Losing out to ride hailing operators and social distancing, amongst others, HCMC bus services are struggling to reroute impacts of low demand.
Ho Chi Minh City’s Transport Department recently asked the city for a public bus subsidy of VND1.31 trillion ($56.8 million) this year, up 14 percent from an earlier estimate.
The reason cited for the increase is low demand during and after the social distancing period. Resumption of services has only reached 80 percent of the target and companies say they need to pay staff and service their debts during the social distancing period despite revenues plummeting.
Without the increase in subsidies, the department said it might have to cut 15 percent of bus trips in the last six months of the year.
HCMC has been subsidizing the public bus system since 2002 and increasing it each year, but buses have not been able to gain a significantly bigger market share.
In 2009, the city had aimed at public buses accounting for at least 25 percent of commuter traffic, but the ratio is just 4.3 percent now.
The number of bus passengers reached 305 million in 2012, but is estimated to fall to 159 million this year. This means that after eight years and nearly VND10 trillion ($434 million) in subsidies, the number of passengers will have fallen by 48 percent by the end of this year.
In the last two years, many bus routes have been suspended due to low demand.
The city will suspend three out of 132 bus routes next month, the latest of many terminated in the last two years due to low demand.
Annual subsidies were never meant to be the main financial income for public buses. Cao Thanh Binh, Deputy Chairman of HCMC Economic and Budget Department, told local media that the subsidy is meant to help expand the number of buses and improve quality to attract more passengers, which in turn will bring in more revenue and eventually have the system stand on its own feet.
The city’s transport department asking for bus subsidies every year goes against the original idea of the subsidies, he said.
Other experts have even suggested cutting off the subsidies altogether. Nguyen Le Ninh, an advisor on science and environmental issues for the city, said that the subsidy model was only suitable in the 1970s-80s, but now in a market economy, it makes companies dependent on government’s coffers.
The main problem is the public bus system’s outdated infrastructure and inconvenience, critics say. Vu Anh Tuan, Director of the Vietnamese-German Transportation Research Center, said that the buses are old, and the routes are inappropriately planned and people are unable to get to their destinations on time. This increases preference for motorbikes, he added.
Officials have also pointed out that public buses are losing market share to ride-hailing services. Tran Quang Lam, Director of HCMC Transport Department, said passengers tend to use ride-hailing bikes for short distances as they are more convenient, faster and the cost not much higher than a bus ticket.
Today, the system mostly serves students and low-income workers, and in order to attract more passengers and gain 20-35 percent of the commuter market share, experts estimate the number of vehicles need to be expanded by four or five times the current number.
They have proposed a priority lane for bus and a re-planning of routes to improve connectivity.