Brazilians Foil a Bus Fare Hike, but Commuting’s Still Costly

Brazilians Foil a Bus Fare Hike, but Commuting’s Still Costly

By Joshua Goodman on July 03, 2013

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The street protests that rocked São Paulo and Rio de Janeiro achieved their initial modest goal: In mid-June authorities revoked a 9¢ increase in bus fares that had gone into effect in both cities. Yet even without the fare hike, Brazilians devote a bigger share of their paychecks to mass transit than most of their urban counterparts around the world.Residents of São Paulo and Rio de Janeiro work an average of 10 minutes to pay for a bus ticket (price: $1.21 to $1.34), more than twice the time needed in Paris or New York. The comparison is based on the latest report by UBS (UBS) on purchasing power in 72 cities. In Beijing and Mumbai, residents work less than four minutes to earn the money for a fare.

“It ends up weighing on people’s budgets,” says Samy Dana, a professor at Getulio Vargas Foundation’s business school in São Paulo, who first noted the disparity using the UBS data. “Price is only half of the picture. If you look at the quality of public transport, the situation is even worse.” Since the buses are owned by different companies, transferring between the lines can be costly. Because of urban sprawl in both cities, residents endure long walks to reach their bus stop. In São Paulo, dissatisfaction with public transport is running at the highest level in 26 years, with the quality of service rated “horrible” by 55 percent of those surveyed in a June poll by Datafolha, a pollster in São Paulo. The average wait time for a bus in Brazil’s biggest city is 21 minutes, according to a survey of 1,512 residents taken last year by Ibope, another polling company.

One way to improve Brazilian transport is for the government to boost its skimpy funding, says Jerome Pourbaix, head of policy at the International Association of Public Transport in Brussels. While mass transit in many European cities relies on subsidies for about 50 percent of funding, the cost of bus service in Brazil falls largely on riders. The problem for Brazil is that the bus lines are private but their fares are regulated by the government. Subsidies for bus transit aren’t likely. With the country’s growth forecasts being cut and local governments banned from issuing debt, Brazil’s state and federal budgets may be stretched even further if the government caves in to protesters’ demands for more spending on services. The bumpy ride for Brazilian straphangers may continue.

The bottom line: A resident of Rio de Janeiro must work 10 minutes to earn a bus ticket, twice as long as New Yorkers or Parisians.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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