Environmental considerations kept out of COE tweak, says Lui

Woo Sian Boon Today Online 21 Sep 13;

SINGAPORE — The recent tweak to the Certificate of Entitlement (COE) system has come under sharp criticism — including from a Member of Parliament and a major car-parts supplier — with some saying it could lead to dealers bringing in cars that are less fuel efficient.

Responding to the slew of criticisms for the first time, Transport Minister Lui Tuck Yew yesterday said that the Government had “deliberately decided”, in this particular exercise, not to conflate environmental considerations with the objective of improving social equity in car ownership.

“What we have done actually goes quite a long way to addressing the original intent of why we have Category A and Category B,” said Mr Lui, as he pointed out that the Carbon-Emissions-based Vehicle Scheme (CEVS) has shown “promising results” in incentivising buyers to go for cars which emit less carbon dioxide.

Mr Lui was speaking to reporters on the sidelines of a Transport Ministry event marking the fundraising of S$1 million in aid of the Community Chest.

Under the new categorisation, which will kick in from February next year, Cat A cars must have an engine power output not exceeding 97 kilowatts — or the equivalent of 130 brake horsepower — on top of having engine capacities of not more than 1,600cc.

Mr Lui reiterated that using engine power as an additional criterion is “more simple, more stable, easier and more straightforward to implement and to police”.

Wednesday’s first bidding exercise since the tweak — which was announced on Sept 9 — saw COE premiums for small and big cars rising to hit seven-month highs.

Mr Lui said: “As expected, accompanying any COE announcement, as well as prior to and following the implementations of the changes, you can expect to see some fluctuations.” He added that it “will take some time, several bidding cycles, before you see an equilibrium being reached”.

He reiterated that giving a lead-time of five months before the COE tweak come into effect next year was necessary. A shorter lead time “could cause greater issues and problems” and “more volatility” to the COE bidding exercises, he said.

“Those who are thinking of buying a car, if they can afford to wait, they ought to monitor the fluctuations carefully, watch this process for a while and then decide whether or not they want to purchase a car at this point in time,” said Mr Lui.

On Sunday, Bishan-Toa Payoh GRC MP Hri Kumar described the COE change as “an act of appeasement”. Writing on Facebook, he had added: “Appeasement never works. If a system has no backbone, it will wilt under pressure.”

Asked to respond to these comments, Mr Lui reiterated that the COE system is “fundamentally sound”.

“When we did our surveys, focus group discussions ... people recognised that there’s a need for COE system — that the COE system is fundamentally sound, and Singapore being the small island that it is ... you have to have a combination of ownership and usage restraints, and of course, very much more emphasis on improving public transport.”

Among other things, Mr Hri Kumar also said that the change penalises cars with better technology and those that are more fuel efficient. In response, Mr Lui said that a “holistic scheme” is in place to encourage the use of environmentally-friendly cars.

The CEVS, which offers rebates for owners of cars which are more fuel efficient and emit less carbon, was implemented at the beginning of the year. Currently, about 60 per cent of cars registered have carbon emissions of less than or equal to 160g carbon emissions per kilometre, as compared to 40 per cent before the scheme was implemented, Mr Lui said.

A review of the scheme — which was intended to run for two years — will be conducted next year.

Apart from the CEVS, the Government has also raised the environmental standards of vehicles to be brought into the country. For example, from early next year, new diesel vehicles brought in will be required to meet Euro V standards, instead of Euro IV, and petrol vehicles will have to meet Euro IV instead of Euro II standards.

Mr Lui said that the discussion about environmental-friendly modes of transportation should be extended to public transportation instead of “only about which model of car is cleaner”. “I hope the conversation will extend to whether we have a modal shift altogether from private to public transport, because ultimately, that is more environmentally friendly on a per capita basis,” he said.

Mr Lui also responded to a potential loophole suggested by car-parts supplier Robert Bosch (South East Asia), which said that manufacturers could try to curb engine power output — by encoding a limiter within the engine control unit of the vehicle — to pass pre-registration inspection tests.

Adding that the Land Transport Authority (LTA) had looked “very carefully” into this, Mr Lui reiterated that under the LTA’s “very stringent system”, the engine power of new car models will be compared to that registered in other countries. “So, it’s not so straightforward to simply tune it down, get it into Cat A and then hope to re-tune it thereafter,” he said.

Untested car models will be subjected to testing in the LTA’s laboratories to determine the engine power, among other things. He noted that it may take “a few weeks” or even “many, many months until LTA is fully satisfied” with the checks before cars are allowed to be imported.

Engine power 'better way to classify cars'

Lui Tuck Yew says it's more stable and easier to implement and police
Royston Sim Straits Times 21 Sep 13;

THE Government has defended the upcoming change to the certificate of entitlement (COE) system, saying the use of engine power to differentiate mass-market cars from luxury models allows for better rule enforcement and compliance.

The new COE rules, which will take effect next February, stipulate a capping of brake horsepower for Category A cars at 130bhp on top of the existing requirement that limits the engine capacity of these cars to 1,600cc.

Transport Minister Lui Tuck Yew said yesterday: "We have chosen something which I believe is more simple, more stable, easier and more straightforward to implement and to police."

Since the announcement on Monday last week, some have asked why open market value (OMV) or carbon emission was not used instead of engine power to differentiate luxury and mass-market cars.

Mr Lui said the authorities had considered "very carefully" the use of OMV as a parameter.

But he said the value is subject to fluctuations due to factors such as currency movements and cars of different origins.

"We wanted to avoid some of these oscillations between Cat A and Cat B, and some of these implementation issues where using OMV as a criterion could make it very confusing, very complicated," said the minister.

As for using carbon emission as a yardstick, Mr Lui said the authorities "deliberately decided not to conflate environment issues" with the goal of improving social equity within the COE system when deliberating on the change.

Mr Lui also commented on the latest COE bidding exercise that saw premiums rising by as much as 11 per cent, which analysts have attributed to the rule change.

The minister said such fluctuations were "expected" and that it will take several bidding cycles before prices stabilise.

He was speaking at his ministry's Family Charity Outreach event at S.E.A Aquarium, where he presented a $1 million cheque to Community Chest.