Letter from Chua Yao Kun
After two decades, the Certificate of Entitlement system has proven to be a blunt tool that is nowhere near the ideal of economic distribution of limited resources. Neither has it discouraged vehicle population growth.
After two decades, we can establish the relationship of COE prices to buyer behaviour.
When COE prices are high, the cost of replacement is significantly higher than the cost of maintenance and one would keep the old vehicle on the road longer. This contributes to more pollution.
When prices are low, vehicles of relatively young age are scrapped to recover the COE acquired previously at high cost. This is unnecessary cash outflow for Singapore.
Even if a vehicle is not scrapped, the owner is likely to take advantage of the low prevailing quota premium ahead of COE price increases.
From this observation, one can see that the COE system has more effect on the average age of the vehicle population than on controlling the car population.
Instead of positive social and economic benefits, COEs have contributed to two negative social phenomena.
Firstly, vehicle ownership is increasingly concentrated in the hands of the rich rather than being allocated to activities that promote economic value.
Having different COE categories does not isolate different user groups.
As prices in Category B and the Open Category go higher, some prospective buyers without enough financial power are competing in Category A instead, going by the increased number of Mercedes, Volvo and other luxury makes in this category.
As Category A prices rise, some prospective buyers are being squeezed out and turning to commercial vehicles for their personal transport, going by the sofas I have seen in the back of those small vans.
In a nutshell, the different categories are cosmetic. That is why the COE prices rise and fall in lockstep.
Businesses that need transport are the ones hardest hit. Regardless of the economic and competitive environment, they are passive price takers of the high COE price, while the rich throw their excess cash around.
There is no economic redistribution of resources.
Secondly, COEs drive inflation. Taxi companies, logistics companies and any company involved in moving people and goods would be forced to transfer their escalated costs to consumers, many of whom are not car owners.
A quota on vehicle population does not need a highest bidder system to administer.
While the COE system is an attractive avenue to generate cash, society pays a hefty price.
It is a broken system that has no place in Singapore today, especially when we are trying to promote an inclusive society and arrest inflation.
Everything in Singapore is going downhill because nothing seems to work anymore. Does our COE system allocate resources efficiently? It seems to be only a tool to increase the government coffers at all costs. Who would imagine our taxi’s, that supposed to serve our needs has been inflated so high by paying for a COE and diesel tax that no longer reflect the markets. Not only our MRT system is in a mess, what is our Transport Minister doing? By embracing CNG with tax breaks and then increasing it to be almost similar to petrol? When the rest of the world is readying for battery operated cars to be environmental friendly to offset the needs of petrol, Singapore is falling behind in everything. Even our transport for business has been inflated so high with property prices that we are no longer competitive anymore. Who is responsible for removing air bags from taxis? The problem is that they removed the airbags from the taxi to save costs, that results in both deaths in the taxi when the Rochor accident happens, maybe the airbags could at least save a life, what a pity, someone is going to take the fall for this.
We demand that you ;
1) Scrap diesel tax because it is no longer reflective of market conditions, lower CNG to market prices and do a feasibilty test if Singapore is viable to embrace battery powered cars.
2) Increase the supply of COEs for commercial vehicles.
3) Revoke the requirements for new taxis to pay COE, and refund the COE paid for existing taxis. This will easily increase the income of taxi drivers and create a demand for at least 10,000 new taxis for jobs to compensate, indirectly paying for the loss, where most are state owned taxis, it is the right hand moving to the left hand. What will be the impact? Taxi driver’s income will be doubled, indirecting creating demand for at least 10,000 new jobs.
Who is trying to bluff when an inflation rate of 5% does not affect us? When will our Ministers wake up? After the Hougang SMC elections? Time is short and in less than 4 years, 2016 will be the reckoning day. Singapore must move away from bad policies and concentrate on growth and investments on innovations and technologies to promote jobs and minimum wages, I can easily rewrite the entire economy, but the PAP government is too stupid to listen.
– Contributed by Oogle.