Comments on Sky High COE

I had been reading with much interest the suggestions that people are giving in contrast to the sky-high COE prices today.

As time of writing this post, COE for CAT B 1600cc and above is at $91,000, just marginally shy of the $100k market.

One common suggestion that stands out is the reduce / modify / or even abolish the entire COE system and transfer the cost from owning a car to using a car. That is cars should be priced according to market forces and they should be no government intervention (apart from the import tax) to deter people from buying the car.

However, once the owner of the car drives the car say into town, he/she will need more charges than the current charges now. And since they are paying less in installments, they have a choice of spending the money saved to drive into town or save the money and choose an alternative form of transport.

Thus the rationale should be that the person who parked his/her car most of the time in the carpark should pay the least while the person who drives everyday, especially into congested area should be made to pay the most.

If you observed that people are shunning ERPs for $2 or $3 per time they pass through the gantry, I don't see why a higher charge will not deter the average motorists to drive into town and contribute to congestion.

In Singapore, a $120k (inclusive of COE) Toyota Vios depreciates around $40 a day. Adding up other fixed cost like insurance and road tax to average out to be about $5 per day, making it about $45 a day. Isn't this one significant reason why people cannot not drive each day as whether one drive or not, the $45 is still incurred (obviously you need to pay more than $45 when you drive as the variable costs comes in)
For the same car, less than $60k COE,  it becomes $20 depreciation a day, $25 with all fixed cost, doesn't this figure make it more feasible for one to leave the car at home the whole day or just use the car at night with the option to use the car whenever necessary?

I think that making people give up driving is a far more effective idea than making people giving up their cars. To many, if not all, there will be some occasions where you will need to drive, such as Chinese New Year, Hari Raya, family gatherings, even just to drive out for suppers etc. As these events happen mainly on weekends and public holidays, out of the peak hours and peak areas, they hardly cause serious congestions.

Another good suggestion that I want to highlight here is to ballot for COE. The argument is that now with the sky high prices, it only allows the rich people to buy 2 or 3 cars while depriving the privileges to those whom really need a car: E.g.: Parents with children or people with elderly parents or people who need to fetch people who are not-so-mobile.

This way, it is a fairer system which does not deprive one of owning a car when you need it

Steep COE prices: Balloting fairer and cheaper

IN THE light of the unhappiness over soaring certificate of entitlement (COE) prices of late, I question the wisdom behind the system of car ownership in Singapore.

The stated purpose of COEs is to limit car ownership and, hence, ease traffic congestion. The outcome has struggled to match the goal.

The high COE prices indicate that the system influences who buys a car - those who can afford it - more than it limits car numbers.

This is obvious from the fact that the Government has to intervene by reducing the annual vehicle growth rate to 0.5 per cent come August, from 1.5 per cent currently and 3 per cent before 2009. ('COE prices up because economy is doing well, says Lui'; Monday)

The number of cars sold can at most match the number of COEs available, regardless of the COE price. This means it is unnecessary to have a price beyond an administrative fee required to run the system, which is meant to control car ownership and not generate revenue.

If important aspects like housing and education can be subject to balloting, surely a system can be designed to ballot for cars.

In hindsight, the unintended knock-on effect of high COE prices outweighs its limited success so far.

For the convenience of owning a car, the average family is saddled with a debt of tens of thousands of dollars - money that can improve its quality of life in many other ways.

Most people pay for their cars in instalments, reducing personal savings and spending power over several years.

If they were to divert a part of that money towards retail, education, health care and such, that would surely do Singapore a lot more good.

Chan Tau Chou

(Taken on straitstimes.com, published 19 Apr 2012)

My comments: 

I agree. I think it makes sense rather than people spending unnecessary money just to buy a piece of paper which depreciates. There are many ways to control vehicle population rather than just making people Pay and Pay (sounds familiar...).Deterrence should also be implemented to people who have access to more than one car (although I believe identifying them will not be easy)

Also found and extracted this below passage from www.tremeritus.com which the writer has, I believe, very accurately described the current situation: 

"The main problem with the COE system it allocates a scarce resource based on a person’s ability to pay rather than his needs. A middle income parent who has to ferry his children to school and take his parents to hospital can be out-bidded by a multi-millionaires’s son who uses the car for dates and clubbing. The disadvantage of such a system is it causes an ever widening gap of unfulfilled demand among those with the greatest need for a car. In Singapore, where the income gap is so wide, over time more and more COEs will just go the rich rather than people who need it."