Financing the reform of informal public transport in the Philippines: Visiting Scholar Seminar with Dr. Varsolo Sunio

Join us for a research seminar with Dr. Varsolo Sunio, visiting the Toulan School of Urban Studies & Planning as a Fulbright Scholar from the Philippines.

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Financing the reform of informal public transport in the Philippines

The Philippines’ Public Utility Vehicle Modernization Program (PUVMP) promises to be a game-changer in public transport provision. It mandates that transport cooperatives replace their old jeepneys with modern units. While it has been progressively rolled out since 2017, the pace of its implementation remains very slow. One major pain point in its current execution is the limited access to financing, restricting transport cooperatives from acquiring new vehicles. Transport cooperatives are organizational entities that support specific transport service provision. They are often composed of workers and service providers, formed formally or informally.

In this presentation, I explore the effect of service contracts (SC) on the financial capability of transport cooperatives to renew their fleet of old jeepneys. I present qualitative data from interviews with 12 transport cooperatives and 3 bank credit officers to show how service contracting has improved the cash flows of the transport cooperatives and enhanced their creditworthiness. Next, I present audited financial statements from two transport cooperatives to quantitatively analyze how service contracting has contributed to improvements in cash flow based on four financial metrics. Our findings indicate that long-term service contracts can increase transport cooperatives' confidence in managing debt. This study introduces a new approach to leveraging private bank financing for the reform of the informal transport sector.