Photos in the story show the various modern PUV prototypes on display at the Transport Modernization Expo in 2018. (PIA-NCR file)

For decades, the iconic jeepney has been a cultural symbol and mainstay of public transportation in the Philippines. But the old, inefficient vehicles are now being slowly replaced under the government's Public Utility Vehicle Modernization Program (PUVMP). Jeepney operators must transition to operating a modern, standardized vehicles by forming cooperatives and acquiring loans.

This massive system overhaul is encountering resistance, however, with the key issue being the high cost of jeepney units. But there are strategies operators can employ to defray expenses and make the shift viable. These are practical solutions jeepney coops can implement during the modernization transition and beyond to lessen the financial impact to stakeholders.

Understanding the modernization costs

The PUVMP requires old, dilapidated jeepneys to be replaced with more modern, eco-friendly vehicles following safety and performance standards set by the Department of Transportation (DOTr) and the Bureau of Philippine Standards. Under the rules, operators must consolidate into cooperatives that collectively operates at least 15 jeepneys each.

Jeepneys that meet “Class 2” specifications cost around P1.6 million to P3 million per unit for a fully electric vehicle. Operators are also required to have their own parking space or a terminal as their base of operations.

Additionally, forming a cooperative requires capitalization and organizational paperwork. Loans have high interest rates, requiring coops to have solid financial and business plans to secure money from the bank.

Many small operators, however, lack experience with this process. The combined expenses make acquisition daunting without financial assistance.

Maximizing government support

The government does provides financial support to aid in the transition. Operators should however, fully utilize these programs:

• Subsidies - The DOTr offers a P160,000 subsidy per jeepney to help coops with down payment on loans.
• Low interest loans - The PUVMP's "5-6-7-8" program offers 5 percent down payment, 6 percent interest rate, 7 years to pay and an P80,000 subsidy per unit.
• Livelihood funds - The Department of Labor and Employment provides livelihood grants and training to displaced drivers.
• LGU assistance - Local government units may give assistance for land or transportation programs. Partnerships can be explored.
• TESDA training - Free skills training for displaced drivers by the Technical Education and Skills Development Authority.
• DTI support - The Department of Trade and Industry aids coops with business registration, licensing and incorporation.
• Tax incentives - Cooperatives enjoy tax perks like income tax exemptions and discounted national taxes.
  

Coops should coordinate with the relevant agencies to utilize every available form of support. Getting subsidies and low interest financing is essential to reduce capital costs. Livelihood grants can provide stopgap income while making the transition. LGU partnerships, training programs and business support will also build capacity over the long-term.

Exploring private sector sponsorships

Aside from government help, jeepney coops can also attract sponsors from the private sector by offering advertising and branding opportunities.

Potential partners include:

• Businesses along routes - These are stores, shops and establishments that benefit from jeepney foot traffic. They can sponsor vehicles serving their location by entering into a partnership with the jeepney coop.
• Malls and real estate - Large malls and land developers like SM, Ayala and Megaworld can provide space for terminals near their properties to generate passengers.
• Banks and lending companies - Financial brands that want visibility can sponsor jeepneys wrapped with their logos and ads.
• Telcos and tech companies - Telecommunications companies like Smart, Globe, and Dito can brand vehicles to promote mobile data, WiFi hotspots and cashless payments on board.
• Automotive brands - Car dealers, gas companies and parts makers can advertise on jeepneys as a mobile billboard.
• Consumer brands - Food and beverage services and consumer packaged goods businesses and retail brands can increase exposure through jeepney ads and promotions.

Local businesses - Smaller community brands can also sponsor at lower cost for limited local promotion.
 
Strategic sponsorship propositions with co-branding offers can entice potential partners. This generates crucial additional income for daily operations and loan payments.

With prudence and compassion, the PUVMP can uplift incomes while providing quality public transport. Cooperatives that embody sustainability and inclusiveness will go the distance.

The road ahead

The PUV modernization brings massive changes but also new opportunities. With determination, unity and pragmatism, jeepney cooperatives can navigate the challenges and steer their business forward. 

Professionalism, service excellence and sustainability will define a jeepney coop’s success in the future. The community's support and trust will also empower them for the long haul. Indeed, the road ahead remains long and winding, but the destination is one filled with promise and progress. (JCP/PIA-NCR)