Keywords:

Informal transport; paratransit; economic and social regulations; social protection; entrepreneurship

Idea:

Informal transport is a basic service indispensible to urban lives in most developing countries in Southeast Asia. It provides relatively demand-responsive services to city residents who have no private vehicles and live or work where public transport is inadequate. The informal transport sector also creates jobs for low-skilled workers, many of whom are rural immigrants. In modern cities such as Singapore, informal modes are no longer seen on the streets, as governments have “formalized” them completely. But in other cities, notably Bangkok, Manila and Jakarta, informal transport not only survives but thrives. Their existence will remain partly unofficial – partly official, with some legal status but only limited institutional and state support. Despite its status, informal transport is here to stay for a while.

Scenarios:

Informality continues to thrive

As cities keep growing and expanding to the suburbs, never could enough roads be built to meet the burgeoning travel demand, and public transport has become increasingly critical. However, due to limited fiscal and organizational capacity in transport planning, coupled with political maneuvering by interest groups, most rail transit projects have been delayed. When these services finally come in operation, too often they are not “mass” but “class” transits because the fares are too high for the poor. Bus services are often inadequate, and public bus agencies tend to be debt-ridden. The Bangkok Mass Transit Authority, for instance, has a debt worth of about 25 billion USD as of 2011. It is small wonder that they cannot improve the service quality or area coverage. That leaves a large void for informal transport services to accommodate travel demand, particularly for those who cannot afford private automobiles. In Manila, paratransits account for 76 percent of total public transport trips, while the figure in Jakarta is about 34 percent.^[1]

Informal transport modes in Southeast Asia range from non-motorized traditional paratransits, such as pedicabs, to motorized ones, such as minibuses, vans, and motorcycle taxis. The types of services fall within the range between fixed routes-fixed stops, fixed routes-flexible stops, and flexible routes-flexible stops. The services are mostly run by small-scale, independent operators, who may or may not own the vehicles. In some cases where relatively large capital investment is required, such as for minibuses, drivers are often hired by the vehicle owners. In other cases involving smaller vehicles, such as motorcycle taxis, drivers are usually independent owner-operators. Unlike in other informal sectors, such as street vending, this informal sector is male dominant. It is rare to see female motorcycle, van, and minibus drivers. The number of female drivers may increase in the future, but probably not by much.

Cities are expected to grow and expand in Southeast Asia, and as it is not likely that mass rail and bus transits can keep up with the increasing demand, informal transits will continue to grow, so long as the authorities let them.

The love-hate relationship lingers

Informal transport modes have been prevalent in Southeast Asian cities for many decades, and their history is rife with tensions with transport authorities. On the one hand, slower non-motorized modes of transport are now banned in many cities because they are deemed unsuitable for congested city roads, not to mention perpetuating an image of “backwardness” that modern planners want to cast aside. Cycle rickshaws are now operated mostly as tourist attractions in restricted areas. Motorized modes, on the other hand, have rapidly increased their presence and importance in every single major city in the region.

Public transport authorities have always been uneasy about informal transport, so they attempt to “formalize” the services through economic and social regulations. Economic regulations include restrictions on entry and exit and price control, so public welfare is not diminished by natural monopolies and market structures with limited or excessive competition. But in reality governments have little say as to when and where informal operators can provide services or how much they can charge their passengers. Even when they do, the reasons are not typically out of concern for the public’s welfare. Rather, they are afraid that informal minibuses will compete against existing bus services.

Social regulations, on the other hand, aim to assure the quality of service, especially safety, reliability, and comfort, and the labor conditions. Reckless van drivers, motorcycle taxis without helmets for passengers, dirty seats, cramped space, and fatal accidents are only a few of the reasons that cry out for government regulation. As such, some aspects of informal transport are now regulated, such as vehicle and service registration, while other economic aspects, such as pricing, are left for the operators and the market to determine.

Despite the urge to over-regulate informal transport, transport planners have gradually come to terms with the flexibility, capacity, and responsiveness of informal transport in meeting travel demand. Nonetheless, most governments have not yet incorporated informal transport in their medium- and long-term transport planning. There are also limited data and research studies on informal transport in Southeast Asian cities, which are necessary for devising appropriate transport policies.

As in any informal activity, corruption and cronyism abound in the informal transport sector. “Protection fees” are often paid to local policemen or public officials, who can bend some rules for those who pay. Often times, operators have to rely on local mafia, or they themselves may be local mafia. This is one of the key reasons why the formalization and legalization of informal transport services is a tempting solution. Consequently, several cities have been moving in that direction.

Complementarity and competition

Most megacities in Southeast Asia are currently planning and building more mass rail transit systems. Such infrastructure investment will change the cities’ urban structures drastically. The question arises as to how this will affect informal mobility. The answer depends on whether the governments will install draconian measures to regulate informal transport, how quickly they will expand rail transits and improve bus services, and how much cheaper private vehicles will become. Van services in Bangkok have already lured passengers away from traditional buses, which have been slow to adjust to rapidly changing and rising travel demand. New van routes to transit terminals have been added quickly to accommodate the demand of rail users. Yet, automobile sales have only been increasing in all these countries. If these trends continue, we can expect a scenario in which informal transport services will continue to grow alongside an increasing number of private cars being driven and a decreasing number of trips being taken on buses. Feeder services, such as motorcycle taxis, will continue to transport people to bus stops and rail stations.

Watch out for those secondary cities

Although transport problems continue to plague megacities, it is secondary cities that will need closer attention in the future. These cities, such as Chiang Mai in Thailand, Bandung in Indonesia, and Cebu City in the Philippines, are all experiencing rapid urban growth. Suburbanization is occurring in a similar fashion to that of megacities. The current public transport services are inadequate, but they are receiving even less attention than those in megacities. The rich and the middle class in these cities buy cars; the rest either use motorcycles or rely on paratransits. Population density is even lower in these cities, which makes it even more difficult for public transport to achieve economies of scale. Informal modes of transport have so far filled the gap, but as these cities continue to grow, public transport with greater capacity will become a necessity. Transport planning that integrates informal transport and bus services will sooner than later become necessary.

A polio flower girl at a congested intersection in Bangkok - Copyright @PACEyes

Implications:

Social protection and political representation are direly needed

Social protection is generally lacking for informal transport workers. Even though informal operators are somewhat connected to powerful people, their collective political power is limited. Realizing they cannot simply wait for the government to take action, some groups of workers have formed associations to collectively campaign for better social protection. An example is KASAMPADYAK, an association of 2,000 “padyak” drivers in Navotas, Metro Manila. The members now have access to social protection schemes, such as free PhilHealth and other social benefits, from the Navotas local government. A modest amount of mutual aid is also allocated to every member as financial support for various needs.^[2]

Similarly, the Thai Association of Motorcycle Taxi Drivers has been established to promote social welfare and basic labor rights. So far, only a small fraction of the more than 100,000 motorcycle taxi drivers in Bangkok have joined the group. However, the association has already co-operated with the Bangkok Metropolitan Administration and insurance companies in a campaign to offer accident insurance at low cost for motorcycle taxi drivers and their families. Ironically, they have also held a small public demonstration demanding that the city disallow some drivers who have not registered with the city to operate in overlapping routes.

Entrepreneurship and the potential for impact investment

Informal sectors are often associated with cheap, outdated and low-tech technologies. Although that remains true in Southeast Asia, it does not mean the spirit of entrepreneurship and the strive for improvement do not exist. There are now signs that indicate increasing potential for adoption of new technologies. For instance, van service operators in Bangkok are using cell phones to inform others of traffic congestion and co-ordinate their schedules. GPS navigation systems are being considered for monitoring and scheduling purposes. In Jakarta, Go-Jek, a motorcycle taxi start-up, is offering a variety of transport services, including transporting passengers, courier service and shopping and delivery services. Launched in February 2011, the company now employs seven full-time employees and has partnered with more than 200 “ojek” drivers at 80 pick-up points across Jakarta.^[3]

This sector needs more attention from policy makers, aid donors, and investors. Despite the fact that informal transport innovations could potentially affect the livelihoods and quality of life of a large number of people, technology and innovation policies in Southeast Asia do not consider informal mobility to be as important as nanotechnology or other advanced fields. The potential for creating, implementing, and diffusing innovations that really matter has not yet been realized. There is also a great potential in terms of improving urban sustainability. Because of the large market and potential for economic and social returns, impact investment and social enterprises in this sector are sorely needed. The informal transport business has mostly relied on personal savings and informal sources to finance their capital assets, primarily because the operators have limited access to formal credits. There is certainly ample room for microfinance initiatives here.

Copyright @PACEyes

Drivers/Inhibitors

• As domestic urban migration continues, and public transport networks and services remain lagging behind, informal transport services will continue to increase.
• The cost of car ownership is expected to come down in most Southeast Asian countries, but a large number of urban residents will still be unable to afford cars and have to rely on informal services.
• Suburban sprawl without provision for public transportation will only increase informal provision of transport services.
• Informal transport is a cushion from economic shocks. Like in other informal sectors, the number of informal workers goes down when the economy booms, and goes up when the economy busts.
• Without supportive government measures, specifically in finance, technology, and security (i.e., protection from extortion), the informal transport sector will not realize its tremendous potential.