Solution for the COE problem

[dniwkh]

But why would having more COEs to sell result in no change in car population? This part, I don't understand. Sorry, I'm not a car owner and have not looked at the car market, so perhaps you could explain this part in more detail to hapless souls like myself.

Ok. Let me explain. The COE system is set up like this. Every month there are 2 COE biddings. The quota is set by the growth rate (currently at 1% per annum) + whatever cars was deregistered in the past six months (pro rated). 1% per annum is really little compared to the supposed 10% of cars that should be deregistered every year because of COE expiry. (COE last for 10 years so on the average 10% of the cars should expire every year).

The big problem is you DON'T have to keep you COE for 10 years. When COE prices fall, you can scrape your car, get some COE rebate and bid for a NEW COE. Example, if you bought your COE in 2003 for 40k and when COE drops to 10k in 2005, it make sense to scrape your car because you can get back $32k just from your COE and use those money to buy a brand new $10k COE+car.

When you scrape your car, your COE get rolled back into the system within months. This is thus a big problem. In 2001-2004 the COE prices were very high but it dropped a lot in 2005. EVERYONE who bought a COE in 2001-2004 scraped their car and bidded for a new COE in 2005-2006. Those COEs that were launched in 2001-2004 got added back into the pool in 2005-2006 further forcing the prices down.

While low prices looked good at that time, it caused a BIG problem 10 years down the road as all the COE that is supposed to expire in 2011-2014 is all gone. Even if the COE prices rocket up, it does not really help as everyone's COE has not expired yet. All it does is to restrict demand and does NOTHING on the supply side. (frankly, someone should have foreseen this problem at that time)

Introducing COE rebates pegged at a percentage(discount) of todays price, allows rising COE prices to encourage people to GIVE UP driving and return the COE back to the government. By allowing Government to buy back COE from WILLING SELLERS, this allows the government to take some cars OFF the road, and thus able to introduce new COEs without increasing the car population.

The government then sells the COE to the next happy buyer at todays prices and makes some money.

 

[catchlights]

simple solution for COE,

rise Road tax,
rise ERP,
rise Parking,
rise Patrol
rise Motor Vehicle Insurance
rise Interest for Motor Vehicle loan

so less people can maintain a car, car less in demand, COE will drop liao lar.

 

[Bukitimah]

With limited land and ever increase in demand for cars due to population growth, there must be a mechanism to control or rather limit it. Be it be COE or other taxes, there is no magic formula.

I don't see how the government can justify using public fund to 'finance' buyer for COE they paid earlier and now cost more. In fact, the idea of any actual refund in cash is out of the question. You can only 'transfer' this unused 'COE cash' for the new purchase. This is fair.

The government should release more COE so that the price will come down and that way, more people can own cars. This is their exasperation and we should give it to them. However, driving them will cost more. So, you can own it and polish it but drive it will cost $. This is the only way to keep the roads usable.

The COE actually helps dealers to make more $ since they are the ones speculating it. I have no idea how to close this loop hole but it is the job of the authorities to make sure they don't take advantage. One question has always been in my mind that I don't have an answer.

With COE going to close $100K, in order to bid for COE, if a dealer need 5000 COE, the company has to put in 500 x $50K = $25 million per month aside for COE bidding. Bidding is a monthly affair, How are doing this business? Are they using a banker's guaranty instead? That maybe the true reason why the COE is driving upwards.

 

[dniwkh]

With limited land and ever increase in demand for cars due to population growth, there must be a mechanism to control or rather limit it. Be it be COE or other taxes, there is no magic formula.

I don't see how the government can justify using public fund to 'finance' buyer for COE they paid earlier and now cost more. In fact, the idea of any actual refund in cash is out of the question. You can only 'transfer' this unused 'COE cash' for the new purchase. This is fair.

Actually, the government is NOT using public fund to "finance" buyer for COE they paid earlier and now cost more. the government is using the NEXT buyer's money to fund this.

Example now COE is $80k. They buy back COE from people who is willing to stop driving by paying maybe $40k (the exact percentage is up for discussion), then they immediately sell this COE for $80k to the market. The government POCKETS extra $40k.

The whole point is that people who have bought a car when the COE was at $10k maybe willing to stop driving and sell their car if their COE is worth more than $10k. There are buyers out there who is willing to pay $80k for a COE, so why not allow the transaction to go through? The government pockets a percentage as comission.

 

[ricohflex]

I'm more worry of fight over cars with 'lucky number' like those with 8... and cars with lots of 4, no one take... LOL :bsmilie:

Have seen car with licence plate 4444.

 

[reno77]

I think each car should be tied to the house address, for every extra car in the household, the COE should be doubled.. encourage only 1 car per household..

 

[Octarine]

The thinking must change, on a much larger scale. The thinking that owning a car is a must and privilege. The thinking that jacking up the price of a car to 4x the actual price will deter people from buying it.
Instead of penalizing the buyer, make the car user feel the money clicking down every meter they use the car. If a ride to CBD costs $15 ERP (excluding parking) and a taxi ride costs $25 then people will think twice.
Another point will be the additional load on buses and trains if only 25% of car commuters shift to public transport. So only shifting to another form of commuting is not the real answer. It also needs a shift in working culture: getting away from 9-5 office jobs with people being driven by the clock and presence in office.
Thirdly: creating 'Sleep Townships' in Punggol and business parks in Jurong will not make the problem smaller. Last but not least: a public service with profit orientation is a contradiction in itself. Serving the public is not a way to make profit, but to serve for costs only. With the insane profit all bus and train captains could have a decent salary, locals could feed their families from this job. $1.4k is a bad joke, not a salary.

 

[Octarine]

You aren't serious, right? The administration would be a huge headache. I can foresee people hopping on coin-op cars and dropping it around Lim Chu Kang in droves just for laughs. :bsmilie: Even if that doesn't happen, over time, you're bound to encounter issues of placement of the cars in remote areas over longer periods of time, and ensuring that they are brought back into "normal circulation".

In the morning you'll see many people running for these cars to get into the city again. It will balance over the time. It's the same as with taxis.

 

[milez]

Your idea is good, well thought but flawed.

The COE system is to determinie the price by supply and demand. In our case, demand will always be there, and supply is controlled by the government with a set of formula which determine vehicle population in the country.

Your method of government buying back at 50%, is assuming that COE premium is pegged at certain level. Lets say the system goes like this. It means there will be more COE quota available for every bidding every 2 weeks. With higher quota, the premium will fall. With falling premium, lets say to $50k level, car owners with COE premium purchased at $10k, will only get back about $20k after 3 years of use. The scrap value of his car is almost nothing compared to what he paid for it 3 years ago. Assuming his OMV of the car was $15,000. The PARF he'll get back is only $7500 (based on 100% ARF and 50% PARF... Go read up One Motoring website how these are calculated). Based on OMV of car at $15k and COE premium at $10k, it is likely that the initial purchase price of the car was about $60k. So even if he gets back $20k COE rebate, his depreciation of the car is far higher than if he were to simply sell the car in the open market like now to finance his new purchase.

In summary, this system will not work as most people will opt to sell their car in the open market rather than scrap, resulting in no COE additional quota to be added to the subsequent month's bidding.

2nd point. On LTA front, where would the coffers of paying to buy back COE from the public from from? How are they going to balance their books without any hint of fraud or market manipulation by some car dealers? On auditting's point of view, there is no justification and does not meet the current accounting practice of Singapore.

Some suggested common shared vehicle which anyone can loan/ put coins in, to use it when someone needs it. There are already car sharing clubs available now. If the government force everyone to go this direction, our country will be no better than communist country on common people's assets. Which goes against the countries constitution/ pledge ... " to build a democratic society based on justice and equality."

By imposing high usage cost on the roads will not be ideal too as the public transport infrastructure is not ready to support the whole population (which is still growing). Perhaps when the Down Town Line And Thomson line MRT is ready, but by then (2021), our population could be 6m. The stress on public transport system will be great without other alternatives. Therefore, car usage is still necessary to balance out everything.

As such, the best and proven system is still the COE system to manage car population growth. But I suggest that it is time to tweak the system.
Firstly, make every aspiring car owner bid for their own COE.
Secondly, make COE non transferable. So, your COE still last for 10 years. If you decide to change car, you simply sell your car but not the COE. You buy the new car with your existing COE (even if there is only 5 years left). The car distributors will therefore sell buyers cars without the COE. The buyers will be responsible for financing the COE and bid for a new COE when 10 years is up. ARF and PARF will be independent of COE. Therefore a car is still subjected to 10 years life span to get back PARF. Once over 10 years, no more PARF from the government. But the car owners can continue to own the car and drive it as long as his COE is still valid. Road tax and car inspection system/structures remains.
This way, the COE premium will fall as real car buyers will not punt so high when bidding for COE, especially without bank financing. And he can change car whenever he wants to as long as his COE is valid.

As for used car, there will be a people who prefers to buy used car even with fresh 10 year COE as it is more affordable. They can buy directly from existing owner or thru car dealers but he must first get a COE thru bidding.

This way, the car industry is not controlled by the number of COE available in order to survive. Buyers will have more freedom. COE premium should not skyrocket since car financing do not include COE premium. Car insurance premium is based purely on the value of the car and not including the COE (which does not need to be insured since you cant lose nor damage your COE) as it is now, which many paid for nothing. COE is ensured to be used for 10 years instead of going back to the pool for rebidding (in which it is guaranteed to be higher).

My 2 cents.

 

[diver-hloc]

Have seen car with licence plate 4444.

I've seen it too... but you are 'issued' with that number and can't really choose.... but if 4-5 cars of the same color, model and condition is at the parking... the only difference being the car plate number... not sure about you... but I think there will be people who might go for a 'lucky number' vehicle... :bsmilie:

 

[allenleonhart]

You aren't serious, right? The administration would be a huge headache. I can foresee people hopping on coin-op cars and dropping it around Lim Chu Kang in droves just for laughs. :bsmilie: Even if that doesn't happen, over time, you're bound to encounter issues of placement of the cars in remote areas over longer periods of time, and ensuring that they are brought back into "normal circulation".

drop to lim chu kang... hehe. prank taxi drivers to drive there at midnight next time

 

[ahboy168]

COE is a revenue generator for government..... no way they will terminate it..

Not true. They will terminate Coe and install a taxi meter in all vehicles.
Everyone become taxi driver of your own !

 

[ahboy168]

I think each car should be tied to the house address, for every extra car in the household, the COE should be doubled.. encourage only 1 car per household..

Keep it simple. 1 Coe = 1 vote !

 

[MichaelLee]

the COE system is working fine...bring in so much $$$. why there is a problem ?
whether it is a problem, depend which perspective you are seeing

 

[milez]

Keep it simple. 1 Coe = 1 vote !

How about 1 vote = 1 COE = 1 place in primary school of your choice for your kid = 1 5room HDB flat at location of your choice ... ?

 

[Dukes4]

i was recently in KL and im really glad that we have this flaw COE system.
imagine there is a tap which supply new cars and this is left open, this is exactly the problem in KL, the carparks are always full and the roads during peak hrs are at a standstill. its not a crawl, my car was just not moving at all for minutes. a trip of abt 25km takes abt 1.5hrs ie everyday i was stuck in traffic for abt 3 hrs.

 

[Dukes4]

our coe provides our gov with a good source of income, which hopefully was channelled into good use, ie build roads, mrt, buses etc
hopefully it provides a way so that most people can afford the coe. right now the system is based on the last lowest bid the the quote allocated.
so if currently coe is 80k , the rich would most like bid for 90k - 120k to have a certainty to secure the coe. the not so affluent people like me would ask the dealer for a good deal , something where they may try to bid at 75k and slowly up the bids.

if the system is changed to pay as u bid, the rich would continue to bid at a price which is above the prevaliling price to secure their coe, and we at the poorer end would always be priced out of owning a car

a simple example would be orchard rd apartments. i can never afford the apartments in orchard and do u think the rich would allow the price to be at a level, mass market people can buy it.

 

[milez]

our coe provides our gov with a good source of income, which hopefully was channelled into good use, ie build roads, mrt, buses etc
hopefully it provides a way so that most people can afford the coe. right now the system is based on the last lowest bid the the quote allocated.
so if currently coe is 80k , the rich would most like bid for 90k - 120k to have a certainty to secure the coe. the not so affluent people like me would ask the dealer for a good deal , something where they may try to bid at 75k and slowly up the bids.

if the system is changed to pay as u bid, the rich would continue to bid at a price which is above the prevaliling price to secure their coe, and we at the poorer end would always be priced out of owning a car

a simple example would be orchard rd apartments. i can never afford the apartments in orchard and do u think the rich would allow the price to be at a level, mass market people can buy it.

The rich does not bid at all. Their car dealer sells them the car with COE included. Therefore, it's the dealer that bids the COE on their behalf. So, the onus is on the car dealer not to bid too high in order to preserve his profit margin. But not too low that he lose out the bidding. It's all part of business.

The condos at orchard road can be priced at mass market price. But you will not be the only one wanting to buy that condo at that price. Everyone in this forum also wants it. So, the owner who sells it will sell to the highest bidder. Natural market forces of supply and demand. Nothing wrong with this in a free market. Don't blame the rich for dictating the price so that the poor cannot afford it. Even the rich dont want to pay high. It's the market forces.

 

[ahboy168]

As long as the taxi on the road is still new, Coe will remind high. They lower the Coe for taxi companies(guess who own them ...) to renew their old fleet.
Once done, it time to up the Coe !

 

[9V-Orion Images]

drop to lim chu kang... hehe. prank taxi drivers to drive there at midnight next time

Not uncommon, know of some NSmen during ICT who tried calling for midnight taxi service around Lim Chu Kang after they "hollanded" during open terrain NavEx.

Apparently they find interpreting topo map without road names disorienting. :bsmilie: