Monday, December 31, 2012

Balloting of COEs

Singapore introduced the Certificate of Entitlement (COE) for purchase of cars 
22 years ago. It served a useful purpose in controlling the number of cars on 
the road.

Over the years, many people have complained that the system of bidding for the COE 
favors the wealthy at the expense of "more deserving" families that cannot compete in
paying the high price for the paper.

The suggestion of balloting the COEs have been raised many times, but was 
not accepted by the government on economic arguments, that scare resources are
 best allocated through market pricing. With the high prices of COE in recent months, 
the calls for the use of the ballot system have re-surfaced.

Balloting is not unusual in Singapore. For decades, we have been 
using it to assign new HDB flats to purchasers and primary school places to pupils. The system
was also implemented to give higher priority to certain groups, for example, pupils with
siblings in the same school.

If COEs are balloted, it is possible to fix the rice to reflect demand, but there is no need to
suffer the wild swings and panic buying that are seen in the current system. If the demand
exceed supply, the COEs can be balloted, with a higher chance being given
to "more deserving" families, such as families with children or does not now
own any car.


T Lee said...

Even the balloting system did not prevent the astronomical rise of the HDB prices.

I think what the govt should do is to limit the ownership of cars by families. If they can limit people to the number of HDB's they can own, why not cars?

For sure, the need for cars will always be less than the need for housing. So this might actually be a good system to take thousands upon thousands of cars off the road. Why would a family need 2 cars? Many kids? Then buy a MPV! Even more people to ferry, then get a minivan or something!

This whole mkt pricing thing obviously favours the govt as the money ultimately goes into their pockets.

yujuan said...

Guess the Authorities have pushed themselves into a very tight corner, trying a balancing act, between pandering to the rich's demand for more cars, and trying to cater the aspiration of the lower classes' bread and butter demand for just one small, utility car for the family.
And sandwiched in between, the poor small SME owner whose pick up is a requisite for his business survival. Decision to make, renew his COE for 5 years, still making a hole in his pocket, or get a second hand pick up, and pray it won't give him more breakdowns from wear and tear of a used vehicle.
A witch's cauldron is brewing, seems the Govt dun know what to do.

fan jiafang said...

I think it is ok with the current bidding system. But government should give some subsidy for needy family. Like 80% rebate for family with two or more children. 50% for one child family, 20% for married couple and 0 for single. So that they can promote local birth rate as well

Solomon said...

The Government could use money collected from COE to improve MRT and bus service, subsidise day care system for baby and senior citizen and experimenting car sharing.

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