The HCMC People’s Committee has directed the Departments of Transport, Culture and Sport and Finance to negotiate the extension of a contract with Japanese advertising agency Koa Sha Media for advertising on public buses.

The order rejects a proposal by the transport department earlier this month that the auction for the right to advertise on buses be stopped, temporarily.

The proposal was made earlier this month after a three-year bus advertising contract with 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 side of 492 buses for three years.

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 for 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.

Given all the above reasons, the department had proposed that the auctions for bus advertising be temporarily stopped pending a review on pricing the packages in accordance with demand.

Now, the city administration has requested that the transport department works with relevant agencies to extend the contract until a further plan is made.

The new plan should make adjustments that align it better with the demand of bus travel and the demand for advertising.

Since 2018 until now, running advertisements on buses has generated VND57.3 billion ($2.47 million) for the city budget.

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, and with the upcoming removal of three more routes, only 129 are left.

If it is able to put ads on all its buses, it can earn over VND100 billion per year, easing the burden of subsidizing them.

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