It is a no brainer that cars are often considered a luxury in land scarce Singapore. This is the very reason why the COE system was first implemented 33 years ago on 1 May 1990. It was to curb car ownership as the car population grew with increasing affluence of Singaporeans.
Understandably, with our tiny city state, it is not possible to allow unbridled growth of cars. Our Government had the foresight to pursue a car-lite vision. With this vision, comes the punitive usage and ownership measures. The Government invested heavily in improving the public transportation. Capital expenditure on MRT infrastructure reached a cumulative S$150 billion in 2021. The Government also enhanced the Bus Services through a 5-year program costing S$1.1 billion. The rail network is expected to continue to expand and renew to the tune of S$60 billion over the next decade. This is all in the bid to wean car loving Singaporeans to switch to public transportation.
The Government often regard cars as a luxury in Singapore. Though car owners form only 11% of the population, they are always whining about high COE premiums. If 8 in 10 households by 2030 will be living within a ten-minute comfortable walk of a train station, there seems to be little reason for the Government to pander to these outcries and make any policy changes now, right?
Wrong – do hear me out.
A car might be a luxury to able-bodied Singaporeans, who can easily make their way to the nearest MRT station. Or take a bus or hail a private hire with a few quick taps on the mobile app. However, it is a necessity for households with young children or with seniors suffering from various morbidities and require frequent visits to hospitals and clinics.
Our population is rapidly ageing, which 1 in 4 Singaporeans will be over 65 by 2030. A sizeable proportion will be in their sixties and seventies, taking care of their elderly parents, who are in their eighties and nineties.
I have the first-hand experience of the difficulty using public transport as I often need to bring my elderly parents to various hospitals and clinics for their follow-up visits. They are in their late eighties with various chronic ailments. My father has Parkinson’s and is wheelchair bound. It is a challenge to help him get into and out of taxis and private hire vehicles due to the general stiffness of his body. If I hail a sedan, he will have great difficulty trying to lower his head to get into the car due to the lower roof line.
Having a car in this instance is a necessity in my household as there are many instances where due to a medical emergency, we need to rush our parents to the doctors at the drop of a hat. There is no time to plan, to book a car sharing or wait for private hire cars. Not every driver is patient when you try to board the vehicle with the elderly. I also do not want to subject my father to the fickle weather conditions in Singapore. If I opt to take the public transport like the MRT or a bus, pushing him on a wheelchair and taking the umbrella to shield him from the hot sun or pouring rain at the same time is not an easy feat. And try doing that navigating the hilly terrain at the various hospital grounds.
Cars might be a luxury in the yesteryears but for many households in Singapore with elderly folks, they are no longer a luxury but a real necessity.
How can we tweak to make the system more equitable?
- Even out the COE feast and famine phenomenon to stabilize prices
However, this move is not bold enough as the COE quota in a ‘feast’ year can be 5x as high as a ’famine’ year e.g. 3,670/ month vs 760/ month. This has caused unintended effects of big volatility in the price of cars, especially during the years when the quota is at its smallest.
The Land Transport Authority (LTA) recognises the number of vehicles deregistered do cause the volatility of prices. Hence, they announced that with effect from Feb 1 2023, the number of COEs available for bidding in each quarter will be computed based on the rolling average of de-registrations over the previous four quarters.
If the “ideal” population of cars in Singapore is around 530,000, then let’s set a quota of 53,000 a year. This works out 4,416/ month.
- Limit the number of private hire cars
Let us call a spade a spade. Private hire cars are essentially similar to taxis. The only difference is there is no limit on the numbers allowed in Singapore. This has caused its exponential growth from a pool of 16,396 private hire cars in 2013 to 72,632 in 2022. This is a whopping 343% growth. Every private hire car rented out by companies to drivers is depriving someone from owning a car.
- Impose a higher cost of owning more than one car in each house hold
When Singapore’s car population was at its peak in 2013, 42.1% of households had a car. That meant 494,465 out of 1,174,500 households. In 2022, the figure has dropped to 471,000 out of 1,399,600. This means only 33.6% of households in Singapore own a car, out of which 12% or 56,520 have two cars. And less than 3 per cent of these households, or 14,130, own three cars or more.
Some people have argued that having 15% of households with 2 or more cars is insignificant. This may be true during years with abundant COE numbers. Example back in 2018, there were 44,040 COE available for bids for the whole year. But during COE ‘famine’ years such as 2013 and 2023, the number of COE released dropped to only 12,360 per year. This will then be a significant factor. Hence, it makes sense to impose a “factor” on the calculation of tiered Additional Registration Fee (ARF) based on OMV.
For example taking the OMV as $20,000 or less:
If it is 1st car within the household, the ARF is calculated based on 100% OMV
2nd car in the household, the “factor” imposed could be 2x on the ARF
3rd car in the household, the “factor” imposed could be 3x on the ARF
And so on so forth.
It is time to deal with the runaway COE premium conundrum boldly. And the best part is it is not even rocket science.