$81k just for an entitlement to owe a small car in Singapore
The latest COE (Certificate of Entitlement) prices showed any round of high prices at $81k for small cars. With an average open market value (OMV) for say Suzuki Swift 1.6 at $16k, this means the entitlement cost 4 times the OMV? Not forgetting other taxes on the car. This means small car taxes are about 5 to 6 times?
I agree with the government idea to “restrict” the among of cars on the road and comparing traffic conditions in Malaysia and Bangkok, Singapore can be heavenly. There are, of course, more than one way to “encourage” less car ownership or less cars driving on the road. At the very least, our public transport system must be convenient and good enough for consumers. The constant problems with train delays, slow bus services and missing taxis during rain, surely doesn’t appeal to the public transport users?
That aside, the government ideal of free market bidding has done nothing but put the power of pricing into the hands of car dealers. In systems like this, I don’t believe in free market because it only benefits the rich. Those who are not as rich but really needs a car and small companies who needs delivery are either priced out or have to suffer huge loans to get the cars both are not good for the society in the long term.
For one, only potential car owners should be allowed to bid. We all have our singpass account, don’t we? We should disallow bidding by proxy, i.e. the car dealers. With the requirement of using singpass, I am quite sure not many people are that will to give others their account. Further, we should make people pay for a percentage amount of the COE price, for example 25%. This way, people will not rush to bid for such high prices like $80k because they will have to fork out $20k in cash, at least, to buy even a small car.
Bidding aside, in the first place, wasn’t the COE supposed to be a quota system to limit the number of cars? By itself, there is limited COEs per bidding cycle and I believe most if not all of the COEs would have been taken up , regardless of prices. So the government idea that high COEs will reduce car ownership is false, no? People are still buying cars at $80k COEs. What this means is that people may be taking bigger loans and possible more chances of people getting in debts or not being able to repay loans.
So why even have a bidding exercise at all if all COEs are being issued regardless of price? Already the quota system is there to control the car quantities, no? Why not just have a set of nominal price for COEs for different classes? COEs can be balloted, with a guarantee that a person will surely get it within 3 ballots cycles. Again, we cannot allow bidding by proxy and will require everyone to use their singpass to bid. A cash amount equivalent of a percentage of the nominal price must be paid. This amount will be deducted from the COE once you get it and should not be recoverable, i.e. you cannot cash back if you decide not to ballot or quit. In this case, the COEs should not be transferable before it is used to buy a car. If the holder does not buy a car by, say, 2 months, then it will return to the pool for the next ballot. That holder will then be disallowed to ballot again for, say, the next 3 – 6 months; he/she will also forfeit a cash amount. This will ensure that only people who are genuine car buyers ballot for the COE.
The government over reliance on free market pricing does not factor in the reality that its the rich who set the prices. Car ownership should be limited for sure, but there should be a more equitable system. The current system is definitely not and it is forcing people to pay ever higher and ridiculous prices, even for small cars.