[sustran] Asian economic crisis and transport

[John Ernst]

At 09:26 AM 1/28/98 +0700, Paul Barter wrote:
>
>I am interested to hear the views of sustran-discussers on the implications
>for transport of the economic problems that have effected many of the
>formerly fast-growing economies in East and Southeast Asia.   
>


Paul makes a very timely request.  "The Nation", one of the two primary
English-language newspapers in Bangkok, this morning featured a front-page
editorial asking their readers to support a gas tax increase.  While
arguing the economic benefits, the editorial states: "The government is
understandably afraid of the political outcome".

Indeed, Asian governments appear to be held hostage by consumers who feel
that cheap fuel benefits everyone.  Since this issue hits everyone’s
pocketbook, it is not hard to mobilize a public outcry.  

Fuel price increases in the Philippines are widely perceived as hurting the
poor.  A participant in a transport workshop last week in Manila argued
that it was the government’s duty to keep gas prices low to help all the
people.   When I suggested that someone driving their own Mercedes around
Manila ends up receiving a much higher subsidy from low fuel prices than a
presumably poorer person riding in a jeepney, this appeared to be new
information.  

Public transport in Manila is often viewed as more of the problem than the
solution.  Jeepneys and buses have been targeted as sources of pollution
and causes of congestion. (Robert Verzola has written a good summary of
biases against public transport in Manila).  The concept of passenger-km as
opposed to vehicle-km does not seem to be well understood in either the
Philippines or Thailand.  

>

>*  Have Thailand, Korea and the Philippines (which import most of their
>oil) allowed their fuel prices to rise in local currency terms to reflect
>the international US$ price??  If not, then who is paying for this?
>

The Philippines are in a particular squeeze.  The government attempted to
deregulate oil prices last year, but the law was declared unconstitutional
in November.  While legislators attempt a new deregulation law, oil
refiners have threatened to stop importing crude oil at current prices
(reported in the Philippine Daily Enquirer, 17-Jan-98, p.1,14).  In
response to this situation, last Friday, the Philippine Energy Regulatory
Board raised fuel prices by 1.18 pesos ($0.03) per liter for premium
gasoline.  The price of diesel, used by jeepneys, rose 50 centavos to 7.83
pesos per liter (roughly $0.19/liter).  The price rise prompted strikes by
jeepney operators at locations throughout the country.  

In Thailand, the currency has lost 50 percent of its value since June.  Gas
prices have not doubled, but increased by about 33 percent.  A part, but
not all, of this difference can be attributed to the fall in world oil
prices.  Prices have fallen about 15 percent since June (the WTI - Cushing
spot price for crude oil was $19.26 in June 97, $16.48 on January 16, ‘98).
  All else equal, fuel prices in baht should be up by 70 percent.

Prices around Asia for premium gasoline were reported today in the Bangkok
newspaper (The Nation, 28-Jan-98, p. A-5) as follows.  I’ve converted these
to US dollars at 54 baht/$ plus added in the new Philippines price using a
42 peso/$ rate.  Prices shown are in US dollars/ liter:

0.23	Thailand
0.25	Malaysia
0.28	Brunei
0.32	Philippines
0.41	Myanmar
0.45	Laos
0.49	Taiwan

For comparison:
0.87	Austria 
0.37	US (source: US Dept of Energy, www.eia.doe.gov).  

Ironically, the dollar-based price of oil is lower in Thailand – which
imports essentially all of its oil – than in Brunei, a major oil exporter.
Unlike the Philippines, I am not aware of any price controls of the Thai
government, but I would be interested if anyone has some information on
what might be going on.  

>
 Will the
>crisis help to bring about a change towards more equitable, people-friendly
>and sustainable transport policies? Or will it set back this cause?  


There have been a lot of used Mercedes for sale lately in Bangkok.  But,
although there is propaganda in Thailand to cut back on consumption, I
doubt if anyone is cutting back on car use until they are forced to by
economic necessity. This is not hard to understand considering the only
options to private motorized vehicle transport in Bangkok are slow,
uncomfortable, dangerous or all three.  

Developing public and non-motorized transport -- which can be as simple as
giving these modes enough road space to run more efficiently and safely --
presents an opportunity to relieve the economic drain of oil imports from
many Asian economies.  However, there is one risk of pushing these modes
now.  They could be even more associated with "hard times" or poverty by
the public.  In status conscious Asia, that is a major setback.

Still, there is an opportunity to convince governments to improve public
and non-motorized transport so that they provide fast, cheap, safe and
reasonably comfortable alternatives to private cars.  I would be really
interested in information which clarifies the relationship between oil
imports, oil prices, inflation and economic functioning, so that a strong
case can be made on these grounds for governments to move toward more
efficient and equitable transport systems. 

John Ernst
International Institute for Energy Conservation - Asia office



INTRODUCTION

I am remiss to admit that this is my first contribution to the SUSTRAN
list.  I have followed the discussion since the beginning last April.  I
would like to thank those who have provided some very useful information to
me through this list over the past months.

By way of introduction, I manage the transport program of the International
Institute for Energy Conservation’s office in Asia.  I am an ecologist by
training with 12-years experience in environmental advocacy from an  NGO
perspective.  I have researched transport related issues in Africa and Asia
for the past six-years and previously worked on a study of sustainable
transport in 3 mid-sized Asian cities.  

IIEC-Asia is based in Bangkok, Thailand and currently has transport-related
projects in Thailand, Manila and Xiamen, China.  IIEC is a small
non-profit, non-government organization with other offices in Santiago,
Chile; Pretoria, South Africa, London and Washington, D.C.  We focus on
transport, energy efficiency and renewable energy solutions in a developing
world.  The transport program worldwide includes Julia Philpott in
Washington, Lloyd Wright in Pretoria, Kristina Egan in Bangkok, and Chris
Zegras (a regular SUSTRAN contributor) in Santiago.