Tuesday, October 4, 2011

Lui Tuck Yew: Singapore has limited space for new roads

For FT and real estate developer, Singapore has infinite space
AsiaOne reported govt set to curb vehicle population. Singapore's vehicle growth rate is set to be revised downwards this month to further limit vehicle growth.

The current growth rate stands at 1.5 per cent and was last reduced in 2009. It was halved from three per cent to the current 1.5 per cent.

Mr Lui said that Singapore has limited space for new roads.

Ironically, there are a lot of space for FT and also property developer/speculator.

The effect of COE price when supply is decreased
COE is quite demand inelastic in economics term. A little change in supply will cause price to sky-rocket. The current COE quota with its soaring premiums has inflated car prices. A 1.6-litre Toyota Altis now costs over $100,000 as compared to around $83,000 11 months ago. When vehicle growth was reduced from 3% to 1.5%, COE price hiked 20%.

A middle class tax

The price mechanism of COE dictates that government can actually make more monies by reducing COE supply a little. Most private car owners are middle class, and COE price hike hits them hardest. 

Historically PAP has put more priority in making monies from the poor rather than any genuine interest in congestion. PAP's current fanatic FT policy shows that over-crowding or limited land is not their priority issue. We can duly presume that this time no doubt PAP tries to control clogging , but its main aim seems to be extracting rent from middle class. 

PAP collects extremely low levy on the rich, and middle class shouldered disproportion amount of taxation. In the coming years, the pugnacious land sale HDB sale revenue may somewhat slow down. The greedy PAP will look elsewhere for compensation.

I expect PAP to hike public transport, education, retail power tariff, water, gas...etc, which target especially the middle class. 


99% confirm said...

Guys, my humble opinion. I feel that the current sky rocketing COE prices is a market correction caused by the low COE prices during the credit and mortgage crises during 2007-2009.

Those years, the automobile industry was badly hit and COE bids hardly meet the quota. That was when we experienced $1 COEs (similar scenario to the 2008 financial crisis). This low COE phenomenon encouraged car purchase and that is when our roads started experiencing growth of cars at an accelerated rate.

The government actually tried to salvage the scenario with a 1-year plan to cut COE allocation but revised it to a 3-year plan in view of the repercussions. View the below article.


I quote from the above article - "LTA had planned to make corrections to its previous over-projections in the number of vehicle de-registrations in the remaining one year.

But after consultation with relevant stakeholders, Transport Minister Raymond Lim told Parliament on Monday that the remaining 9,577 COEs to be corrected will now be done over a period of three years."

So i believe COE prices peaked prematurely due to miscalculations by LTA.

The outlook for the automobile industry is gloomy. The coming crisis will once again deter car buyers but i do not see the government intervening to adjust COE prices as they cannot afford another possible occurance of cars flooding the roads. Current car owners will choose to renew their COEs instead of buying a new vehicle at least for the first renewal. Automobile industry will slash prices to remain competitive but i doubt many can afford to do so.

Car markets to be badly hit in the coming years i reckon. Just a penny for your thoughts Veritas. Sorry if i made wrong assumptions.

99% confirm said...

sorry i meant the 1998 Asian financial crisis in the 2nd paragraph.

99% confirm said...

and the link to the article is http://www.channelnewsasia.com/stories/singaporelocalnews/view/1103738/1/.html

Dodo said...

Wah, PAP apologists infesting all the websites, looks like ah lee is on offensive leh :) unfortunately it makes the comments columns just like Straits Times reporters, next time I just read doremon main text, no need to read comments anymore, enuf of brainwash olready

Sadist said...

No offence to car dealers, but I hope the vehicle industry suffers big time.

But that is wishful thinking anyway.

I do not understand the fascination over cars. Not only here in Sin but all over thw world.

If the middle class can afford $2 per lit petrol, ERP charges, car park charges, and paying loans over 5, 7 years.. why cant they just catch a taxi?

Just because they live in Henry Park? S'goon Gardens, Telok Kurau?

Yeah, I supose its to show off to their neighbours that they are so good at business deals and so good at their profession that each adult owns their own car and have to park it along the roads outside of their homes (which is a terrace house anyway)

Not to forget that Suyati has to clean all 4 in the mornings.. but thats ok with her. Thats when she has her union meeting with the rest of the neighbourhood maids.

I hope COE goes back up to $150,000 for a Kia.
I hope ERP charges go up by another $2 for each gantry
and I hope Oil prices hit US$300 per barrel.

Man!.. thats what I call excitement!! finally! some action