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2004 another record year for scrapped cars / The Great COE Scam

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  • mellaniehewlitt@cnn.com
    Comments: Mellanie Hewlitt 24 Dec 2004 Singapore Review The obsolesces rate of valuable assets in Singapore is extremely high. Whilst it is conceivable that
    Message 1 of 1 , Dec 23, 2004
      Comments: Mellanie Hewlitt
      24 Dec 2004
      Singapore Review

      The obsolesces rate of valuable assets in Singapore is extremely high. Whilst
      it is conceivable that certain products like computers have short life spans
      due to rapid technological progress and changing consumer needs, it is quite
      another matter to find this unhealthy trend in "longer term" assets like a
      house or cars.

      A car that usually would cost only SGD30,000/- with an average life- span of 20-
      30 years is only given a shelf life of 10 years on paper (COE). In other
      developed countries, it is not unusual to see a 1965 Beetle (or cars older then
      15 years of age) rumbling along the roads as these vehicles are still in
      perfectly good and road worthy condition and are testimony to the engineering
      feats of their makers.

      But in Singapore, the COE system effectively encourages owners to discard
      perfectly functional cars and replace these with newer models. Of cause the
      only beneficiaries are the government (who rake in the proceeds from new COE
      bids) and also car dealers.

      In reality, one never really owns a car in Singapore. One only acquires the
      right to lease the vehicle from the government for 10 years. And the icing on
      the cake is that car prices in Singapore are the highest in the world. A
      typical 1.6 liter Japanese car can cost SGD85,000/-. No two guesses needed on
      where the proceeds go.

      The same applies also to 99 year leasehold property and HDB flats. On maturity
      of these periods, "owners" have to fork out additional cash upfront to retain
      the right to the asset. This inefficient and highly expensive system has
      resulted in tremendous wastage and additional costs for the average Singaporean
      especially since housing and cars will be the 2 most expensive items for the
      average Singaporean.

      High Obsolesces Rates of Valuable Assets Lead To Wastage & High Costs

      70 to 80 per cent of the 82,000 care that were deregistered last year are less
      than five years old, and more than 90 per cent are less than 10 years old.

      A home and a car will top the list of big ticket expenses for most
      Singaporeans. And these same items have limited life-spans......

      Dec 24, 2004
      2004 set to be another record year for scrapped cars
      by Christopher Tan

      DESPITE measures to discourage the early scrapping of cars, the number of vehicles deregistered will reach a record level again this year.

      It is estimated that by year-end, up to 115,000 vehicles will have been taken off the road, up from the 109,710 recorded by the Land Transport Authority last year. The estimate is based on the more than 105,000 vehicles deregistered in the last 11 months, a monthly average of about 9,600.

      Cars would make up 74 per cent of them, a tad above last year's 73 per cent.

      The sizeable exodus has been a yearly phenomenon since the late 1990s, because of the tax rebates owners get when they send their cars to the scrapyard or for export.

      As prices of cars decline with falling taxes and certificate of entitlement (COE) premiums, rebates are often higher than what owners could get on the resale market.

      The Government has taken steps to curtail the premature scrapping, as it is a drain on the country's foreign exchange earnings. It changed the rebate formula in early 2002 to make it less generous.

      But industry players say the trend will take time to reverse. The president of the Automotive Importers and Exporters Association, Mr Neo Nam Heng, expects the trend to continue for some time, noting that 2002 and 2003 cars are already being scrapped.

      'In my yard, there are at least 50 2002 cars, mainly Lexus,' Mr Neo said, adding that the lower COE results released this week will 'accelerate scrapping'.

      Four export-processing zones - yards to hold vehicles before they are shipped out - were set up last year. Two more operators were appointed two months ago to handle the growing number of scrapped cars.

      But Transport Minister Yeo Cheow Tong expects more people to keep their cars for 10 years, with the new scrap rebate formula. Pegged to the additional registration fee (ARF), the rebate will shrink as the ARF is trimmed.

      The Government will be gradually reducing the ARF. Mr Yeo last month said: 'We will continue to review the upfront taxes to make car prices more affordable.'

      --------------------------------------------------------------------------------------

      From: ConcernedReader@...
      Date: Tue Jan 13, 2004 12:00 am
      Subject: The Great COE Scam


      We circulate below letter from Concerned Reader.

      To: Sg_Review-owner@yahoogroups.com
      CC: mellaniehewlitt@...
      From: Concerned Reader
      Date: Tue, 13 Jan 2004 12:51:06 +0800

      Dear Sir

      You have the knack for stating the obvious. It is no secret that the official
      reason used to impose COEs (i.e. to restrict traffic and control congestion) is
      bogus. Any person can come up with 10 different schemes of rationing cars on
      roads without imposing sky-high COEs.

      Indeed, the entire world is aware that the ONLY reason for existence of the
      COEs is to get revenue from car owners.

      What is less obvious is the huge amount of money that goes into the government
      coffers every year. Taking the below statistics from the Shitty Times as a
      rough yardstick, if 82,000 cars per year were prematurely retired, there will
      be new replacement COEs of equivalent number.

      At an average rate of SGD23,000/- per COE, 82,000 COEs will bring in an
      estimated SGD1.886 billion per year. This is in addition to the daily ERP and
      road tax rates that the government imposes. Let me put this figure in proper
      perspective; SGD1.886 billion is;

      1) SGD1,886,000,000; or
      2) One Thousand Eight Hundred and Eighty-Six Million Sing Dollars.

      And no one has a clue what happens to this humongous sum. Where does it all go?
      How is it utilised? Does the LTA spend SGD2 billion a year upgrading roads?
      Please do not tell me that the money went into the half-baked half f%$%#@ piece
      of contraption that is the NEL. That's another joke of the year.

      Its clears as daylight that Singaporeans are taken for a very expensive ride.
      And the even more amusing fact is that no one even raises this as an issue to
      be addressed. People still flock to buy cars by the hundreds!!! Call it herd
      mentality (or monkey see monkey do).

      Given that a car tops the list (after a house) as the biggest ticket item on
      the average Singaporeans lists of expenses, this also says alot about the
      apathy permeating Singapore's less then inquiring populace. But then again,
      this is Singapore......

      Just my two cents worth.

      From a "Concerned Reader"


      Below are extracts from "Singapore National Education Part 68" which
      illuminates the wonderful Singapore COE system in practise.

      http://www.mrbrown.com/sne68.html

      "9. That because of a freak $101 COE for the month of July, people are buying
      COEs to extend their 7 to 10 year old cars for another 10 years. Based on the
      three-month moving average of the COE, a person owning an 10 year old car can
      renew his car for about $18,000, instead of the usual $30,000+.

      But because of the present low COE prices compared to say, 2 years ago, and
      because of the poor market sentiment post-Sept 11, many Mercedes Benzes and
      Lexuses (Lexii?) bought with high COEs of the past are now being scrapped. This
      is because these big almost-new cars can fetch better values from
      deregistration (thus realising the rebates from the unused portions of the
      residual taxes) than from a second-hand sale.

      From the BT Motoring section:

      "According to the Land Transport Authority, 50,392 vehicles were deregistered
      in the first eight months of 2001, of which 32,508 were cars. Of these, 11,562
      were big cars (above 1,600cc). The figures are already higher than several
      previous full-year numbers. And extrapolated over 12 months, scrappage is
      likely to hit 75,588 vehicles or 48,762 cars. Of these, 17,343 would be big
      cars."

      So, as a result of our wonderful COE system, ten-years-or-older cars with old
      emission engines are being kept on the road, while high-tech two-year-old
      luxury cars are being scrapped.

      Renew your old car, scrap your new one. Only in Singapore."
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