“The discussion risks going around in circles with the same points being raised over and over about making the system fairer, for example, by giving preference to those who really need a car or restricting it to one car per family,” wrote Han Fook Quang, a veteran newspaper editor. “None of this is going to work because the people proposing it want prices to go down, which they won’t do,” he told CNA radio in September.
“If you don’t like this outcome, there is only one solution: abolish the certificate of entitlement system.”
‘$150,000 on a Corolla?’: Singapore drivers dream of parking as costs rise
‘$150,000 on a Corolla?’: Singapore drivers dream of parking as costs rise
In Singapore, every motorist or dealer who wants to own a car must bid for a COE, a permit introduced in 1990 to limit the number of vehicles on the road. Each certificate is classified based on vehicle type and is valid for 10 years. The Transport Authority controls the number of Centers of Excellence available, and announces quotas every three months.
Permit prices rose sharply in all categories last year, with two categories rising to more than double the country’s average annual income. While the numbers have since fallen in the latest round of bidding – the COE bid for a small car closed at S$65,010 at the tender on Jan 4 – analysts are skeptical that vehicle ownership costs will remain at current levels.
Victor Cowan, a former auto company director, said complaining about the COE market is “cyclical.”
I’ve seen two full cycles over the past 20 years and critiques [about the COE system] “It comes and goes,” said Kwan, a lecturer at the Singapore University of Social Sciences.
Since 2014, the government has been pushing for a so-called “car-light” society by expanding the public transport system, providing alternative modes of transport and controlling vehicle use and population, including through the contingent-owned equipment system.
Singapore has adopted a no-vehicle policy, which was introduced to manage congestion in the 719-square-kilometre compact city-state, effectively limiting the number of ownership certificates available for bidding on the number of unregistered vehicles.
Transportation analysts say the modernization of the decades-old road pricing system based on a global navigation satellite system — known as e-Road Pricing 2.0 — also gives policymakers an opportunity to modernize how road congestion is controlled.
Many Singaporeans have grudgingly accepted high car insurance premiums as the price to pay for smooth traffic and clean air. The state’s public transit system also performed well in terms of affordability and efficiency, according to a 2021 McKinsey study of urban transit systems in 25 cities, helping many locals give up their aspirations for car ownership.
However, vehicle ownership becomes a contentious issue every time COE premiums rise, with one observer noting that it is important for officials to keep prices “relatively stable.”
“When prices rise, those looking to buy new cars will be unhappy and complain. But when COE prices fall, existing car owners will complain that the value of their used cars will fall in parallel. So it is in the government’s political interest to Prices remain relatively stable.
The government is aware of these concerns even as it vigorously defends the contingent-owned equipment system. In November, it provided some COE shares of deregistrations in peak years in an attempt to stabilize the market.
“We are effectively… borrowing from the future,” acting Transport Minister Chee Hong Tat said in parliament in November. “And that’s also why… we have to be quite calculated and not go overboard with this reduction and filling because there will be downsides in the short term.”
There is no alternative… except for the government to undertake major reforms to the contingent-owned equipment system
Jake Lear, chief marketing officer at online automotive platform Motorist Singapore, said the move was intended to mitigate price volatility but had instead “ironically” contributed to the significant decline in COE prices recently, noting that it had also sparked renewed interest. By purchasing cars. .
However, Lear added: “Despite the immediate market disruptions, the government’s strategy may remain sustainable in the long term, as it seeks to balance market stability with the coming increase in COE availability.”
Earlier this week, Xi said in an interview with Chinese-language newspaper Lianhe Zaobao that the government may introduce a new category of COE for vehicles owned by private-hire vehicle fleet operators — and some have cited the latest batch of bidders as a reason for the strong demand. The last on owned equipment excellence. However, Xi told parliament in November that private rental cars were unlikely to be the main factor driving up COE prices.
![Motorists wait at a junction on Orchard Road in Singapore. Car ownership becomes a divisive issue each time COE premiums surge. Photo: Roy Issa](https://cdn.i-scmp.com/sites/default/files/d8/images/canvas/2024/01/12/c73cfc9b-1564-4651-8b44-570c3c52561d_ea911595.jpg)
One political observer described the potential shift in the government’s position as an “attempt to appease” the population without directly addressing the roots of the problem, stressing the need for a major overhaul of the system sooner rather than later.
“In my view, there is no alternative but for the government to undertake major reforms to the COE system, which is seen as lacking fitness for purpose,” said Eugene Tan, a law professor at Singapore Management University.
He added that the current COE system had added fuel to a “sense of inequality in some quarters” in society and narratives that the cost of living exceeds wage increases.
Tan expected the government to introduce more radical changes to the system soon after this year’s budget on February 16, which is similar to the “deliberate moves” taken by authorities to curb red-hot demand in the housing market over the past two years.
“Time is of the essence,” he said, noting that the move must happen before the country goes to the polls, which are scheduled to be called by November 2025 but are widely expected to take place this year.
![Vehicles cross the Benjamin Sheares Bridge in Singapore. Since 2014, the government has been pushing for a so-called “car-lite” society by expanding the public transport system. File photo: Reuters](https://cdn.i-scmp.com/sites/default/files/d8/images/canvas/2024/01/12/df552f25-6e06-4cef-845e-64a54f8d5131_4470add1.jpg)
An elitist system?
Policymakers on both sides of the political divide have raised several long-term policy alternatives.
An non-constituency opposition lawmaker from the Progress Singapore Party proposed a “points-based system”, which takes into account factors such as a bidder’s family background or disability when allocating vehicle quotas, or implementing surcharges for those who buy more than one car. trolley.
A member of parliament from the ruling People’s Action Party proposed a ballot system similar to the one used to allocate public housing.
However, transportation analysts say these proposals are impractical compared to the current COE system.
“Many ideas have been put forward over the years. For example, a one-car-per-family policy, a lottery, or a queuing system for COE – they all suffer from serious flaws,” Cowan said. The current SOE is not perfect, but it is still the easiest and fairest to manage.” “Whoever is willing to pay this price gets it.”
The $100,000 cost of a car permit in Singapore shatters middle-class ownership dreams
The $100,000 cost of a car permit in Singapore shatters middle-class ownership dreams
Many alternative proposals did not take into account Singapore’s land constraints, unlike the contingent-owned equipment system, said Zhou Yi, an associate professor in the engineering group at the Singapore Institute of Technology.
However, the system is long overdue for some modifications, according to analysts.
Transport expert Walter Theseira said the fundamental problem with the system was the number of centers of excellence distributed, which he described as an “old issue” as the number was largely determined by the proportion of vehicles in 1990, when certifications were first introduced.
“Today, we have a boom-and-bust cycle in COE, resulting in high price volatility over sometimes only a few months, and we have not considered whether our vehicle mix is appropriate for our economy and society today,” he said. .
![A woman walks across a bridge above vehicles travelling along the Pan Island Expressway highway in Singapore. Photo: Bloomberg](https://cdn.i-scmp.com/sites/default/files/d8/images/canvas/2024/01/12/3dd5e2e9-f5d0-44df-a762-ac1f7e288fb5_f60200c9.jpg)
In 2005, Paul Barter, an urban transportation researcher and consultant based in Singapore, wrote a paper proposing to “change” the taxes associated with vehicles, which would mean pricing COEs based on mileage rather than the current ten-year lifespan. He explained that this would allow the government to control the size of the vehicle fleet while charging the relevant fees based on usage rather than a fixed amount.
“The result would be lower car costs for people who own a car but use them relatively little and increased costs for people who use their cars a lot. Arguably that would be fair. Drive less, pay less. Drive more,” Barter said in an interview with This Week In Asia in an interview. And pay more.”
He said this could address the “getting my money’s worth” mentality some drivers may have as they have to pay a lot for their cars. “The average kilometers traveled per car in Singapore is high for such a dense and compact city with a strong public transport system.”
Barter said that in 2005, technology for monitoring vehicle usage was in its infancy, but his proposal could work today.
“When I wrote the paper, monitoring vehicle usage was a problem. But with the new ERP 2.0 system that will be launched soon, it will be easy to create a system to track the amount of kilometers traveled by each vehicle.
Singapore’s tax hike on foreign property buyers is similar to a ‘freeze’
Singapore’s tax hike on foreign property buyers is similar to a ‘freeze’
But Theseira said such a system could cause more discontent and turn into a difficult political issue for the government to deal with.
“The main problem with high operating costs is that motorists feel a lot of pain from their daily driving. That’s the whole point because paying costs makes you change your mind about driving into a congested area, but it may cause more political pain.” [for the government]”.
Singapore Management University’s Tan claimed the government could no longer afford to appear to be “putting things behind” any longer, with the system becoming increasingly difficult to defend against a population that still largely aspires to own cars.
“While the COE system keeps the number of vehicles under control, it comes at a high price for the average Singaporean, who increasingly views the system as elitist,” he said. “In a major renovation, we can expect the COE to be consigned to the dustbin of history. It’s meant to be.”