Salceda’s war against excessive toll fees

Albay Governor Joey Salceda has mounted a vigorous and determined media campaign against the 277 percent (not 250 percent, he says) increase in the toll at the South Luzon Expressway (SLEX). He has strong and cogent arguments against the legality and desirability of the onerous rate increase. He has also provided the best analysis of the economic impact of the unjust imposition.

To me, the management of SLEX simply doesn’t deserve the increase. The tollway is mismanaged. The employees are gruff, indifferent and disdainful of motorists, its customers. They do not bother to smile nor greet you Good Morning, Good Afternoon or Good Evening. They don’t count your exact change. And on at least three occasions, the toll clerk gave me the wrong change (kulang). Often, taking the tollway and paying the toll is not just worth it. Traffic is terrible, which defeats the purpose of taking the expressway.

Last week, there was an accident on the northward lane of the expressway at Bicutan. A truck spilled canned goods on the highway, completely closing the artery for several hours. Yet, the teller at Sukat didn’t advise me to take the Skyway instead to avoid the traffic. What should have been a 15-minute ride at the most became a 45-minute ordeal.

The present SLEX management under the Malaysians is the best argument that Filipinos can run their own highways better. SLEX is an embarrassment and a disaster compared to the way the Manila North Tollways and the Subic-Clark-Tarlac Expressway are managed. There, there are enough signages, traffic enforcers are always on their toes, and the tellers are polite and honest.

Meanwhile, using vehicle registration, car ownership and trade patterns, Albay Governor Salceda estimates that Bicol originates only 15 percent of total vehicular traffic at SLEX. Albay’s share is estimated at 4 percent. That appears small for all the big noise we are making, Salceda concedes, adding “it should really be Batangas and Quezon who should be at the forefront of this cause.”

But Albay’s 4 percent, Salceda estimates, “actually translates to P400 million per annum and becomes big when compared to our nominal aggregate household income of Albay at P18 billion using 2006 FIES (Family Income and Expenditure Survey). This also represents a net resource transfer from our provincial economy of P400 million which again looks small but that is almost one half of our annual provincial budget of P920 million and that, to me as a governor mandated to manage local economic development effort to reduce poverty, is a huge resource outflow that could be saved and retained in our local economy to be used by our households for their basic needs and by small businesses to invest.”

The Supreme Court has temporarily stopped the nearly four-fold increase in toll rates. Backers of the SLEX management insist that the SC TRO sends the wrong signal to investors. I am sure investors know the meaning of fairness. The four-fold increase was imposed without the benefit of public hearing. It was the unilateral decision of the Toll Regulatory Board, which should be protecting the interest of Filipinos rather than so-called foreign investors.

Says Salceda: “It is not our doing that [a] the STOA joint venture was not subjected to procurement procedures. It was neither bidded out or even Swiss-challenged and [b] the toll fee was not subjected to notice and hearing. It is the judgment call of the investor (there is such a thing called “due diligence”) to take the intrinsic risks as a consequence of such utter lack of transparency behind such shocking quadrupling of rates. Common sense would easily tell you that such lethal combination would trigger a public outcry.”

The Albay provincial CEO argues: “If there is any lesson to be learned from SLEX, it is that in a liberal democracy, the incest between big business and government seems so natural that it can only be regulated through the vigilance of the citizenry and civil society. The thought that deregulation, liberalization and privatization have banished the demons of rent-seeking now seems too sanguine with big-time regulatory capture. “

In the six cases pending at the SC, the TRB is represented by the Department of Justice, the Philippine National Construction Corp. and by the Office of the Government Corporate Counsel. Salceda says the “TRB is the first party to the STOA that stipulated the toll fee per km with formula for inflationary adjustment.” He wonders: “Who represents the people, the consumers, the motorists, the rural viajeros, the farmers in all of this? So, where is the poor in all of this?”

Salceda resorts to time-tested economic arguments against excessive toll fees. He explains: “The SLEX toll fee hike is an unavoidable burden of our viajeros, the lynchpin of our MSMEs.

“About 74 percent of the Philippine poor is rural. And Bicol accounts for 9 percent of this poor, the second highest pool of poor among regions. As a practitioner of rural development strategy since I entered local politics in 1998, I have witnessed the critical role of two key players in the rural markets—lowly viajeros and the compradors—in the viability of farmers, small agropro-cessors, coop-owned firms, household-based business or negosyo and entrepreneurs.

“Micro and small enterprises account for 99 percent of total businesses in Bicol, just like the national average. And, viajeros and com-pradors are the lynchpins or binding forces in rural markets. They play significantly in the provision of informal financing, in taking risks in price and volumes as an aggregator and in making rural products reach urban markets.

“Typically, a viajero would have an Izuzu Elf probably acquired through inhouse (casa) installment financing and a house serving as warehouse as their main physical assets. But, accounts receivables and advances would be a bigger item in their balance sheet. Thus, understanding their operations is central to any rural development strategy as they either you displace them with alternative institutions, fortify them by enabling them to go formal or maintstream through easier access to bank financing or supervised credit programs or increase their numbers to foster competition through a more expansive macro policies.”

Salceda says the abrupt quadrupling or 277-percent increase in SLEX toll fees impacts adversely on the cost structure of viajeros. Fuel is their main variable cash expense—computed at an average P1,348, i.e.
586 kms divided by 15km/liter x P34/liter. Thus the P232 toll would repesent 17 percent of their fuel expense, increase their costs by 13 percent. And there is a risk that they find no backload in Divisoria to carry to Polangui, Albay. The toll fees then exaggerate their costs. Bicol relies on the rest of Luzon for inputs to their businesses and consumer commodities. Again, the toll fee hikes would be passed on to ordinary consumers.

The Bicol viajero has no choice but to use SLEX unlike their counterpart in the north—there is MNR for TPLEX, Gapan-Olongapo Road for SCTEX and MacArthur for NLEX. The vehicular traffic in Alabang-Calamba section of the MSR (Manila-South Road) is just too heavy due to the rapid industrialization and massive residential development of Calabarzon. In effect, the monopoly position of SLEX as a provider is quite elevated, virtually making the toll fees a major unavoidable cost item for the viajeros. In short, they are likely to more risk averse in their trade transactions given the upward shift in their cost structure.

Travel to Manila has been a regular activity of a typical Bicol family, Salceda says. –TONY LOPEZ, Manila Times

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