Changes in transport policy for cars

24% fewer COEs this year, Vehicle Quota System under review
Asha Popatlal, Channel NewsAsia 12 Feb 09;

SINGAPORE : The number of Certificates of Entitlement (COEs) available this year will be about 24 per cent lower compared to last year.

A total of 83,789 COEs will be available for this quota year, which starts from May and ends in April next year.

Transport Minister Raymond Lim said part of this quota is to allow the vehicle population to grow by 1.5 per cent, a target set under the Land Transport Masterplan announced last year.

Bidding under this quota will start in April this year.

The drop in COEs available came as no surprise. It is in line with a previously announced move to reduce the annual vehicle growth cap from 3 per cent to one and a half per cent.

And more changes are set to take place. Mr Lim said his ministry is looking at tweaking the Vehicle Quota System.

When the transport ministry comes up with its annual COE quota, it looks at two things - the 3 per cent caps and the expected number of vehicles that will be deregistered.

One common complaint in the past was that there was a mismatch between the number of deregistrations projected by LTA and the actual numbers.

"Such forecasts have inherent inaccuracies and the net vehicle growth rate may turn out higher or lower from the targeted rate," said Cedric Foo, GPC (Government Parliamentary Committee) Chair for Transport.

Mr Lim acknowledged this. "This is not to say the COE system does not work. It does, because any errors in projections are always corrected in current or subsequent years," said the transport minister.

However, he added the system could be improved. One possible approach is more frequent reviews.

"It will improve the responsiveness of the system, but there will, however, be trade-offs, such as more uncertainty over the quota released," said Mr Lim.

And so, the LTA will consult the motor vehicle industry as part of its review.

Meanwhile, the ministry is also looking at ways to enhance the Off-Peak Car Scheme to attract more motorists to make the switch.

Currently, there are about 42,000 such cars on Singapore roads - that is an eight-fold increase over the last three years. However, there have been complaints - from limited hours of use to cumbersome paper licences.

So, three areas are being looked at.

1) Replacing paper licences with tamper-proof electronic ones
2) Giving cash rebates to motorists who convert their normal cars to off-peak cars, instead of when the car is deregistered
3) Relook at the restricted hours where off-peak car owners can drive freely. They have long lobbied for full-day free use on Saturdays instead of half a day.

However, such measures may come with changes in the tax breaks such motorists now enjoy. - CNA/ 938 LIVE/ls

COE supply to be slashed by a quarter
New 1.5 per cent cap on annual growth rate to remain for three years
Christopher Tan, Straits Times 13 Feb 09;

CAR sellers and buyers will have to contend with far fewer COEs this year.

For the quota year April 2009-March 2010, there will be 83,789 certificates of entitlement - 24 per cent or 26,565 fewer COEs than the previous year.

The supply takes into account a new 1.5 per cent cap on annual growth rate of the vehicle population. If the previous 3 per cent cap were still in place, the COE quota reduction would have been around 12 per cent.

The new supply included adjusting for an oversupply of 10,103 COEs in the previous quota.

Despite calls from some MPs for the vehicle growth rate to be cut further on account of the weak economy, Transport Minister Raymond Lim said the 1.5 per cent cap will remain for three years before another review takes place.

He said it is important to make gradual changes 'so that people have sufficient time to adjust'.

Mr Lim also said the vehicle population growth rate 'should not be dependent on prevailing economic conditions, which are volatile'.

He said long-term factors such as the pace of road construction, public transport improvements and progress in road management technology are more critical.

The motor industry was not entirely surprised by the news.

Motor Traders Association (MTA) president Tan Kheng Hwee described the fresh quota as 'within expectations' and 'reasonable'.

Singapore Vehicle Traders Association president Neo Nam Heng said the used- car trade welcomes the cut.

'We hope COE prices will rebound and stabilise the market,' Mr Neo said. 'This will benefit existing car owners as well as improve the confidence of banks, so that they can start lending again.'

COE premiums have plummeted to historic lows in recent months. The worsening global economy and an abundant supply of certificates caused car COE rates to fall to as low as $2.

Mr Neo said if COE prices do not rebound, car resale values will slump. 'People may be able to afford a new car, but they can't afford to sell their existing car.'

Traders also said an uptrend in COE premiums would also put a check on premature scrapping of cars.

But the shrunken supply is worrying some distributors. Mr Koh Ching Hong, managing director of Toyota agent Borneo Motors, the biggest vehicle group here, said the cut 'is bigger than expected'.

Meanwhile, Minister Lim also announced that the formula for determining COE supply will be tweaked.

The current formula has often resulted in a drastically uneven vehicle population growth pattern over the years, as well as an oversupply and undersupply situation that has led to price swings.

Observers said that this had contributed to the worsening road congestion in recent years.

But Mr Lim noted that the supply formula had been working well over the long term. He said the compounded average growth rate of Singapore's vehicle population since 1990 had been within the 3 per cent prescribed by the COE system.

Off-peak car scheme to get a tune-up
Govt to replace paper permits, relook rebate system and restricted hours
Christopher Tan, Straits Times 13 Feb 09;

IT COULD soon become more attractive for would-be car buyers to consider off-peak cars (OPCs), and for existing motorists to switch to such cars.

The Government will look into enhancing the scheme in three areas.

Firstly, the supplementary day licence, currently a cumbersome paper permit that is prone to tampering, will be replaced.

Head of the Government Parliamentary Committee for Transport Cedric Foo, a strong OPC advocate, suggested an electronic system like London's camera-based congestion charging system.

As street cameras are already widely deployed here, details of the cars can be readily captured when they are on the road. The owners can then pay up by cash or direct debit within 24 hours, Mr Foo suggested.

'Our OPC system must be made more robust and tamper-proof,' he said.

Transport Minister Raymond Lim concurs. He said in Parliament yesterday that the Land Transport Authority will look at how an electronic charging system can be applied.

Secondly, the Government will look into granting cash rebates to motorists who convert their normal cars to OPCs. This, Mr Lim said, will be more attractive an incentive than the current system, where car owners can realise the rebates only when they finally scrap their vehicles.

Lastly, the Government will relook the restricted hours that OPCs can ply without charge.

Currently, these red-plated cars can be used only from 7pm to 7am on weekdays, and after 3pm on Saturdays, and for the full day on Sundays and public holidays.

Over the years, the Government had received 'numerous feedback' from OPC owners, with many asking for free use for the whole of Saturdays.

Minister Lim hinted that free use for the whole of Saturdays could be possible, but there would be commensurate adjustments to the tax breaks that OPCs are accorded.

Today, OPCs get a one-off $17,000 rebate on their registration taxes.

Mr Lim said the OPC scheme 'is something we should encourage'.

'It provides an alternative and a lower-cost means for people to own cars, and as its name suggests, helps to alleviate peak-hour congestion on our roads,' he added.

He pointed out that there are about 42,000 OPCs today, eight times more than the 5,000 back in end-2005. They make up about 7.7 per cent of Singapore's car population.

Motor Traders Association president Tan Kheng Hwee said 'we look forward to more details regarding the improved OPC scheme'.

'We hope the announcement on OPC will be made soon,' she added. 'Otherwise, those who are considering an OPC may be unsure whether they should commit now or wait until the new scheme is announced.'

OPC owners welcome the proposed improvements. Student Cynthia Elizabeth Tang, 27, said the electronic charging system 'is a good move'. She said it would be more 'hassle-free' than today's paper coupon system.

'There have been times when I tore the wrong date, and it's $20 gone,' the owner of an off-peak Nissan Sunny said.

She also said extending the free use to full day on Saturdays would make the scheme more attractive to would-be owners - even if the $17,000 tax break is adjusted. 'It makes sense, as more people work a five-day week now,' she added.

No change to road tax and registration fees
Straits Times 13 Feb 09;

THE Government will not change reductions to road tax and additional registration fees (ARF) on cars even if it collects less revenue from Electronic Road Pricing (ERP).

Transport Minister Raymond Lim said yesterday that additional revenue from new ERP gantries and revised charges implemented last year might fall to $50 million a year from the projected $70 million.

But the Government will not change the cuts to road tax and ARF, costing $310 million in all. The minister also addressed a question from Mr Lim Biow Chuan (Marine Parade) on why ERP is implemented on roads where there is no congestion.

He explained that the rate for a gantry within a wider cordon is determined by speeds along roads in that cordon. Gantries in a cordon must have the same rate, or motorists will jam the road with the gantry that charges a lower price.

YEO GHIM LAY

Car-ving out change
Leong Wee Keat, Today Online 13 Feb 09;

WITH their origins in the 1990s, both the off-peak car (OPC) and Certificate of Entitlement (COE) schemes received welcome tweaks in Parliament yesterday.

The Land Transport Authority (LTA) is seeking to make the OPC scheme “more attractive and convenient to motorists”, and will study three areas: An electronic licence system to replace paper licences; cash rebates for those who convert their cars to OPCs; and fewer restricted hours for OPCs, in particular, on Saturday.

Transport Minister Raymond Lim also announced a review of the formula for determining COE quotas, which in recent years have led to vehicle growth rates of more than the 3-per-cent cap.

This year’s COE supply, beginning in April, was slashed yesterday by 24 per cent to 83,789, taking into account the new vehicle growth rate of 1.5 per cent. And a review of the formula, said Mr Lim, will “improve the responsiveness of the system” but carry trade-offs, “such as more uncertainty over the quota released”.

Motor Traders Association president Tan Kheng Hwee welcomed consultations with LTA on the review and said this year’s COE quota fell within industry expectations.“It’s actually good that the substantial reduction is happening during a period of relatively low demand,” she said. “We expect COE prices should still fluctuate between $1,000 and $10,000 for the next 12 months.”

MPs Cedric Foo and Seah Kian Peng, however, wanted to see vehicle growth rate of only 1 per cent — commensurate with road expansion, the worsening economy and falling COE prices.

While growth rates may be further reduced in the longer term, replied Mr Lim, the public should be given sufficient time to adjust to the changes.

For OPCs, though, motorists and the motor industry are hoping for a speedy review. “Otherwise, those who are considering an OPC may be unsure whether they should commit now or wait until the new scheme is announced,” said MTA’s Ms Tan.

Remisier Jimmy Ho, who gave up his off-peak car for a normal car two years ago, added, “If (the review) had been implemented earlier, I might not have wanted to convert to a normal car.”

OPCs have gained popularity recently, numbering 5,000 in 2005 and 42,000 now, and the scheme should be encouraged, said Mr Lim. “It provides an alternative and a lower-cost means for people to own cars, and as its name suggests, helps to alleviate peak hour congestion.”