COE: Problems and Thoughts

COE is very high. We won’t argue with that.

Even the Ministry of Transport and Minister Lui Tuck Yew is worried, and for good reason. They fear Singaporeans will never be able to afford the widely touted “C”(as in the 4 Cs of the Singaporean Dream).

We did ground work, questioned people, read online comments and came face to face with Facebook chats to have a look at the ideas from everyday citizens.

But before we continue, let us agree on a few things:

 

a.) EVERYBODY wants a car

Everybody. It is no use telling us that public transport is cheaper and more convenient. We all want four wheels…to flaunt, for convenience, for necessity, for security, for more girlfriends…

 (…because if you want to date them…)
 (…this will make it so much easier.)

b.) Singapore does not have enough space for so many cars

We only have some 700 square kilometers. “Sway” lor.

 

c.) If you WANT something badly, you will find ways to get it

This means you will try to beat the system. So whatever policies you have in place, you have to guard against loopholes.

 

So now that we have an accord (pun intended), let’s have a look at those ideas on how to curb car use:

Grant COE first cheaply to those who need it.

Who needs it? Business people? Sales people? Those in wheelchairs? The blind? Families of those in wheelchairs and are blind? Those with children? Those with old people? Women and children? We face a moral problem here – which Government department (or politician) wants to be in-charge of determining who needs a car?

The Loophole: Could there be a situation where those that usually don’t need a car (such as many wheelchair bound), suddenly rush to buy a car, just because its so cheap? Will their family members use their status to acquire one for their own use?

What if a black market forms from this policy loophole?

Verdict: Not good idea.

 

 

Taxis: They are the culprits. Split taxi COEs to a new category
We do not have data (yet) about how true this is, but let’s assume it is anyway.

Who determines how many taxis are needed? If we keep a free market system, and a “taxi COE” was implemented, more new taxis will go on the road. Maybe taxi COEs could even be $1 (since there are only so many taxi companies). Taxi companies will benefit.

The Loophole: More will want to be “part time taxi drivers” just to use a car. In fact, already there are so many that use the taxi for their own transportation, sending their kid to school and coming home to sleep…. selling insurance and ferrying real estate clients (*wink wink, you know who you are*) These people don’t need passengers, they pick up a passenger or two when they’re in the mood.

Verdict: Not a good idea. Come to think of it, could this be the reason why Hong Kong has sooo many taxis?

(Hong Kong: Taxis during mating season)

Increase COE prices for families (200-500%) with more then one car
This came from one who was unhappy with richer families owning more then one car. But arguably, only one person can drive one car at a time.

There are also families with multiple kids, or parents living with them etc. Are we unfairly penalizing families with more children (And hence sabotaging procreation).

The Loophole: “My dad has a car, stays with me and now when I have to buy a new car, I have to pay 5 times more, sorry dad, COE is more important, you gotta go”.

or:

“Hey, I don’t have a car – why don’t you pay me to use my quota?”

Verdict: Not a good idea.

 

 

Ballot system
Otherwise known as: “tikam”. A set number of COEs goes into the market and people will ballot for a chance to own one. So, what about those who “need it”? This would create difficult barriers for them.

The Loophole: If we have a ballot system, would this encourage people to try their luck? This could also create a black market – those who get the ballot could mark-up and sell to those who don’t.

Verdict: Not a good idea.
Moving Average COE system
COE prices are determined on the moving average of prices of the past X months; making it affordable, yet with quota, there won’t be a burst of vehicles.

Hmmm. I still cannot understand this to be honest. The COE operates on a mechanism of bid. If we use the average of 5 months worth of data and artificially determine the 6th, how would that work out for the 7th, 8th, 9th etc ?

The Loophole: We don’t understand this as yet and cannot comment.

Verdict: This requires more thinking.

 

 

Remove COEs and let the market buy freely: let the inconvenience control usage
With all due respect, this has by far been the most absurd idea.

The Loophole: There isn’t one because it’s so absurd.

Verdict: Mad.


The COE system is not perfect, like everything in life. But so far its the most sound solution.

If you have any ideas, please do write in and let us know: we’ll be glad to publish those that are worthy of debate and consideration!

 

 

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20 Comments

  • There is another solution. Make the ERP very expensive and the COE very cheap. That way everybody can own a car, they can use it if it’s absolutely necessary (sending a sick person to hospital, use it after midnight, going to market, fetching your kids) but they will certainly cut down their car usage.

    • Solving the problems of car ownership is easy: just build more car parks. Or build them higher. The problems of car usage cannot be solved by building more roads.

      The other thing is that Singapore has 700 sq km, not 500.

    • Then we have the problem of landuse, should we build more roads, buildings, trains, homes or carparks. Some of the difficulties in considering this include: security, defense, culture, underground use, industrial use etc. The problems of car usage cannot be solved by building more anything…

      thanks for the highlight on the size, we have changed the offending text.

    • It wouldn’t work as well. Best is keep BOTH high isn’t it.

      By having low COE and high ERP wouldn’t work as tested out by Raymond Lim (big mistake) and also put into legendary words by our late President Mr. Ong Teng Cheong.

      Once you buy a car, you will never go back to using public transport. Once you buy a car, because of the money you paid to buy a car, you will drive it regardless of the costs involved, whether high petrol prices, high ERP, high parking prices or difficulty of parking.

      That is human behaviour.

  • 1. I think separating the COEs for Taxis and Private cars is good idea. Taxis companies are profit driven, so long as there is a profit to be made, they will keep bidding for having more fleet of taxis.

    2. Moving average – It is to prevent any spike or large dips in the COE bidding price. Any change in the quota would have lesser impact on the prices. Thus, car sellers cannot manipulate the fluctuations as much.

    • Here’s the loophole: If it is cheaper or if it costs the same to get a taxi rather than a car… this may encourage increased taxi ownership. But having all that said, these are anticipated scenarios. Perhaps a study and a trial period can be put in place to test if this new system works…

    • Not only that, if for this month, the taxi companies do not bid for COEs, then it will be zero. And they will take turns buying COEs.

      Meaning that they will have taxis coming out every month regardless whether the taxi companies need them, coupled with the fact that rental will decrease, it might attract more people to rent a taxi for own use. When citizens see taxi COEs $0, and car COEs $200,000. Won’t things get ugly?

      Taxis contribute 240x or more to the traffic condition in singapore. If you put a taxi on the road, meaning you put 240 normal cars on the road. mainly because
      1. They drive 24 hrs a day (for those who put on double shift)
      2. They start and stop, hence potentially cause traffic thoroughput to reduce on the road

  • please…taxi rentals is about 3000 a month. – the lousiest taxi. If you afford 3k a month for crappy diesel fuel taxi, you might as well buy a decent/good car at 3k a month.

    COE is high for a reason and keep it high. if you cant afford it, can take cab or public transport.

    If you really want a car – migrate to US. the cost of a coe in sg can buy a 911 in the states, with left over

    • I’m not sure if it’s $3k, my uncle drives a taxi and i think it’s a little less.

      Good point on how much the cars are in America, I have ever bought a Volkswagon for £300 ($900 then) in the UK. The problem is with the physical size of Singapore – with such a small country, we have much opportunity cost and must pay more for so little.

      That is why this small and hot country has so much more reasons to push you out than to pull you in. That is why it is not easy to govern this little island.

    • My neighbour who drives me to work everyday, he told me a secret.

      He earns 4k a month driving taxi.

      Everyday he drives me to work, and from there he ferries people to and fro the MRT station. he says its easily 20-30 rides a day. He goes home to sleep and 10am or ferries his wife and daughter. He wakes up at 4pm and goes and do the same thing but back from the business park to the MRT or to town and goes home at 9pm or earlier. He doesn’t do midnight and doesn’t queue at the airport for 2 hours or rent out his vehicle for 2nd shift.

  • Just look at the price of a Cat A COE today – $92,000.

    Considering a straight line depreciation over a period of 10 years (validity period of COE), the cost of owning a car whether u drive it or park it in the carpark cost about $25/day not even considering the cost of the car and the related cost coming along with it.

    Impossible to own one at present for young people.

  • Some people have also suggested pegging the COE to the price of the car rather than the size of the engine. so if i buy a pricier care, i pay more, I buy a cheaper car, I pay less.
    keep the same quota.
    problem solved
    can you please elaborate on the pros & cons of this system

  • I think we should ban car dealership from bidding on the COE. Get the people who want the car to bid for it. If they need the car badly enough and have the cash for it, let them bid for it on their own.

    And also limit the number of COE per person can have.

  • One of the proposals above sounds plausible, making COE cheap but increasing the running cost of the car. this way, everyone gets a choice to drive (clog up roads) or not to. to own a car, or not to.

    potential problems and solutions:
    1. overcrowding of carpark- a car takes up more than 140sqft or parking space inclusive of space outside of the actual lot (ramps, entrance etc). taking monthly rental of $3psf, parking lots in HDBs ought to be around $450/month. this should deter enough people from parking.

    2. roads will be congested- implement more ERP or GPS distance based charging, its a bitch but can be an effective solution if priced correctly.

    3. slippery slope, once you own a car you wont go back to public transport- not entirely true. look at other major cities ie tokyo, NYC. its very common for executives to use public transport to travel to the city, though they may own a car to use on the weekends/outskirts.

  • hi,

    you forget one factor… number of foreigners/PRs who own a SG-plated car

    this figure is not transparent, but think it’s quite significant

    if HDB are regulated between citizens and PRs, then COEs should also be the same

    Singaporeans first!!

  • Perhaps the COE system could be one of balloting. One car per person, and you enter into a state lucky draw system. It is not money dependent, but sheer luck. The car, you have to buy. So only put the name in when you are going to buy a car. COE is non-transferable. It stays with you. You can sell the car, but not the COE. Still, one person one car.

    Car numbers can still be regulated in this manner.

  • How about a quota system where 20% of quota is for open market bidding as per current. So the rich folks can bid as high as they want for their 2nd or 3rd car. 20% for business and taxi bidding. Remaining 60% reserved for everyone else in a balloting system where price of COE is fixed, but those with children or disabilities have double the chances for the bidding.

    Those in the 60% category, cannot resell their COEs to prevent abuse of the system. Additionally percentage should be varied based on the past 6 mths take up rates.

Share your thoughts!