http://www.straitstimes.com/The-Big-Story/The-Big-Story-3/Story/STIStory_795607.html
Govt trying to ease COE supply crunch
Transport Minister proposes two measures to improve situation
By Christopher Tan, Senior Correspondent
The Government is looking at ways to mitigate a drastic shrinkage in the supply of certificates of entitlement (COE) in the coming months, a situation that could drive car prices - and inflation - even higher.
Transport Minister Lui Tuck Yew, in response to a question from The Straits Times, said he has asked the Land Transport Authority (LTA) to do two things to help improve matters.
One, to see whether the market can be eased into the new growth ceiling of 0.5 per cent in vehicle population that kicks in from August. 'Rather than dropping from 1.5 per cent to 0.5 per cent, whether we can be more flexible in the implementation,' he said.
Two, whether the LTA can further defer the claw-back of past oversupply. This adjustment was originally to be made over one year. Last year, responding to appeals from the motor trade, it was spread over three years.
The adjustment currently reduces the number of COEs each month by 6 to 7 per cent.
Mr Lui said he had asked the LTA to see if it was feasible to defer the claw-back further, on account of an expected cyclical increase in COE supply from next year.
He said the LTA will get back to him by the end of the month.
Motorists need to get a COE at fortnightly auctions before they can own a vehicle in Singapore.
COE supply, determined every six months, is influenced mainly by two factors: the number of vehicles taken off the road in the preceding six months, and the allowable annual vehicle growth rate.
This rate had been 3 per cent a year until 2009, when it was halved. It was to be cut further to 0.5 per cent from August.
COE supply has been falling since 2009. Last year, there were fewer than 30,000 COEs for cars, and this year, the figure is expected to fall below 25,000.
But between 2004 and 2008, the annual average was 105,000.
The sharp decline has driven COE premiums to record or near record levels.
The COE spikes, in turn, drove inflation to 5.2 per cent in March - one of the highest rates in recent times.
At last month's tender exercise, the COE premium for cars up to 1,600cc (Category A) hit an all-time high of $64,201.
The premium for cars above 1,600cc (Category B) ended at $91,000 - not far from the record $110,500 witnessed in December 1994.
Mr Lui said he understands the concerns that have been raised by motorists, commuters and motor dealers.
'With the data that I now have, which I did not have previously... I think if we proceed with the plans we had earlier, it would put a significant squeeze on the vehicle quota numbers,' he said.
The minister said data shows motorists are keeping their cars for longer periods than before. This in turn has reduced the number of cars taken off the road in recent months.
Motor traders welcome the possibility of a reprieve from the supply crunch, even if it is a modest one.
'It's a small relief,' said Mr Ron Lim, general manager of Nissan agent Tan Chong Motor. 'The slowdown in deregistration in Category A is very significant. Even if you allow the 1.5 per cent growth rate to continue, I think Cat A will still see a 30 to 40 per cent drop in supply.
'But it will mitigate the situation in the other categories.'
Singapore Vehicle Traders Association secretary Raymond Tang has a different view, saying: 'When the Government has announced a certain regulation or policy, it should stick to it until the next announced review.
'Otherwise, it creates uncertainty and affects confidence of investors.'
He said the Government could rely more on electronic road pricing to control congestion, 'but before it can do that, a good public transport system has to be in place'.
Govt trying to ease COE supply crunch
Transport Minister proposes two measures to improve situation
By Christopher Tan, Senior Correspondent
The Government is looking at ways to mitigate a drastic shrinkage in the supply of certificates of entitlement (COE) in the coming months, a situation that could drive car prices - and inflation - even higher.
Transport Minister Lui Tuck Yew, in response to a question from The Straits Times, said he has asked the Land Transport Authority (LTA) to do two things to help improve matters.
One, to see whether the market can be eased into the new growth ceiling of 0.5 per cent in vehicle population that kicks in from August. 'Rather than dropping from 1.5 per cent to 0.5 per cent, whether we can be more flexible in the implementation,' he said.
Two, whether the LTA can further defer the claw-back of past oversupply. This adjustment was originally to be made over one year. Last year, responding to appeals from the motor trade, it was spread over three years.
The adjustment currently reduces the number of COEs each month by 6 to 7 per cent.
Mr Lui said he had asked the LTA to see if it was feasible to defer the claw-back further, on account of an expected cyclical increase in COE supply from next year.
He said the LTA will get back to him by the end of the month.
Motorists need to get a COE at fortnightly auctions before they can own a vehicle in Singapore.
COE supply, determined every six months, is influenced mainly by two factors: the number of vehicles taken off the road in the preceding six months, and the allowable annual vehicle growth rate.
This rate had been 3 per cent a year until 2009, when it was halved. It was to be cut further to 0.5 per cent from August.
COE supply has been falling since 2009. Last year, there were fewer than 30,000 COEs for cars, and this year, the figure is expected to fall below 25,000.
But between 2004 and 2008, the annual average was 105,000.
The sharp decline has driven COE premiums to record or near record levels.
The COE spikes, in turn, drove inflation to 5.2 per cent in March - one of the highest rates in recent times.
At last month's tender exercise, the COE premium for cars up to 1,600cc (Category A) hit an all-time high of $64,201.
The premium for cars above 1,600cc (Category B) ended at $91,000 - not far from the record $110,500 witnessed in December 1994.
Mr Lui said he understands the concerns that have been raised by motorists, commuters and motor dealers.
'With the data that I now have, which I did not have previously... I think if we proceed with the plans we had earlier, it would put a significant squeeze on the vehicle quota numbers,' he said.
The minister said data shows motorists are keeping their cars for longer periods than before. This in turn has reduced the number of cars taken off the road in recent months.
Motor traders welcome the possibility of a reprieve from the supply crunch, even if it is a modest one.
'It's a small relief,' said Mr Ron Lim, general manager of Nissan agent Tan Chong Motor. 'The slowdown in deregistration in Category A is very significant. Even if you allow the 1.5 per cent growth rate to continue, I think Cat A will still see a 30 to 40 per cent drop in supply.
'But it will mitigate the situation in the other categories.'
Singapore Vehicle Traders Association secretary Raymond Tang has a different view, saying: 'When the Government has announced a certain regulation or policy, it should stick to it until the next announced review.
'Otherwise, it creates uncertainty and affects confidence of investors.'
He said the Government could rely more on electronic road pricing to control congestion, 'but before it can do that, a good public transport system has to be in place'.
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