Jeepney financing plan meets resistance from cooperatives
THE lending terms for the public utility vehicle (PUV) modernization program have proven to be a stumbling block as operators do not want jeepney drivers to be the borrowers, Land Bank of the Philippines (LandBank) said.
Asked about interest in the modernization lending program, LandBank President and Chief Executive Officer Alex V. Buenaventura said: “It looks like (operators) are resisting.”
“The operators are complaining. Maybe they don’t want us to lend to the drivers,” Mr. Buenaventura said, which means vehicle ownership will ultimately be transferred to the driver when payments are complete. “I heard that they prefer the old way, they want to be the borrowers so they benefit (from ownership),” he said.
The current setup directs loans to the franchise cooperative, making the latter the registered owners of the vehicle. The cooperative then lends the vehicles to drivers, who pay rent through a so- called “boundary” system, a daily quota they have to pay to the vehicle owners, beyond which any money they earn is theirs.
He said that jeepney drivers earn about P16,000 on average per month with the current boundary system. The PUV modernization program is estimated to raise their earnings to up to P33,000 a month, apart from having an asset under their names.
“Perhaps we have not succeeded in communicating that inclusiveness is one of the goals of the lending program,” Mr. Buenaventura said.
The government in May signed an agreement to offer up to P1 billion worth of credit via LandBank, to fund an initial 650 modern jeepney units, costing about P1.4 million to P1.6 million per vehicle. The Development Bank of the Philippines will likewise offer another P1.5 billion for 700900 more jeepneys.
The modernization program reforms Transportation department’s Omnibus Franchising Guidelines, requiring local government units to develop a Local Transport Plan and a Transport Route Plan, and the gradual phasing out of traditional jeepneys, as well as jeepneys aged 15 years and older, for replacement with environment- friendly vehicles equipped with more efficient engines.
Mr. Buenaventura noted that due to the large volume of jeepneys in Metro Manila, the bank plans to pilot the program instead in Metro Cebu and Metro Davao.
“There are 70,000 jeeps in Metro Manila. This ( loan program) only covers 650. We might pilot the program in places like Davao and Cebu,” he said.
LandBank could choose to expand the lending program if it sees strong demand in the future.
LandBank is studying an automatic debit system for drivers. All borrowers typically open accounts with their creditor banks but the bank may go as far as setting up cash deposit machines at strategic area like maintenance depots.
“Unlike before, they would pay boundary to the operator. A deposit would cost around the same, P800 per day, but they will deposit to their (LandBank) accounts,” Mr. Buenaventura said.
“At the end of month their loan payment is automatically debited.”
He added that defaults would give the bank the right to seize the vehicle and assign it to another driver, who would then take up the loan.
“I am very sure no driver would want to default,” Mr. Buenaventura said.
Sought for comment, George F. San Mateo, national president of the transport alliance Pinagkakaisang Samahan ng mga Tsuper at Opereytor Nationwide ( PISTON), said that the organization is not against the PUV modernization program in itself, but are against the government’s terms.
“LandBank’s statement betrays their lack of knowledge of the jeepney industry. We are not talking of super huge profits. Jeepney operators are small operators, and the majority are single-unit operators,” he said in a text message.
The government plans to eliminate the single-unit operator franchise, in exchange for a corporate type of franchise, organized around a minimum fleet size of 10 units, he said.
“Under the proposed system, all the 300,000 small operators will be phased out and only big companies and corporations will corner the franchises for public transport.”
“Gov[ernmen]t should allow rehabilitation of current existing units to enable the small operators to modernize, with government help, increased subsidy and through government centralized procurement of brand (new) environment-friendly engines,” he added. —