Economy - July 23, 2023 | 03:00 pm PT

20 years of ups and downs for Saigon’s buses

After almost 30 years of operating on the busiest bus route in Ho Chi Minh City, Truong Thi My Hang, once a wealthy businesswoman, now sells coffee to make up for her firm’s losses.

The 50-year-old from HCMC had inherited the bus transport business from her father.

When she took over from him in 1994, she had three buses, all over 20 years old.

At around that time bus owners gathered into cooperatives to run the city’s bus network with "3 self’s": self-starting routes, self-operating with their own buses and self-managing the economic aspects.

City authorities only oversaw things and monitored routes and ticket prices.

The members invariably operated aging Desoto, Dodge, Hino and Isuzu buses.

Buses with peeling seats and paint and no air conditioning often broke down, giving Hang the headache of finding replacement parts.

She says: "The buses, already decrepit, became worse because of frequent accidents. Once a bus climbed onto a pavement and killed several people.

"Passengers were fed up with the buses, and passers-by were scared when they saw a bus coming."

A bus on the streets of Ho Chi Minh City in 1996. Photo by Ian N. Lynas

In 2001 the Government decided to put an end to this situation and issued Decree 92 that fixed a 20-year lifespan for buses.

In HCMC, over 450 superannuated buses would become scrap when the new decree took effect.

But investing billions of dong was beyond the capability of most members of bus cooperatives, and the public transport network was in danger of folding up.

Life-changing move by authorities

At this critical juncture HCMC came up with a program to replace 1,318 old buses. It needed cooperative members – all operators had to be members of some cooperative -- to pay only VND100 million (now US$4,230) upfront for a new bus costing more than VND900 million, and pay the rest over 10 years in installments with a low interest rate.

The members rushed to participate in the project.

Other changes too were afoot. On some routes, for instance, the number of buses was cut to 40 from 50 earlier.

Phung Dang Hai, chairman of the HCMC Transport Cooperative Union and director of Quyet Thang Cooperative to which Hang belonged, says: "The cooperative had to organize a lucky draw to decide who would get the new buses. People waited in long queues."

In 2003 the program’s first buses reached cooperative members.

Another important change saw cooperatives no longer starting or operating routes by themselves.

City authorities had taken over that role.

HCMC trialed ticket subsidies and the fare was now only VND1,000.

Thus, it compensated them if a bus owner made a loss.

Drivers were happy that there was no longer pressure earn revenues.

The reforms brought quick results as fancy new buses with air conditioning yet low fares began to attract more and more passengers.

Between 2002 and 2005 the number of passengers increased by 70-100% a year. On many routes, Quyet Thang Cooperative members had a bus leaving every minute during peak hours and extended operations to 10 pm.

By the end of 2005 the number of subsidized routes had jumped from eight to 83 out of the total of 128.

Bus transport exploded, with 35 cooperatives now in operation, and accounted for nearly 80% of all public transport users.

"It was the glory days of buses," Hai recalls.

Passenger numbers increased year after year, peaking at 1.1 million a day in 2012, some 11 times the 2002 number.

Cooperative members had paid off their debts, owned their buses and made profits.

End of an era

But after peaking in 2012, things began to unravel for bus transport as both the public and investors turned their backs on it.

The numbers of passengers, buses and routes all declined in the next 10 years.

However, the bus network was fragmented with too many units, leading to the disparity in service quality between routes.

In 2006 the Department of Transport planned to reduce the number of bus cooperatives from 35 to 10 based on the recommendations of foreign consultants.

By 2016, four years later than planned, many of them were merged leaving nine operational.

Hai says the cooperatives that were merged with others had poor management.

The May 19 Cooperative took over all buses and routes from four cooperatives that had shut shop to become the largest with its members owning more than 300 vehicles.

Nguyen Van Trieu, its director, who has managed it since the early 1990s, realized that the traditional way of bus owners managing everything including salary payment to drivers and other staff only caused more problems.

"With 50 buses on a route, there were 50 bosses and 50 different ways of serving passengers, who suffered," he recalls.

He persuaded members to switch to a new model: They would invest money while the buses, ticket sales and staff were managed by the cooperative.

After each month the revenues were divided according to investment and the performance of the route.

"The cooperative members did not know which bus they owned, who the drivers and assistants were, and so they not interfere in the operation of the cooperative."

According to Hai, other cooperatives also adopted revenue sharing. Since the total ticket sales were divided equitably, there was no longer an incentive for bus owners to compete for passengers.


After the success of the reforms, HCMC added another 1,680 buses to comprehensively modernize public transport in an urban conglomeration with 10 million people.

Cooperative members had to put up 30% of a bus’s cost in advance and get a bank loan for the rest. The city partially subsidized the loan interest for seven years.

Cooperative members were supposed to have a capital of VND600-800 million, up from VND100 million 10 years earlier.

The repayment period was shorter, which meant the monthly interest pressure was higher.

Many members hesitated to buy new buses.

But Hai advocated for them to continue, explaining that the incentive 10 years ago had been a "once-in-a-lifetime opportunity."

By this time HCMC focused on environment-friendly buses running on clean fuel - compressed natural gas (CNG) – and offered lower loan interest rates in return.

After mulling over it for long, Hang decided to sell her old bus for VND300 million and took out a loan to buy a new one.

"I had to try and cling to my bus route, or else I would have lost it to someone else," she says.

Within two years the target of replacing old buses with 300 CNG buses was completed.

But owners like Hang did not expect to share just four CNG charging stations, one each in the districts of Binh Chanh, Hoc Mon, Tan Binh, and Thu Duc. The six new charging stations are still on paper.

It was not the only policy failure: Authorities planned to have bus terminals with more than 80 hectares of space, but have managed just over 20% of that.

Many buses used pavements, office buildings and schools as parking space.

Hard infrastructure is insufficient, and the city’s bus development policy is also unfinished.

Authorities have put forth ideas like restricting private vehicles and setting up separate lanes and prioritizing buses, but all of them have remained on paper.

Buses surrounded by cars and motorbikes at Hang Xanh intersection in Ho Chi Minh City in February 2022. Photo by VnExpress/Gia Minh

Le Trung Tinh, former director of the HCMC Center for Management and Operations of Public Passenger Transport, says the city tried having dedicated lanes for buses on some routes, but gave it up because of traffic jams.

After retiring in 2012, in his role as president of the HCMC Passenger Transport Association, Tinh along with other traffic experts continued to call for having a separate lane for buses, but in vain.

He laments: "This is a deplorable step backward. Buses cannot be developed without priority on the road."

Increasingly stuck in traffic, the city’s buses are becoming sparser even as the public has growing options.

Since 2008 the number of motorbikes in the city has been increasing at a rate of 300,000 a year. By 2014 ride-hailing apps appeared, and buses became even more disadvantaged.

The target of public transport meeting 15% of travel demand by 2015 was pushed back to 2020 and then 2025, but for all purposes it remains a mirage.

This rate is currently below 5%.

Vicious circle

"People only take the bus if it meets at least two criteria: cheap and punctual," Trieu concludes after more than 30 years in the industry.

Despite all their efforts to improve service quality, it was difficult for bus cooperatives to attract new passengers since punctuality is almost impossible in HCMC traffic.

Trieu points out that the number of students using buses decreased significantly in the exam season since they were afraid of being late.

Though buses are getting fewer and fewer passengers, the city still required cooperatives to earn big revenues, making it difficult for bus owners.

According to Phung Dang Hai, on route number 8, the busiest in the city, each bus owner faced loss of VND5-10 million a month since ticket sales and price subsidies cannot cover operating costs and loan interest.

Cooperative members are trapped after borrowing money from banks to invest in buses.

"The current situation in HCMC is a vicious circle with no way out," Vu Anh Tuan, director of the Transport Research Center at the Vietnamese-German University, says.

As passenger numbers decreased relentlessly and the subsidy mechanism became outdated, bus cooperatives suffered losses, forcing them to reduce their fleets and routes.

The decreasing frequency of buses means users have been becoming increasingly frustrated.

"The city wants businesses and cooperatives to invest in bus services, so it must first create conditions for them get by," Tuan points out.

The buses bought under the program 20 years ago are reaching the end of their life, and those bought until 2014 have seen or will soon see their interest subsidy ended.

HCMC is planning to revamp its bus system for a third time, making a switch from CNG vehicles to electric. It is preparing to start many new routes and rearrange existing routes to feed the Ben Thanh - Suoi Tien metro line, which is nearing completion.

But even Hai, who exhorted members to buy new buses in 2014, is no longer keen. They have yet to repay their loans and the number of passengers is meager, and they cannot afford any new debts, he says.

"We are exhausted after many years of losses," Hai says. "If the city does not have new breakthrough policies, it will be difficult for cooperative members to continue to spend money on buying and running buses."

While waiting for the next round of revamp and to make ends meet, Hang decided to open a coffee shop right at the Quyet Thang Cooperative parking lot.

She says: "Bus transport is our traditional business, so I am trying to keep it. But even if I want to sell the business, no one will dare buy it."

Story by Viet Duc, Gia Minh, Dang Hieu