Is Singapore becoming the land of unaffordable private vehicles?

The recent raising in COE (certificate of entitlement) for vehicles ownership in Singapore has annoyed Singaporean citizens, especially who have been troubled with the growing immigrants and high density geographic.

COE was meant to control traffic congestion. However, the question posed is Why Singapore government needs to impose this and how strongly this has impacted Singaporean lives?

ERP

Singapore Traffic (Singapore Strait Times)

 As we all know, Singapore is a small land with 276.5 sq miles, yet it is considered as one of the richest countries in the world, with high living standards, safe and clean environment, with stable policies and government. In 2013, Singapore’s total population amounted 5.26millions, including 1.46millions of Non resident population (cited from http://population.sg/resources/population-composition/#.VDYeH9yppuZ) . With the influx of immigrations and non-resident populations from neighbor countries such as Indonesia, Mainland China, Malaysia, Thailand etc, Singapore has received lots of foreign direct investments, yet this also has side effects. These countries tycoons bring their family members over, buy houses, cars in a fast speed. Singapore, in short period of time, has become an expensive living land.

With small land area yet high population density, Government needs to have good infrastructure, yet to control the traffic jam. “Traffic congestion in 1975 vehicular speeds during peak hours to an average of 19 km/hour (Phang and Toh, 1997)”.

Singapore government has successfully controlled the traffic demand system by implementing successfully 4 major measurements to limit the numbers of cars: (1) fiscal measures to curb car ownership (2) a VQS (3) an ALS, which has been recently upgraded to an electronic road- pricing (ERP) system, and (4) efficient and affordable public transportation systems. ( from http://pub.iges.or.jp/modules/envirolib/upload/181/attach/p135-176_apdx.pdf ). For purpose of this blog, I will only discuss the first 2 points.

(1) fiscal measures to curb car ownership : car ownership duties taxes were heavily imposed ( import duty was 30% of OMV- Open market value- in 1968, increased to 45% after 1972 but subsequently reduced to     31%   and in May 2002, it was reduced to 31% for cars, 12% for motorcycle , 7% for taxis, and 31% for buses with eight or fewer seats) . Along with the import duty, the government also increased ARF (additional registration fee) up to 150% of OMV in 1980. This was meant to heavily discourage residents from purchasing private cars. Total car registration fees, including ARF, increased 17.5 times over 11 years from 1972. Fuel prices were also heavily taxed, gasoline prices in Singapore was $1.73/liter compared with USA’s 0.98/liter in 2nd quarter 2014. (http://www.bloomberg.com/visual-data/gas-prices/20142:Singapore:USD:l )

(2)VQS : Vehicle quota system was introduced in 1990 to cap the maximum number of newly registered vehicles. Under this system, prospective vehicle owners obtain COE making ownership of a vehicle valid for 10 years through open bidding. Bidding is opened twice a month and a list of bidders in descending order is arrayed. The bid quoted by the last bidder of the designated quota is called a “quota premium,” and is the price levied on all successful bidders for COE. So far, the demand of COE has exceeded the designated quota by two times or more and quota premiums for passenger cars have been in a range of 30-80% of the selling prices of cars (Fwa, 2002; Willoughby, 2000).

However, over the years, COE seems to be too high and unaffordable for Singaporean’s low and average income citizens, especially, young work force citizens. The recent peak in motorcycle’s COE has created tremendously negative impacts on Singapore citizens. A female biker showed her disappointments, claiming “the government has placed too many ERP gantries in Singapore. She also thinks that the government has increased the price of premiums for the Certificate of Entitlement (COE) “ridiculously high”, which she feels has forced many to purchase second hand cars instead.” She even ended rant with an impressive comments, which received lots of tweets “So, shall we start commuting around on animals, like horses, since it’s the year of the Horse too? Or are you gonna (sic) impose a fee on horses too?” (https://sg.news.yahoo.com/blogs/what-is-buzzing/female-biker-rant-rising-costs-transportation-singapore-gains-111056511.html ).

 The question for Singapore government now is how policies can control the traffic demand, yet to improve citizens life quality without creating a demotivation for citizens: Are only rich people able to afford cars in Singapore? We need to be grateful for Singapore government for all the tremendous efforts in control the traffic congestion, to reduce air pollution, yet there should be solutions for this issue.

Singapore's COE

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