Jump to content

COE cycles of boom and bust

COE cycles of boom and bust

ST_Opinion

17,600 views

blog-0135278001435885247.jpg

blogentry-133904-0-06377200-1435885126_thumb.jpgSince its inception in 1990, the vehicle quota system has followed a 10-year peak-and-trough cycle, where the annual supply of certificates of entitlement (COEs) could vary from 20,000 to 100,000.

 

Even if this fluctuation does not impair the effectiveness of the COE system in controlling Singapore's vehicle population, it is highly disruptive. For consumers, the price swings cause discontent, and trigger wasteful outcomes such as cars barely three years old being scrapped.

 

This is because when COE supply is on an upswing, the price of a new car could fall below the residual value of one bought two years earlier.

 

This negative equity has an impact on banks and financial institutions. In the case of defaults, these lenders cannot recoup their loans.

 

The recent curb on car loans mitigates this risk, but not fully.

 

The biggest disruption, however, is to the motor industry. When COEs are bountiful, companies raise their headcount to cope with the surge in sales - only to lay off people when the next dry spell hits.

 

This hire-and-fire pattern makes the sector a highly volatile one. This, in turn, makes skills development that much more challenging, not to mention the ripple effect that disrupted employment has on families and the economy at large. The industry is by no means insignificant. At last count, authorised agents accounted for 4,000 jobs. This could swell to 6,000 in the next two to three years, when COE supply peaks.

 

The figures exclude parallel importers and supporting businesses such as leather upholsterers, accessory shops, and logistics providers like car transporters and warehousing firms.

 

Industry players and advocates have appealed for a more stable and predictable COE supply pattern for some 20 years now. The Government has stood its ground, even when it was presented with the ideal environment a decade ago to make a change. That was when an oversupply brought COE prices down to $3,000 or less.

by Christopher Tan




10 Comments


Recommended Comments

Nothing new that he has not raised in previous articles. Strange he is repeating the same call again, maybe OCS really on the way and this is to prep the grounds.

Link to comment

There is nothing wrong with boom and bust as long as there is a bust when I want to buy a car.

 

Now is all boom and no bust. When can we have a bust?

 

So you can say its now is all boom boom boom.

Link to comment

All these criticism about Chris and that he is writing nothing original.

 

I would like to defend Chris and say

 

Maybe he is a product of our local education and he is trained to regurgitate?

 

:D

Link to comment

Actually I think he is taking about the employment angle here? Regardless, there are boom and bust for many industries, property for example is also very susceptible to severe fluctuations. I guess people in these line will be adept in adjusting to the upswings and downswings

Link to comment

The writer's statement in the last paragraph is incorrect.

 

COE prices were NOT down to $3,000 or less because of an oversupply, BUT rather due to the 2008 financial crisis, considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.

 

Even if there is an oversupply of COE now, prices will never be close to a 4 digit figure.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Why cross-border road trips are now easier with Singtel Dash

    As your all-in-one mobile e-wallet, having Dash on hand makes topping up your TNG eWallet more secure and seamless - with competitive rates to boot too! Within the short span of a few years, road trips up into Malaysia have taken on a more tech-centric guise. We're talking, of course, about the rise and the omnipresence of the all-powerful Touch 'n Go eWallet (TNG eWallet). With most merchants in Malaysia now accepting cashless payments via the TNG eWallet, you could effectively g

    donutdontu

    donutdontu

    23 years on, Infernal Affairs remains the best gangster movie I've watched

    TL;DR It's over two decades old, but Infernal Affairs remains THE gangster trilogy. *SPOILERS AHEAD* *SPOILERS AHEAD* *SPOILERS AHEAD* The Hong Kong Police and a triad have placed moles in each other's ranks. Tony Leung is Chan Wing Yan, an undercover cop desperate to leave his assignment. The antagonist is Senior Inspector Lau Kin Ming (Andy Lau), a decorated policeman who is actually a mole for Hon Sam (Eric Tsang), a triad boss. It's a game of cat-and-mouse, with poli

    jeresinex

    jeresinex

    Movile Cave: Aliens on Earth

    Picture this: a subterranean hideaway so exclusive, it's been sealed off from the outside world for a cool 5.5 million years. Yep, the Movile Cave is a strange alien universe right here on Earth, tucked underneath the Romanian coast.  It may be just 20 metres below ground, but the Movile Cave is about as alien an environment as you will find anywhere on Earth. With no interference from the plebeian air that we breathe and light that we see, the cave instead is a concoction of sulphuric

    bobthemob

    bobthemob

    More aliens on Earth?

    "Scientists Just Discovered a Creature That Breaks the Rules of Life". I mean, that's quite the headline.  Sukunaarchaeum mirabile is also quite the name to pronounce. But yes, that's the name of a recently discovered organism that apparently challenges the traditional scientific definition of 'life'.  There's a fair bit of scientific jargon to sieve through, but the quick summary is this: Cells are considered "alive" because of their ability to self-replicate and reproduce, whereas vi

    bobthemob

    bobthemob

×
×
  • Create New...