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Referring to the articles “Supply cut sends COE prices rocketing again” (Straits Times, 8 April) and “COEs the next lighting rod?” (Today, 8 April)
The My Paper article stated that “COE for cars above 1,600cc hit $45,501, 26.1 per cent higher than its previous level and its highest point since 2000.”
“The Open category, which can be used for any vehicle type but is typically used for cars, climbed 16.7 per cent to reach a 10-year high of $49,000.
“In the commercial-vehicle category, prices trekked north to close 11 per cent higher at $36,511 – the highest in 16 years.”
So certificate of entitlement prices have gone up by more than six times in just one year for Cat B cars (above 1,600 cc), from $7,501 to $45,501. Prices for commercial vehicles have also reached a 16-year high.
Second Minister for Transport Lim Hwee Hua’s view (‘COE spikes not due to formula change: Lim Hwee Hua’, Straits Times, 5 April) was that the government’s new formula to determine the number of replacement COEs was unconnected to the surge in COE prices in the latest exercise. She blamed other factors such as market forces and economic conditions.
I was like many Singaporeans flabbergasted by such an irrational denial of responsibility. You do not need to be a genius to know for sure that when you half the growth rate of vehicles from three to 1.5 per cent, the price of COEs will go up.
Moreover, it must be obvious to everyone (except the Ministry of Transport) that higher COE prices must lead to lower de-registration of existing vehicles. Under the new formula of pegging COEs to actual de-registrations, instead of the old formula of projecting de-registrations, this will lead to further price increases.
Christopher Tan of the Straits Times wrote: “Each monthly quota is now about 4,300, or some 40 per cent less than the supply at the same time last year, because of fewer vehicles being taken off the road and an adjustment to offset a COE oversupply in recent years.”
So the number of COEs will be about 40 per cent less each month than the same period last year. Who suffers when COE prices rise so rapidly?
Well, perhaps almost everybody, with the exception of used car dealers and the Ministry of Transport because of higher COE revenue. How much more COE revenue will be collected this year?
“Dealers have reported a plunge in new orders since COEs rocketed two weeks ago, with some saying that sales had dropped by 90 per cent,” Tan reported.
Even public transport operators say that rising COE prices may lead to higher bus fares, he said.
Every day, there are COEs expiring or nearing expiry. Businesses will be affected by the higher COE prices, which may then have to pass it on to consumers by way of higher prices, and thus lead to higher inflation. The fear of rising prices in a sense, may force those nearing their COE expiry to rush to buy now – a vicious cycle that may lead to ever rising prices.
This may be the last thing that Singaporeans need as we are just coming out of our worst recession. The competitiveness of Singapore vis-a-vis other countries may be affected. Those who need a car for work will be more financially stressed. Individuals and businesses who can’t afford may face financial hardship or have to close down their business.
The solution to controlling the growth of the vehicle population need not necessarily be higher car prices and costs.
Perhaps the Ministry of Transport has never heard of the importance of maintaining price stability in an economy. With about 900,000 vehicles of all types, the risk of altering our COE policy is that it may even stall the fragile economic recovery.
By: Leong Sze Hian
http://theonlinecitizen.com/2010/04/...omic-recovery/
The My Paper article stated that “COE for cars above 1,600cc hit $45,501, 26.1 per cent higher than its previous level and its highest point since 2000.”
“The Open category, which can be used for any vehicle type but is typically used for cars, climbed 16.7 per cent to reach a 10-year high of $49,000.
“In the commercial-vehicle category, prices trekked north to close 11 per cent higher at $36,511 – the highest in 16 years.”
So certificate of entitlement prices have gone up by more than six times in just one year for Cat B cars (above 1,600 cc), from $7,501 to $45,501. Prices for commercial vehicles have also reached a 16-year high.
Second Minister for Transport Lim Hwee Hua’s view (‘COE spikes not due to formula change: Lim Hwee Hua’, Straits Times, 5 April) was that the government’s new formula to determine the number of replacement COEs was unconnected to the surge in COE prices in the latest exercise. She blamed other factors such as market forces and economic conditions.
I was like many Singaporeans flabbergasted by such an irrational denial of responsibility. You do not need to be a genius to know for sure that when you half the growth rate of vehicles from three to 1.5 per cent, the price of COEs will go up.
Moreover, it must be obvious to everyone (except the Ministry of Transport) that higher COE prices must lead to lower de-registration of existing vehicles. Under the new formula of pegging COEs to actual de-registrations, instead of the old formula of projecting de-registrations, this will lead to further price increases.
Christopher Tan of the Straits Times wrote: “Each monthly quota is now about 4,300, or some 40 per cent less than the supply at the same time last year, because of fewer vehicles being taken off the road and an adjustment to offset a COE oversupply in recent years.”
So the number of COEs will be about 40 per cent less each month than the same period last year. Who suffers when COE prices rise so rapidly?
Well, perhaps almost everybody, with the exception of used car dealers and the Ministry of Transport because of higher COE revenue. How much more COE revenue will be collected this year?
“Dealers have reported a plunge in new orders since COEs rocketed two weeks ago, with some saying that sales had dropped by 90 per cent,” Tan reported.
Even public transport operators say that rising COE prices may lead to higher bus fares, he said.
Every day, there are COEs expiring or nearing expiry. Businesses will be affected by the higher COE prices, which may then have to pass it on to consumers by way of higher prices, and thus lead to higher inflation. The fear of rising prices in a sense, may force those nearing their COE expiry to rush to buy now – a vicious cycle that may lead to ever rising prices.
This may be the last thing that Singaporeans need as we are just coming out of our worst recession. The competitiveness of Singapore vis-a-vis other countries may be affected. Those who need a car for work will be more financially stressed. Individuals and businesses who can’t afford may face financial hardship or have to close down their business.
The solution to controlling the growth of the vehicle population need not necessarily be higher car prices and costs.
Perhaps the Ministry of Transport has never heard of the importance of maintaining price stability in an economy. With about 900,000 vehicles of all types, the risk of altering our COE policy is that it may even stall the fragile economic recovery.
By: Leong Sze Hian
http://theonlinecitizen.com/2010/04/...omic-recovery/
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