File pic of heavy traffic at the central business district in Singapore. - AFP
SINGAPORE: Singapore will from this month start freezing the number of cars allowed on the road as part of its vision to go "car-lite". Whether the costs of owning a car will become increasingly exorbitant remains to be seen, but one thing is clear - it’s bad news for the auto industry.
Twelve per cent of Singapore’s total land area is taken up by roads, and authorities are introducing increasingly strict measures to curb car usage in the island city state.
Which is fine by research engineer Kheng Hui Yeo. His commute involves taking a bus to the nearest metro station, followed by two separate trains to get from his home in the north down to his office in the south-western part of the island.
His 60-minute journey may sound entirely ordinary, except he owns a perfectly-functioning car - a Japanese KIA - that would slice his travelling time in half. However, he’s happy to let the car sit idly in the garage.
“I prefer the reach of public transportation and its impact on the environment. I’d rather take buses and trains everywhere than drive,” he says. “That way I don't have to worry about looking for a place to park, refuel, or whether my cashcard is sufficiently topped up.”
It is this behaviour that the Singapore government has been hoping to encourage, ever since it levelled its gaze at curtailing car ownership and usage from the 1960s, citing the country’s competing demands for land.
It does this by tightly controlling the number of permits issued, called Certificates of Entitlement (COEs), which grant aspiring owners the right to buy and own a private vehicle.
The cost of a COE can be prohibitive, sometimes surging to as high as the cost of a car itself, as participants vie with each other for one through an open-bidding system.
These COEs are only valid for 10 years, after which owners must decide to either scrap their cars or renew their permits for a maximum of another decade.
Authorities historically allowed for growth rates in the COE quota that hovered between 1.5 per cent to 0.5 per cent per year, but from Feb 1 (today), the growth rate on the quota of new cars and motorcycles on the road will remain at exactly 0 per cent.
In this strictly one-in, one-out system, potential car buyers will have to wait for current owners to de-register their vehicles at the 10-year mark, before being able to bid for these newly-freed up COEs.
Land scarcity and hefty investments in public transport infrastructure were cited as reasons underpinning the move.
There are about 5.6 million people living in Singapore, and as of the end of 2017, there were 575,353 cars on the island city-state's roads.
“Twelve per cent of Singapore’s total land area is taken up by roads,” said the Land Transport Authority (LTA) in a statement. “In view of land constraints and competing needs, there is limited scope for further expansion of the road network.”
The authorities are intent on keeping the growth rate stagnant for the next three years, until the measure is up for review in 2021.
How car buyers will react to the measure remains to be seen, when the first round of COE bidding after the measure’s implementation is slated to take place on Feb 7.
Average Singaporeans seemed accepting of the measure, despite fears that the chokehold on COE supply may exert upward pressure on prices.
“We definitely cannot expect the number of cars to grow infinitely, which will come with an entirely new set of problems - traffic jams, lack of parking space, and increase in parking fees,” says mother of one Sheila Ang, who owns a hatchback Volkswagen Golf TSI.
“It preserves existing vehicles which may be in good condition rather than forcing the purchase and production of new vehicles,” Kheng says.
Other industry insiders say that the net effect of the measure is likely to be minimal since the number of available COEs is largely driven by vehicle de-registrations than government issuances anyway.
Some venture that this is merely a correction mechanism the government is enacting, recalling the glut of new cars in 2008 when COE prices dropped to an unprecedented 1.47 US dollars.
Those owners may decide to de-register their cars when they hit their 10-year expiry in 2018, which coincides neatly with the expected start of the freeze.
In any case, car retailers agree that the tighter restriction of cars on the road augurs badly for the auto industry, because it means a shrinking pie to carve a slice out of.
“You’re squeezing the market,” said Mohamed Taifoor, the owner of a car dealership. “You lose volume in selling due to the reduction in quota.”
Car agents will have to offer special promotions to create demand, either by reducing car prices, offering softer terms of payment or cutting operating costs from rental and labour, he added.
In 2014, Prime Minister Lee Hsien Loong first articulated the vision of a "car-lite" Singapore as part of a 1.5-billion-dollar, 15-year plan to reduce reliance on the car and move towards more sustainable transport solutions.
Three years on, a report released by the LTA indicated that the number of private cars in Singapore had sunk to a five-year low of 575,353 by the end of 2017.
If this trend is anything to go by, Singapore may well be on its way to achieving its vision.
