Channel NewsAsia
Updated: 02/05/2013 21:41 | By Channel NewsAsia

No new COE category for first—time car buyers: Josephine Teo

No new COE category for first—time car buyers: Josephine Teo

No new COE category for first—time car buyers: Josephine Teo

SINGAPORE: Minister of State for Transport Josephine Teo said tweaking the Certificate of Entitlement (COE) system to favour first—time car—buyers may induce people to get around the arrangement.

Mrs Teo was responding to a question in Parliament on Tuesday on whether the ministry would consider creating a different COE category for first—time car buyers.

Mrs Teo said this will be a policy which will be quite easy to circumvent.

She said: "If a family was forced to register a car in the name of a first—time car owner, it would be quite easy for him to get a relative to stand in as a first—time car owner. Similarly, a business could set up a subsidiary to own just a car so there is a practical difficulty in implementing a policy of this nature.

Mrs Teo said it is difficult to justify who deserves a car more than another, whether it is a growing household which needs a second vehicle or singles getting their first car.

She cited the needs of bigger families and growing businesses that may need more than one vehicle.

Mrs Teo said: "To this family, a COE system which favours first—time buyers would not be fair. They would argue that their needs are greater than first—time buyers who are singles, or who have no children, or have no elderly members in the household.

She added that it is also important to consider the needs of businesses that have built up a customer base which needs a second vehicle to service.

"To such business owners, their purchase of an additional vehicle is no less deserving than for a start—up buying its first vehicle," explained Mrs Teo.

Mrs Teo said the government is open to reviewing the COE categorisation system.

She said COE prices are determined largely by demand, which is in turn influenced by many factors like interest rates and the economy’s state.

However, she added it is important to look closely at the various suggestions put forward to tweak the COE system, to see if they would really be effective in promoting lower prices without distorting the market.

Mrs Teo said: "The government is mindful that some businesses have a critical need for vehicles and that is why several concessions are in place to help businesses with their transport costs. Businesses bid for COEs for commercial vehicles in a separate category "C" and do not have to compete with private car—buyers in categories "A" and "B".

"In addition, the additional registration fee (ARF) for most goods vehicles is set at five per cent of the vehicle’s open market value instead of the 100 per cent OMV applicable to cars."

Mrs Teo however, did not reject suggestions for COE categories to be redefined and not be based on engine capacity.

MP for Jurong GRC, Ang Wei Neng, had suggested that Category A be pegged to the Open Market Value (OMV) of the car rather than just engine capacity.

In response, Mrs Teo said: "Indeed, we recognise these are valid ways in which we can rethink how the COES re—categorisation can be done and we are open to reviewing them, so I would urge the member to be patient."

On the trend of the car population in Singapore, Mrs Teo said it has increased by an average of four per cent per annum over the last five years.

At the start of 2008, there were some 515,000 cars.

At the end of last year, there were about 618,000, with nearly one in two households owning a car.

In 2008, two in five households owned a car.

The Ministry of Transport estimates that currently, fewer than one in 10 households own more than one car.

Mrs Teo said, "Our Vehicle Quota System aims for sustainable growth in our vehicle population. Today, our road infrastructure already takes up close to 12 per cent of our land space. Going forward, given our land constraints, we must endeavour to moderate further growth.

"Hence we decided to reduce the allowable vehicle growth rate from three per cent per annum, which was the rate since we introduced the vehicle quota system in 1990, to 1.5 per cent per annum in 2009, and we have further reduced it to one per cent per annum in 2012 and to 0.5 per cent per annum in February 2013."

Mrs Teo said given Singapore’s land scarcity, the country does not have the luxury to allow everyone to own a car and that car ownership also cannot be put in the same category of basic necessities such as housing.

"In land scarce Singapore, unfortunately, we do not have the luxury of letting everyone own a car. We also cannot put car ownership in the same category as housing, health, or education, which are basic necessities. Our current vehicle quota system is not a perfect system, but still, the most appropriate way to allocate a limited and non—basic resource," she said.

Mrs Teo said the solution lies in improving the public transport system and taxi services.

— CNA/de/fa

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