Prude HCMC fails to develop rational public bus ads policy

The city issued Decision 108 in September 2002 "banning advertisements on public transportation means" because officials felt they could be "inappropriate or offensive."

The city stuck with the decision despite many businesses complaining about it.

Six years later, the municipal Department of Transport came up with a plan to run advertisements on the side of buses for VND33-55 million ($1,440- 2,400) per year, depending on the ad's size.

At that time, HCMC had more than 153 routes with more than 2,000 buses in operation. The plan said the advertisements could raise VND104 billion a year, sharing the burden of subsidies.

But the city administration rejected the plan, saying: "In fact, there are many shortcomings that remain unsolved and the management of advertisement has yet to be tightened enough to guarantee public decency."

It followed up on the rejection in June 2009 by issuing Decision 39 to replace Decision 108, continuing the ban on advertising on public transportation means.

Meanwhile, the capital city of Hanoi and localities neighboring HCMC, including Dong Nai, Binh Duong and Long An, were allowing private companies to run bus advertisements, which helped them generate significant budget collections.

Given this situation, the Ministry of Culture, Sports and Tourism wrote to HCMC in August 2009, asking that it considers making changes to Decision 39 because there was nothing in national laws that banned advertising on public transportation; and that it was inappropriate that HCMC does so.

In 2011, the city assigned a private company to build a plan to run commercial advertisements on public buses and tasked the HCMC Public Passenger Transport Management and Operation Center with executing it. This plan was expected to generate at least VND100 billion each year for the city.

However, it was not until June 2014 that the municipal Department of Transport submitted the project for the city's administration's approval, which came in October 2015.

This meant that ads could be carried on buses operating on 156 routes. Until now, more than 2,000 buses have carried advertisements on their sides.

Another block

However, earlier this month, the municipal transport department proposed that the auction for the right to advertise on buses be stopped temporarily. The proposal was made after a three-year bus advertising contract with Japanese advertising agency Koa Sha Media ended.

The company was the only one that won the bid for a bus advertising package in 2017 that allowed it to advertise on the sides of 492 buses.

Since then, the Transport Department made several changes to the advertising package for the auction, including allowing a flexible payback period and reducing the number of buses included in the package to attract small businesses. However, all the auctions since have proved to be a dud, with not a single party bidding for the packages.

The department had explained the failure on bus advertising not being as attractive as and more expensive than those on social media and websites as well as other forms. Moreover, companies have to bid to be able to advertise their products on buses, which is a time consuming process.

The department also said that the operations of buses have been unstable due to the Covid-19 pandemic and the city was in the process of replacing old buses and upgrading the public transport system.

But the municipal finance department said running advertisements on buses has generated VND57.3 billion ($2.47 million) for the city budget since 2018 until now and stopping it could cause financial difficulties for companies operating buses on routes that are not subsidized.

The HCMC administration last week had rejected the transport department's proposal and directed it to work with the departments of culture and sports as well as finance to negotiate the extension of a contract with Koa Sha Media.

Nguyen Quy Cap, president of the HCMC Advertising Association, said high auction prices along with low commuter demand for public buses were main factors that dissuaded businesses from running advertisements on public buses.

"The auction price to run advertisements on HCMC buses is five times higher than that of Hanoi," he said.

Cap said that in addition to the time-consuming bidding procedures, the successful bidder must advance a large deposit and sign a multi-year contract, making the deal even less attractive for businesses.

To make bus advertisement work, the city should not get deeply involved in the process and should just let bus operators and the businesses that want to advertise decide for themselves, he added.

From late 2018 to date, the city has repeatedly stopped operations of public buses because of a lack of passengers. It used to have 136 bus routes, which will be reduced to 129 with the upcoming removal of three more.

It has been estimated that if the city is able to put ads on all its buses, it can earn over VND100 billion per year, easing some of the subsidizing burden.

On average, the city spends more than VND1 trillion a year on subsidizing public bus travel.