Why a car is an extravagance in Singapore
Posted October 30, 2017 3:53 a.m. EDT
SINGAPORE (CNN) — There is no such thing as an old clunker in Singapore.
Here, a car is more than just a tool---it's an expensive treasure to be cherished. This status symbol is now set to become an even more extravagant commodity as the government shifts its attention towards engineering a "car-lite" country.
The government already regulates the total number of cars in the tiny city-state by issuing limited numbers of permits, known as Certificates of Entitlement (COE).
However, a new 0% growth formula, which was introduced in October and expected to take effect from February 2018, will ensure that there is no increase in the number of cars on the country's roads, except for goods vehicles and buses which will be exempted until 2021.
This reduction in the number of COEs, and the corresponding spike in cost, will be another disincentive for car ownership in a country where it's already incredibly expensive to own one.
Here's why cars are so pricey in Singapore.
Prospective buyers have to first bid for a COE before they are allowed to purchase a car. It isn't cheap: the last tender for COE bids for a mid-sized sedan came out at S$41,600 (US$30,600).
Additional taxes are slapped on top of that, which means that these costs add up to more than the open market value of the car itself. The average cost of a compact car in 2017 has been reported to be about S$105,929 (US$77,670).
It's part of the government's plan for a "car-lite" Singapore, as limited space challenges city planners.
"Today, 12% of Singapore's total land area is taken up by roads," the country's Land Transport Authority said in a statement. "In view of land constraints and competing needs, there is limited scope for further expansion of the road network."
Efforts to provide more alternatives are underway.
An LTA report released at the end of 2016 indicated that "Singapore is committing S$36 billion over the next five years to create a car-lite society where people will happily choose to walk, cycle and take public transport."
However, public resistance to the quota system for cars in Singapore has been fairly minimal.
Despite recent woes with breakdowns on Mass Rapid Transit (MRT) lines, the public transport network is still largely efficient, and the government continues to expand the rail network and provide bus contracting subsidies to enhance capacity.
Bicycle-sharing platforms like oBike and Mobike have also emerged to provide options for travel over shorter distances.
'Nail in the coffin' for car ownership
Leo Cheng, a private tutor currently sharing a vehicle with his parents, had hoped to one day have a car of his own. Although he describes the LTA's latest announcement as the "final nail in the coffin" for any dream of car ownership, he still supports the move.
"Having so many cars is a terrible and illogical choice for land-scarce Singapore," he said.
Also, the extra damage to the wallet doesn't deter everyone from shopping for automobiles. Melanie Ralph, a journalist, is on the lookout for a third car. Her husband, a CEO of an asset management company, already owns a supercar and an antique Ferrari, so she's planning to find another vehicle for her and their children's everyday use.
"The reason we're buying a car for the family is because it will cost us almost the same as a lease car would," she said.
"The COE works for Singapore because Singapore is a small island and the public transport is excellent, so if you are without a car, it's not the end of the world," she added.
"If the COE meant that the poorer people couldn't get to work or take their children to school for example, then I wouldn't agree with it, but because the public transport here is so good, actually having a car in Singapore is a luxury for many."
This system of quotas, bids and limited validity has occasionally been the subject of criticism, particularly in the way it is seen to perpetuate inequality in a country known for having a high population of millionaires.
The suggestion of providing rebates to families with children or elderly was raised in Parliament in 2015, but dismissed by then-Senior Minister of State for Transport Josephine Teo: "[O]ther groups would soon ask for rebates too, and where would this leave us?"
One household caught in this situation is Yu-Mei Balasingamchow and her family; the rising cost is a big headache for them.
"The only reason we're getting a car is because my parents are elderly and in particular, my father has Parkinson's," she said. "Yes, we could take taxis but it's very difficult for my father, given his mobility issues, to wait for long periods of time. And taxis are so unpredictable---I wish the transport minister would try getting a taxi with an elderly person at [the Singapore General Hospital] at the times when everyone is coming out from their outpatient appointments."
"Why doesn't the government make COEs more expensive for people who are buying second, third or more cars?" asked Balasingamchow.
"A family who needs a car to transport their kids or elderly family members is not buying a flashy luxury model and certainly not keeping cars in their garage as a collection. People who don't actually need the car and are buying multiple cars because they can afford to, can also afford to pay whatever sky-high COE the government wants to charge."