Many bus companies and transport cooperatives in HCMC have stressed the need to change the way bus subsidies are calculated to minimize their losses.

A fare-subsidized bus No. 31 stops at a bus stop in HCMC

Nguyen Van Thao, director of Transport Cooperative No. 15, said it is unfair to measure bus fare subsidies by subtracting costs from revenue, adding that the current method of calculation discourages bus firms from upgrading their buses and improving the quality of service to attract more commuters. Many enterprises that replace old buses with new ones do not receive higher subsidies than those operating old buses with a small number of passengers.

Thao noted that each route was subsidized with VND66,000 in 2017, but the figure has slumped to VND43,000 to date despite enterprises’ investment in new buses. Ebbing subsidy levels and rising costs have hampered enterprises from showing much interest in their bus operations.

General Director of HCMC Transport Cooperative Phung Dang Hai stated that the existing calculation method for subsidies applied to both old and new buses is unfair. Moreover, buses carrying many passengers have been given small subsidies but will receive larger subsidies if they transport fewer passengers.

That subsidies are given to buses regardless of the number of passengers they carry seems to be a strong disincentive for enterprises to enhance the quality of services.

“It is necessary to encourage buses to increase the number of passengers by granting them large subsidies,” Hai remarked, adding that inefficient bus routes should be discontinued to streamline the bus network.

Tran Chi Trung, director of the HCMC Public Passenger Transport Management and Operation Center, noted that the current way to calculate a bus subsidy is to subtract costs from revenue earned from ticket sales, adding that the cost is determined by the price framework issued by the city for trips of more than one kilometer. However, the price framework set in 2009 is now unsuitable.

As such, the municipal Department of Transport has worked with the HCMC Department of Finance, proposing updating the price framework, Trung said.

HCMC annually spends more than VND1 trillion on subsidizing bus fares to attract passengers to use public transport. However, due to the falling number of passengers and growing losses incurred by bus firms, many experts and transport enterprises have urged the relevant departments to reconsider the method of calculation for bus subsidies.

SGT