“The debate risks going round and round, with the same points being raised over and over again about making the system fairer, such as prioritizing people who really need a car or limiting cars to one per household. Han Phuc Kwan, a veteran newspaper editor, said this in a commentary on broadcaster CNA in September.
“If you don’t like the outcome, there’s only one solution: abolish the title certificate system.”
“$150,000 for a Corolla?”: Singapore drivers park their car dreams as costs soar
“$150,000 for a Corolla?”: Singapore drivers park their car dreams as costs soar
In Singapore, all drivers and dealers who wish to own a car must bid to obtain a COE, a permit introduced in 1990 to limit the number of vehicles on the roads. Each certificate is categorized based on vehicle type and is valid for 10 years. Transportation authorities control the number of COEs available and announce allocations on a quarterly basis.
Permit prices have risen sharply in all categories over the last year, with two categories soaring to more than twice the country’s average annual income. The numbers have since come down in the latest bidding round (in the January 4 auction, bids for small car COEs ended at S$65,010), but analysts doubt the cost of car ownership will remain at current levels. It is true.
Victor Kwan, a former director of automotive operations, said complaints about the COE market were “cyclical.”
“I have seen two complete cycles in the last 20 years and there was no criticism. [about the COE system] They come and go,” said Mr Kwan, a lecturer at the Singapore University of Social Sciences.
Since 2014, the government has been promoting the realization of a so-called “car-lite” society by expanding public transportation, providing alternative transportation, and controlling vehicle use and population through COE systems and other means.
Singapore’s zero-car policy, introduced to manage congestion in the compact 719 square kilometer city-state, effectively reduces the number of ownership certificates available for tender to the number of deregistered vehicles. It is restricted.
An update to the decades-old road pricing system based on the Global Navigation Satellite System, known as Electronic Road Pricing 2.0, also gives policymakers an opportunity to revamp how road congestion is controlled, transportation analysts say. ing.
Many Singaporeans have grudgingly accepted high car insurance premiums in exchange for smooth transportation and clean air. A 2021 McKinsey study of urban transportation systems in 25 cities found that the cities’ public transportation systems are also so affordable and efficient that many locals have given up their desire to own a car. He says it’s helpful.
Nevertheless, car ownership has become a divisive issue whenever COE premiums rise, with one observer noting that it is important for authorities to keep prices “relatively stable”.
“When prices rise, those looking to buy a new car will be dissatisfied and dissatisfied. However, when COE prices fall, the value of used cars will fall at the same time, so current car owners will “There will be dissatisfaction. Therefore, it is in the government’s political interest to keep prices relatively stable,” Kwan said.
The government acknowledges these concerns while staunchly defending the COE system. In November, in order to stabilize the market, some COE allocations were brought forward from peak-time registration cancellations.
“We are effectively…borrowing from the future,” Acting Transport Minister Chee Hong Tat told parliament in November. “That’s also why we need to be very well-adjusted and not do too much of this cut-and-fill because that’s the downside in the short term.”
There is no other choice… but for the government to make significant reforms to the COE system.
Jake Rahr, chief marketing officer of online car platform Motorist Singapore, said the move was aimed at smoothing out price fluctuations, but “paradoxically” the recent COE price It said that this led to a significant drop in sales, and also sparked renewed interest in car purchases. .
Still, Rahr said, “Despite the near-term market disruption, the government’s strategy remains sustainable in the long term as it seeks to balance market stability with increasing COE availability going forward.” There is a possibility,” he added.
Earlier this week, Qi said in an interview with Chinese-language newspaper Lianhe Caobao that the government may introduce a new COE category for cars owned by private hire fleet operators. Some have pointed to the latter group of bidders as the reason. Recent strong demand for COEs. But Chee told Congress in November that private cars were unlikely to be the main driver of COE prices.
One political commentator described the possible change in the government’s position as an “effort to appease” the public without directly addressing the root of the problem, stressing the need for a major overhaul of the system sooner rather than later. .
“In my view, the government has no choice but to make significant reforms to the COE system, which I believe is not fit for purpose,” said Eugene Tan, a law professor at the Singapore Management University. said.
He added that the existing COE system is adding to a “feeling of inequity in some parts of society” and talk of the cost of living outpacing wage increases.
Mr Tan predicted that the government could introduce more sweeping institutional changes soon after this year’s Budget on February 16, which would curb demand that has soared in the housing market over the past two years. He said the move resembles a “deliberate move” by the authorities.
“Time is of the essence,” he said, suggesting the move needed to be made before heading to a vote, which is expected to take place by November 2025 but is widely expected to take place this year. .
An elitist system?
A number of long-term policy alternatives have been proposed by policymakers on both sides of the political divide.
One non-constituency opposition member from the Progressive Singapore Party suggested a “points-based system” that would consider factors such as bidders’ family backgrounds and disabilities when allocating vehicle quotas, or if they purchase more than one vehicle. proposed imposing additional taxes on vehicle.
Lawmakers from the ruling People’s Action Party have proposed a voting system similar to that used to allocate public housing.
However, transportation analysts say these proposals are unrealistic compared to existing COE systems.
“Many ideas have been considered over the years, including a one-car-per-household policy, lottery and COE queuing systems, and all have significant flaws.The current COE system is therefore far from perfect. No, but it’s still the easiest and fairest to administer,” Kwan said. “Anyone who is willing to pay the price can have it.”
Singapore’s $100,000 car permit fee shatters middle-class ownership dreams
Singapore’s $100,000 car permit fee shatters middle-class ownership dreams
Mr Chou Yi, associate professor at Singapore University of Technology’s Engineering Cluster, said many of the alternative proposals did not take into account Singapore’s land constraints, unlike the COE system.
Still, analysts say some adjustments to the system have been slow to make.
Transportation economist Walter Teseira said the fundamental problem with the system was the number of COEs handed out, which was largely determined by the proportion of vehicles in 1990, when the certificate was first introduced. This has been described as a “legacy problem.”
“Currently, COEs experience boom-and-bust cycles, sometimes resulting in wild price fluctuations in just a few months. We haven’t,” he said. .
Back in 2005, Paul Barter, an urban transport researcher and Singapore-based consultant, wrote a research paper suggesting the “variability” of car taxes. This could mean pricing COEs based on mileage rather than the existing 10-year useful life. He explained that this would allow governments to control the size of their vehicle fleets, while charging associated fees based on usage rather than fixed amounts.
“The result would be to reduce the cost of a car for those who own a car but use it relatively infrequently, and increase the cost for those who use their car frequently. Perhaps that’s not fair. Let’s drive less and pay less. Drive more and pay more,” Barter said in an interview with Asia this week.
He said this would address the “you get your money’s worth” mentality among some drivers who have to pay a lot of money for a car. “Singapore’s average distance traveled per car is high for a dense, compact city with a strong public transport system.”
Back in 2005, technology for monitoring vehicle usage was in its infancy, but Barter said his proposal could still work today.
“When I wrote this paper, monitoring vehicle usage was an issue. However, with the new ERP 2.0 system that will soon be introduced, it will be easy to set up a system to track the distance traveled by each vehicle. “It should be,” he said.
Singapore’s tax hike for foreign property buyers is tantamount to a ‘freeze’
Singapore’s tax hike for foreign property buyers is tantamount to a ‘freeze’
But Texeira said such a system could spark further backlash and become a difficult political issue for the government.
“The main problem with high driving costs is that drivers experience great pain in their daily driving. Paying the cost will change people’s minds about driving into congested areas, but the political pain is This is important because it has the potential to grow even larger. [for the government]”
Mr Tan, of the Singapore Management University, said the government was reluctant to do any more “wasteful work” as it became increasingly difficult to advocate for the system for many people who still had the desire to own a car. He insisted that he could not be seen as saying, “I am doing this.”
“While the COE system has curbed the car population, it has come at a high cost to average Singaporeans, who increasingly see the system as elitist,” he said. Ta. “With major renovations, it is expected that the COE will be consigned to the dustbin of history. It must be.”