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Rises in COE premiums: Were speculative elements the cause? by Wayne Chan 05:55 AM Dec 24, 2010 SINGAPORE - Were speculative elements behind the recent sharp rises in Certificate of Entitlement (COE) premiums? That is what the Government parliamentary committee chairman for transport, Dr Lim Wee Kiak, wants to know. Dr Lim told MediaCorp that he has filed a question on the issue to be addressed by the Transport Minister at the next Parliamentary sitting. COE premiums have been rising, going over the $70,000 mark in the latest bidding exercise on Wednesday. And many - including car buyers, car dealers and others in the industry - want to know what caused the recent surge. Dr Lim said: "With the sudden run in prices over the last two bidding sessions, I hope that the Land Transport Authority will be looking very closely into the bidding patterns as well as who are the ones that are bidding these COE prices up. Are they individuals or are they the car dealers themselves?" He said if there are speculative elements like what was seen 10 years ago, then the Government may need to step in. Industry players told MediaCorp that some dealers who were successful in bidding for COEs could be selling them at a higher price to other dealers who had buyers for their vehicles but were not able to secure COEs. Apart from prospective car buyers, the rising COE premiums are also putting the strain on courier and delivery companies. Some of these firms have turned to buying second-hand vehicles or renting them. Mr Paul Ng, operations executive with WARP Logistics Trading and Services, told MediaCorp: "If we buy a new vehicle, it would cost much more than if we were to rent it for a particular month." And if business declines the following month, the company will not have to face the recurrent cost of monthly instalments, which would have been the case if the company had bought a vehicle. Delivery companies said they may have to increase their charges by 20 per cent next year to pay for rising operating expenses - arising from road tax, parking and ERP changes. Parallel importers have also come up with new ways to increase sales, such as sharing the cost of COE premiums with buyers. Some dealers are resorting to selling second-hand cars, as the prices of such vehicles are more stable. To improve the COE system, Dr Lim suggested curbing vehicle financing to 70 per cent of the value of the vehicle, instead of the current 90 per cent. Dr Lim also suggested that the authorities "let the buyers bid for what they want to pay". Said Dr Lim: "(This) means that when you bid for it you pay the actual price for what you bid. Rather than the current system where you pay the lowest (bid), not the highest." ADDITIONAL REPORTING BY LYNDA HONG AND SEET SOK HWEE