I READ with interest the feedback on the Certificates of Entitlement (COE) scheme.

One fairly simple suggestion which I hope the Government can consider is a “dual system” where a car owner can replace his or her old car with a new one without the need to bid and pay for a new COE, while new and second or multiple-car owners would continue having to bid for their COEs.

This would meet several objectives.

Our vehicle population has kept apace with population growth and there is already a reasonable stock of vehicles. The proposed system would still allow policymakers to monitor and control growth to keep within annual targets.

Those who really need to own a car for personal, family or work-related reasons would not be placed at the mercy of market forces and forced to pay exorbitant COE premiums when they need to replace their old cars.

Instead, the system would be tailored to rightfully address those who can afford a second (or more) car.

To qualify for the COE waiver, it could be stipulated that car must be a minimum age — say, three or five years old — before the owner can scrap it and get a replacement.

The COE waiver could be restricted to one car per owner. Those who want to scrap and replace a car before the minimum period, or who want a second car, would have to join the bidding for a COE.

With fewer car owners bidding, COE prices would not be under pressure to escalate alarmingly.

Instead, there could be a downward trend instead.

This vehicle-replacement approach could be extended to company-registered vehicles too, and it would help to reduce business costs.

As for those who give up car ownership, their deregistered vehicles can be fed back into the COE quota, as is being done.

Tweaking the COE system in such a tangible and equitable manner not only benefits tax-paying Singaporeans and residents, but also helps to contain the cost of living for households, reduce business costs, keep the economy competitive and reduce the persistent grouses about the exorbitant cost of car ownership in Singapore.

WITH the recent tweaks to the COE quota, the prices of cars have risen. I have a couple of suggestions to help take some of the frustration out of the equation for potential car buyers.

First:

The price of a car should not be bundled with the COE quota premium.

The current system enables car sellers to speculate on the COE price.

With a cut in the number of COEs, the total supply in the number of new vehicles will correspondingly drop.  As such, car retailers should maintain or reduce the price of their vehicles if they want to maintain equivalent market share — not raise prices. 

[MARKET ECONOMIC DISTORTION]

It should only be the COE price which fluctuates according to demand.

The fact that they are able to raise the price of their vehicles in anticipation of COE price rises which may not take place shows that the cost of the COE system tweaks is being absorbed entirely by consumers. 

[COST OF LIVING AND INFLATION DRIVER]

Second:

When you walk into a showroom and put down the deposit on a car, you have entered into a binding contract to buy the car. Yet, you are not even certain of getting a COE to support that purchase, due to the current bidding system.

[sub-PRIME  BIDDING  SYSTEM]

Why not have the system require that you must first purchase and produce a COE