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Do the right thing

By SGCM_editorial on 23 Dec 2014 in Motoring, ST Opinion

Attached Image Those who held high hopes of a meaningful change to the car ownership landscape, when the Government announced six months ago that it was looking to make the COE system fairer, have the right to be disappointed. After months of deliberation and public consultation, the only change introduced (with effect from February 2014) was a power cap for Category A. In addition to the existing engine displacement limit (up to 1600cc), cars in said category must not produce more than 130bhp.
 
All other proposals, such as a surcharge to discourage multiple-car ownership (which would have resulted in a wider spread of “entitlement” among the population), were thrown into the waste bin. The Government says they are too hard to implement and enforce. In fact, this “too hard to do” reason is used to dismiss a proposal to ban motor traders from COE bidding. It is also used to explain why OMV (open market value) isn’t used to categorise COEs. Using engine power as a proxy to value is “simpler” and “easier”, according to the authorities.
 
A proposal for a pay-as-you-bid system was also rejected. No move was made to address the feast-and-famine COE supply pattern, either. And despite a clear need to address an anomaly in the commercial vehicle category (heavy vehicle bidders outbidding light vehicle bidders and driving premiums to record level after record level), nothing was done.

 
It is a sad day that “too hard to do” becomes a blanket excuse for not taking an issue by the horns. It is also downright tragic for a nation that had defied great odds to become what it is today, to succumb to a “can’t do” mentality when faced with a relatively straightforward issue such as COE.
 
It is sadder still that the only change 
the Government decided to implement will not be as successful as it hopes it to be. Dealerships will bring in models that meet the power limit, including Mercedes- Benz, BMW and Volvo. Many will resort to diesel engines, which typically have low power ratings but high torque values. And as technology progresses, mass-market brands such as Toyota and
 Hyundai will roll out high-
powered models. Then what?
 
What about the other
suggested changes? Well, most
 of them can be implemented. 
If, for instance, a surcharge
on subsequent cars is deemed 
the right policy to pursue, we
 should just pursue it – levy the
 surcharge by owner’s name, perhaps. There will, of course,
 be “leakage”, where buyers
 buy cars in their relatives’ or 
friends’ names. But not many people would be willing to be used in this manner – not without monetary incentive, anyway. 
And if people are caught by passing the surcharge this way, penalise them heavily.
 
Register the car in a company’s name, you say? Well, just disallow that, and bring back the company registration plate, which used to attract higher levies.
 
At the end of the day, the surcharge initiative is doable. All it takes is conviction. If it is the right thing to do, do it. If it isn’t the right policy, say so and explain why. Saying it is “too hard to do” smacks of defeatism. The same goes for the other proposals, such as banning motor traders from COE bidding. Yes, it is true that most car buyers have come to rely on car dealers for every little transaction. But if the law says they have to do their own bidding, they will learn to do so – just as they learnt how to apply for a HDB flat. Allowing motor traders
 to bid means allowing them to “game the system”. It is common practice for firms to lock-in buyers with attractive prices, and persuade them to “top up” when they continually fail to secure a COE.
 
Sure, consumers can walk away after six unsuccessful bids. But by then, prices elsewhere would have risen, too. They face a lose-lose situation by walking away. Therefore, many will agree to “top up”.
 
Big players have also been able to move the market, by the sheer number of bids they submit (or do not submit).
 A company can chase up premiums for five tenders, and then trigger a correction by withholding bids in the sixth. And because they have a pretty good idea how much premiums are likely to fall by, they set their COE rebate levels accordingly. More often than not, motor firms get to gain from a premium correction, and their customers only get a refund on the portion that is below the rebate level.
 
Our Government also says that in a pay-as-you-bid format, consumers do not pay the quota premium they are willing to pay. The logic is hard to follow. In the first place, the premium that bidders are most willing to pay must be zero. But because they are conditioned to accept a certain premium over a certain period of time, they pay what the market wills them to pay. For instance, when COEs rose steadily from around $20,000 five years ago to $70,000 in recent months, the buying has not stopped. Not because consumers are as “willing” to pay $70,000 as $20,000, but because they have no choice.
 
The notion of willingness to pay is an economic one. It does not always apply in real life – certainly not for something that is intrinsically worthless, such as a certificate of entitlement.
 
But we know, it is hard to ban motor traders from bidding. Just as it is
 hard to tell the rich who have more than one car (who make up one in five car-owning households) that they will have to pay more. Indeed, the right things are always the hardest to do

 
This article was written by Christopher Tan, consulting editor for Torque. 

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  • 1
Voodooman Dec 23 2014 07:01 PM
What is wrong with collecting more money?

Some of the suggestions (self bid, pay as you bid) should be tried out just to silence the critic (they might work, back to point 1).
Watwheels Dec 23 2014 09:41 PM

The COE system on its own is actually ok in general or rather people are familiar with it after so many donkey years. So just when the authorities  held back on the quota and COE prices shot up people cry for the "need" to change or to tweak the system. Hoping something of a miracle to bring COE prices down to sane levels.

That wishful thinking actually backfired and needless to say car buyers are screwed. More restrictions, 130bhp and loan restrictions kicked in. Well done, everybody. Well done. If we had been patient, kept quiet and let the high price ride it out, things might actually turn out just fine. But no. Something just had to be done. "Do the right thing", so you say.

Kiang jio ho, mai kay kiang. Suggesting some more ideas and keep harping on your own ideas will get you no where. If you haven't noticed it got you nowhere in the first place so I suggest you keep your 2cents worth and take a few steps back to enjoy what you have. As if the first lesson haven't taught you enough and you want to go for attempt number 2. Ask youself, are you plain dumb or are you stubborn?

Fastfive1 Dec 23 2014 11:06 PM

f**k you Chris. You can suck my dick. You cant get me, Chris, because you're just full of shit

Fastfive1 Dec 23 2014 11:14 PM

The COE system on its own is actually ok in general or rather people are familiar with it after so many donkey years. So just when the authorities  held back on the quota and COE prices shot up people cry for the "need" to change or to tweak the system. Hoping something of a miracle to bring COE prices down to sane levels.

That wishful thinking actually backfired and needless to say car buyers are screwed. More restrictions, 130bhp and loan restrictions kicked in. Well done, everybody. Well done. If we had been patient, kept quiet and let the high price ride it out, things might actually turn out just fine. But no. Something just had to be done. "Do the right thing", so you say.

Kiang jio ho, mai kay kiang. Suggesting some more ideas and keep harping on your own ideas will get you no where. If you haven't noticed it got you nowhere in the first place so I suggest you keep your 2cents worth and take a few steps back to enjoy what you have. As if the first lesson haven't taught you enough and you want to go for attempt number 2. Ask youself, are you plain dumb or are you stubborn?

 

I'm very sure the dumbasses who keep complaining till the cows come home can't afford a car even if they were to take a 100% loan. They say that they supposedly have the money to do so but would rather not blow it on a car. What they mean to say is that they can't afford it and do not want to be seen as inferior when people ask why they don't have a car, hence their response.

 

I've mentioned many times in MCF that the COE system was fine just the way it was. Yet people never understood. 

Fastfive1 Dec 23 2014 11:14 PM

Do what right thing? Go fornicate yourself Chris. 

Carnoob Dec 24 2014 09:53 AM

Too little too late, I would rather LTA keep their focus on improving PTS (Public Transport System).

Pirates Dec 24 2014 09:59 AM

A SMART nation and it's people don't know how to bid his own COE? 

 

CPF Minimium Sum is so complex, change year after year. Yet it can be implemented but COE is 'too hard to do"?

Knoobie Dec 24 2014 10:18 AM

People never learn how to shut up when needed...

Furrynadz Dec 24 2014 04:27 PM

Paul, Paul Lampard

Furrynadz Dec 24 2014 04:29 PM

@Fastfive1 : u ask him suck, later got disease how...no need to take one for the team...

  • 1
 
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