Last year, the Land Transportation Office (LTO) has begun requiring new driver’s license applicants, as well as those who wish to add new restriction codes to their driver’s license to undergo a mandatory Theoretical Driving Course (TDC) either through the agency or through accredited driving schools. Then, there’s the new Motor Vehicle Inspection System (MVIS) that’s done through Private Motor Vehicle Inspection Centers (PMVICs).
One senator has revealed that these two new policies of the Department of Transportation (DOTr) and the LTO alone, could allow private firms a whopping PhP15-billion in annual profits.
Senate president pro tempore, Ralph Recto, has said that the MVIS creates an PhP8-billion annual industry. The mandatory enrollment in driving schools as a prerequisite to taking a driver's license test has the potential windfall to accredited centers of earning PhP7.5-billion a year.
“Dalawa lang 'yan (it’s just 2) out of the many,” Recto said. “It is unfair and premature to call these 'money heist' ventures because as I have said, the objectives are laudable, but the implementation is far from lovable.”
To secure a student permit or licenses for first-time drivers, an applicant must pass a theoretical and practical driving class from either private driving schools or in-house classes that LTO holds. The LTO has limited facilities to conduct such TDCs which forces many to enroll in more expensive, LTO-accredited private driving schools.
“The problem is konti lang naman ang sa LTO, so most are funneled to private driving academies, which have been mushrooming ever since the order was issued,” said Recto.
On average, the cost of taking a TDC in private driving schools is PhP2,875. The course is free if taken at an LTO's Driver's Education Center, but it requires would-be drivers to buy educational materials or a “driving pamphlet” that is around PhP370.
In 2019, the LTO issued 2,614,976 student permits. “If the same volume holds true in the coming years, then driving schools are looking at a PhP7.5-billion annual market.”
Another sector benefitting from these new DOTr and LTO requirements is the PMVICs.
“There are 12-million registered vehicles in 2019. If we take this into account and multiply it by the amount of the testing fee, we’re looking at PhP8.1-billion in potential annual profits for the PMVIC operators. And it could balloon as new vehicles are released each year,” added Recto.
“The profit and ROI (return of investment) for the private businesses that implement this government rule is high. So if [the] government is willing to spend PhP357-billion for a subway that will bleed subsidies, then why can't it modernize the LTO's own inspection system so it can help defray the social cost of car ownership?”