Distribution of COEs

Ms Mary Liew asked the Minister for Transport (a) how many households own two or more cars currently; and (b) whether the Ministry is considering alternatives for a more equitable distribution of car ownership in Singapore.

Madam, Members have asked my Ministry to consider alternative ways to distribute COEs, to favour selected groups with access to cheaper COEs. We have studied these suggestions, whether they merit support and also if they stand a good chance of being implemented effectively.

First, to Ms Mary Liew's question, car ownership has increased significantly. Today, about 45% of all households own a car. That is nearly one in two households. In 2000, around one in three households owned a car. We estimate that between 8% and 9% of households in Singapore have more than one car. In other words, fewer than one out of 10 households own more than one car.

While we understand the intent of Dr Intan's suggestion to favour first-time car buyers, the main difficulty is that it is hard to say why a second-time buyer is always less deserving than a first-time buyer. Consider the perspective of a growing household where the grandparents have moved in to stay, or the family has had more children, and are planning to buy a bigger or second car.

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To this family, a COE system which favours first-time buyers would not be fair. They would argue that their needs are greater than first-time buyers who are singles, or who have no children, or have no elderly members in the household. Consider also the needs of a business at an exciting growth phase, having built up a customer base which needs a second vehicle to service. To such business owners, their purchase of an additional vehicle is no less deserving than for a start-up buying its first vehicle.

As a response to such a policy, the example of the family cited above may register the vehicle in the name of another family member who has not yet owned a car or a relative living in a different household. A business can easily set up a new subsidiary to own another vehicle as a first-time buyer. It is not hard to see how a COE allocation system which favours certain groups is likely to induce behaviour to get around the policy and defeat the purpose of the policy.

In land scarce Singapore, unfortunately, we do not have the luxury of letting everyone own a car. We also cannot put car ownership in the same category as housing, health or education which are basic necessities. Our current Vehicle Quota System (VQS) is not a perfect system but is still the most appropriate way to allocate a limited and non-basic resource.

Let me assure Members that the Government is mindful of the wishes of Singaporeans to enjoy a high degree of mobility. The solution lies not in unrestrained growth of private car ownership but in improving our public transport and taxi systems. Therefore, we will focus our efforts and invest more resources on building up our mass public transport system – more rail lines, more bus routes and more reliable services. We will also continue to encourage premium bus services and improve our taxi system to help bridge the gap between private and mass public transport.

Thank you, Mdm Speaker. I thank the Minister of State for the reply. Even though I understand that there are limitations, I hope that there are also ways to help certain families who really need that first car but for whom the prices of current COEs may be out of their reach. At the same time, would the Ministry consider looking at how the car loan structure can be changed where possibly the first car can be obtained at 100% loan and the second car at 80% or 90% loan, and so on?

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Madam, we thank Dr Intan for her suggestions and we will certainly look at them.