consortium of companies comprising SA Ateliers de Constructions Electriques de Charleroi (ACEC) and BN Constructions Ferroviaires et Métalliques (today both part of Bombardier Transportation), Tractionnel Engineering International (TEI) and Transurb Consult (TC) (US700 million). However, the government failed to pay for its loans and instead lost money until 1993. In its first year of operation, the most touted metrorail lost around P216 million.

The MRT and LRT projects are the best proof that the government is not good at running almost everything. It is also the best proof that the government is the creator of all cartels and monopolies in the country by means of giving franchises, special privileges, subsidies, or grants to a select group of businesses that trade not goods but favors with our career politicians.

Since MRT and LRT are problematic from the very beginning and since they’re now showing the ill effects of big government, the new administration is now entertaining the idea of hiring private companies to operate and maintain the LRT 1, LRT2 and MRT lines to make them more efficient.

“We’re looking at ways to get the private sector involved in the LRT and MRT,” Undersecretary for rail transport Glicerio Sicat told the press.

“We may get concessionaires to do the operations and maintenance of the train lines, but we’ll continue to own the facilities,” he added.

We now know that the LRT lines 1 and 2 is currently run and heavily subsidized by the government in order to lessen the burden being shouldered by daily commuters.

The controversial LRT/MRT price hikes is just one of the many immediate effects of the administration’s economic policies. President Aquino stressed in his first State of the Nation Address (SONA) that his government will not impose new taxes, “level the playing field”, and limit government spending. In order to help alleviate the pressure on state’s finances, the government plans to implement the following: 1) fare hike, 2) privatization, and 3) expansion.

In my own opinion, the only possible solutions to this mounting problem are the following:

  1. The government must stop subsidizing MRT and LRT.
  2. Let the MRT and LRT impose price hike, if they wish to.
  3. Totally privatize MRT and LRT.
  4. Guarantee economic freedom.

All the four measures above must be implemented altogether and not through a piecemeal process. The only possible solution to the problem is total, complete privatization of all mass transit systems in the country. However, many people might argue that this would force the private owners of transit lines to charge their passengers a very high price per trip. The problem is the advocates of subsidy and “right to transport” are merely looking at one element. They forget to consider the following factors:

  • There are a lot of modes of transportation. In the Philippines, the possible alternative to LRT or MRT are jeepneys, FX, bus, and taxis. If, for example, the new private owners of these mass transit systems, charged their daily passengers P60 to P80 per trip, the people, being the end-users or consumers, have the right to choose among MRT/LRT, jeepney, buss, or taxi. Those who can’t afford to pay P60 per trip have the option to take a cab or a jeepney. From an economic perspective, what is clear is that if the private operators of MRT/MRT charged excessively, they might not last long, as there are other modes of transportation in Metro Manila.
  • The power of competition. In order to maintain and protect free-market competition in a free-market economy, the government must guarantee economic freedom and leave business players alone. For decades the government has been plowing billions and billions of pesos into our mass transit systems due to the notion that it has to help more than 500,000 daily commuters. But how about other sectors like the jeepney drivers, bus drivers, and taxi operators and their drivers and their families? Are they not part of our society?
  • Competition leads to innovation. There are possible ways for the new private operators of MRT/LRT to survive without charging too much. As stated above, charging their passengers a very high price would mean their own destruction. In order to survive, mass transit operators may lease or operate concessions at its stations. It may also enter into partnership with other businesses like malls, call center agencies, office building developers, etc.
  • Competition leads to lower transport prices. The presence of other transport players like jeepneys, buses, taxes and other possible competitors in the future would compel mass transit operators to lower their price tag so as to survive. The same principle also applies to bus, jeepney and taxi operators.
  • Taxpayers must not shoulder the transport expenses of a select few. This transport subsidy is one of the worst forms of injustice in our country today. The government steals from Juan in order to serve the welfare or interest of Pedro and Petra. Not all taxpayers have the chance or opportunity to avail of this kind of privilege. The government must put an end to this kind of injustice by stop subsidizing all transit systems in the country.

Indeed, there’s an urgent need to reverse this trend now. The government must look at every element involved in this issue. Government planners should not only look at the immediate effect of their proposed policy or its effect on a single group. Yes, it is true that privatization of all mass transit systems might cause some immediate negative effects, but in the long run all sectors would benefit from the long-term advantages of privatization.

23 Comments leave one →
  1. August 8, 2010 3:38

    Great article!

    • August 8, 2010 3:38

      This time I won’t be accused of not passing UPCAT and no one would tell me to study at UP first in order to know what the “iskolar ng bayan” are fighting for.

      To all “iskolar ng bayan”, this is what I’m fighting for: INDIVIDUAL FREEDOM, in case you don’t have the brain to grasp it.

      • Junior permalink
        September 9, 2010 3:38

        Are you implying that those that go by the monicker Iskolar ng Bayan are preventing you from attaining what you call Individual Freedom?

        Aren’t these the same Iskolar ng Bayan that fight for Basic Human Rights, Freedom of Speech, and Social Justice which are the foundations of the Freedom you wish to enjoy?

        If you’re afraid to fight for your rights and only want to enjoy it, the least you could do is to show some respect and gratitude for those who fight for the very freedom that you enjoy. Lives have been lost to securing these rights. Don’t cheapen them with your words.

        P.S. Read some history son, it’ll do you good.

      • September 9, 2010 3:38

        Read my other blogs… Social justice is an invalid concept. Learn more about this “lie” created by John Rawls. Try to reeducate yourself.

  2. Seluj Albatini permalink
    August 9, 2010 3:38

    Great post!

    For me, privatization of the LRT and the MRT would be most welcome. I don’t care if every square foot of the walls and pillars of the train stations contain ads.

  3. tony dekino permalink
    September 7, 2010 3:38

    Duhhhh! Just like PeNoy. Duhhhh.

  4. Junior permalink
    September 9, 2010 3:38

    I did some research on operation costs of MRT-LRT in other countries. Ended up reading on the Calgary Transit. Operation costs of MRT-LRT are cheaper than buses and go down depending on average passenger rates. The Calgary Transit operates at $163 per hour with an averager passenger rate of 600. Our MRT-LRT line are boarded by 1.2 million passengers everyday according to DOTC that’s an average passenger rate of 70588. The 5 billion peso operation cost of the MRT-LRT is being waved in our faces concealing the truth that it includes loan payments and payments to corrupt goverment officials. Most government projects are overpriced to begin with to pay for the percentages of a few officials. Who pays for these loans? Filipino citizens. Have the majority of these officials been convicted so that we can get our taxes back? No. It cost the Calgary transit 27 cents per passenger to operate at a 600 average passenger rate. Do I have to compute how cheap it is to operate the MRT-LRT at a 70,588 average passenger rate even if I have to use your info that it is boarded by around 500,000 passengers?

    Whenever there’s talk of budget deficits, rich men always consider to make the poor pay? Uh, raise the taxes? With VAT even poor families that eat less than 3 meals pay. Uh, raise sin taxes? Who do you think buys most of the cigarettes and gin to survive inhuman living conditions? Here we have in a new context, an old idea. Raise the fares. Did they even mention to raise corporate taxes? Is money stolen from the country taxed? No.

    Public transportation is a public interest that you are suggesting should be controlled by private interests. We’ve already experimented on this with public utilities being under private control. We ended up with electricity costs that are among the highest in the world. You failed to mention these. Either you don’t know or your covering up for executives in suits with 7-8 figure bonuses (MWSS ahem, ahem).

    Let the burden of our deficit be taken on those who have benefited from Philippine Economy for far too long, the Cojuangcos included. Pedro, Juan and Kulas should be given a break.

    • September 9, 2010 3:38

      @ Junior. We have high electricity cost because of government intervention. It is the government that creates monopolies. We don’t have free-market system in the Philippines. We have a law that gives monopoly to private individuals through the IPP system. This system bars free-market individuals and groups to enter the power market to compete with the IPPs and government cronies. Read this…

      The only answer to the MRT/LRT problem is free-market capitalism.

      • Junior permalink
        September 9, 2010 3:38


        Whoever gave you the idea that we don’t have a free-market system in the Philippines? Compared to others countries Philippine imports have some of the lowest taxes, if none at all. Neo-liberals like you got there way, way back in the 90’s killing local businesses and fattening Transnational Corporations and Multinational Corporations.

      • March 22, 2011 3:38

        That’s really funny.

        Import tax in the Philippines is one of the highest in the world. The rate of import duty varies depending on the commodity imported, ranging from 3 to 50%. The schedule of rates is listed under Section 104, Tariff and Customs Code of the Philippines (TCCP), as amended.

        Under the unilateral tariff reduction programme, Section 104 has been modified and amended reducing the tariff structure of most commodities to its present level under Executive order (EO) 470; EO 189 which reduced the tariff on capital equipment, EO 204 on textile, textile articles and chemical inputs; and EO 264 which gradually reduces thetariff further to the uniform rate of 3% for raw materials and 10% for finished products by year 2003, and finally to a flat rate by year 2004.

        What “neo-liberals” are you talking about? What kind of drugs are you on?

        Do you know what free market means?

  5. Junior permalink
    September 9, 2010 3:38

    I won’t accept you argument that social justice is an invalid concept. You can create your own logic, which I will now call fuzzy logic. Same as Euclidean logic was incapable of solving the movement of heavenly bodies, your fuzzy logic is incapable of validating social justice. You commit the same mistake in that you see it as a concept and not a reality. Try to live by a dollar a day and tell me that social justice is invalid.

    • March 22, 2011 3:38

      Another funny thing. Do you know what social justice means? And what the hell are you talking about?

  6. Junior permalink
    September 9, 2010 3:38

    No to Privatization of Public interests

    Education is a right not a privelege

    Social Justice for all

    • September 9, 2010 3:38

      Don’t you get it, kid? Your socialism is a failure!

  7. KREO permalink
    February 14, 2011 3:38

    Hi! I’m a UP Student, and I think your insights are good. Very nice article!

  8. Jun permalink
    March 22, 2011 3:38

    No to subsidy and no to privatization, why? Simple math, a private corporation has more people that needs money (shareholders) . They expect to earn something from their money – investors. Although there is nothing wrong with that, that will just hike up the fare. Now, remove the subsidy, it will hike up the fare, the the government who owns it (partly or not) doesn’t need high return.

    Correct me if i’m wrong, government owned company only needs to pay for the employees and other overhead costs, not much on profit.

    • March 22, 2011 3:38

      If private businesses did that (hike up the fare like you said), then they might go broke. Remember that there are other modes of transport. What you’re saying is a fantasy because what keeps LRT/MRT prices low is government subsidy or taxpayers’ money. What the government should do is let anyone who wants to start his/her own transport business or compete with the existing mass transit systems. There should be no regulation. That will solve the “hike up” you’re talking about. Competition in the transport sector will lead to affordable fare prices. Just look at the telecom systems wherein the major players that compete for subscribers offer a lot of promotional offers and low call/text prices.

  9. Coolbox101 permalink
    June 17, 2011 3:38

    I like what you said here

  10. November 21, 2011 3:38

    That’s an all round well written blog…

  11. November 28, 2011 3:38

    What a really great blog!!!

  12. December 4, 2011 3:38

    Youre completely correct with this blog post!!!


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