The Straits Times
www.straitstimes.com
Published on Jan 11, 2013
Govt closely studying ideas to improve COE system
Some suggestions merit a much closer look, says Lui Tuck Yew
By Christopher Tan Senior Correspondent
THE Government may embark on a review of the vehicle quota system, taking in the suggestions made by the public in the light of recent record-setting premiums.
Transport Minister Lui Tuck Yew said the Land Transport Authority (LTA) as well as his ministry are looking closely at "the many suggestions we receive".
But he stopped short of saying that a review of the 22-year-old system was afoot.
The Straits Times understands that the LTA has been seeking views from the motor industry on the certificate of entitlement (COE) issue in recent weeks.
The authority would not comment on this, but industry players reckoned one possible change could lie with the way COEs - required for vehicle ownership - are categorised.
Currently, car COEs are split into two: cars with engine capacity up to 1,600cc and those above 1,600cc. There have been calls for them to be regrouped according to power output or emission level instead.
This is seen to be more socially equitable, as luxury brands such as Mercedes and BMW today offer models with high-powered engines below 1,600cc.
Such models outcompete budget cars from makes such as Toyota and Hyundai, which have more modest power outputs, and thinner profit margins that curb their dealers' bidding power.
Another area it could be looking into is restricting bidding to buyers. Bidding today is done mainly by car dealers, who tend to bid aggressively to meet sales targets and then pass cost on to consumers.
Sources also said the Government could reintroduce a cap on car financing to cool buying. Car loans used to be capped at 70 per cent of the purchase price, but this limit was lifted when the Monetary Authority of Singapore liberalised vehicle financing in 2003.
Mr Lui, during a visit to SMRT's Bishan depot yesterday, said some suggestions on ways to improve the COE system "merit a much closer look", but did not go much into details.
He said the Category A premium, for cars up to 1,600cc, had "gone up significantly", and that he has asked the LTA and his ministry "to take a look at whether there is an effect of the CEVS rebate".
He was referring to the Carbon Emissions-based Vehicle Scheme (CEVS) which kicked in on Jan 1. The scheme accorded rebates of up to $20,000 for cars with low carbon dioxide emissions.
Industry observers said motor firms selling cars that qualify for CEVS rebate have extra margins to bid for COEs - one reason they cited for the record $92,100 premium for small cars in Wednesday's tender.
The minister said about 45 per cent of households already own at least one car - up from 40 per cent in 2008. How much can the proportion grow, he said, was "a difficult question", given that roads already take up 12 per cent of land space.
Asked if he would delay the halving of the annual vehicle population growth rate to 0.5 per cent, he said no. The rate will kick in from next month - a move expected to contribute to another drop in car COE supply.
He said premiums were not merely a function of supply, but also the state of the economy and the spending power of the people. He added that high vehicle prices do not raise cost of living for most Singaporeans "on a day-to-day basis".
christan@sph.com.sg
