car ownership Owning and driving a car in Singapore is, by international standards, expensive. This is partly the consequence of various measures designed to restrain car ownership, promote the use of public transport, and so ease traffic congestion, especially in the Central Business District.
After Separation in 1965, land- scarce Singapore needed a sound long- term plan to accommodate its growing economy. During the period 1967– 71, the State and City Planning Study developed a concept plan for the physical development of the island. The study concluded that it would be environmentally unacceptable and physically impossible to build enough roads to meet the prevailing rate of growth in cars; and that buses alone would be unable to meet future public transport needs. From these findings has arisen an overall transportation strategy that attempts to maintain a desirable balance between the use of private and public transport. The emphasis is to improve public transport and encourage its use; and to restrain the widespread use of the private car by demand management. In addition, the transport strategy also calls for land- use planning to take transport into account and vice- versa, and for the construction of a modest road network complemented by good traffic management.
Demand management measures have mainly targeted private cars, which have always accounted for slightly more than half of the total vehicle population. The measures implemented since 1972 are restraint on vehicle usage and car ownership.
Vehicle usage restraint was introduced through an Area Licensing Scheme in 1975 (see Area Licensing Scheme and Restricted Zone), which was subsequently upgraded to Electronic Road Pricing (ERP) in 1998. Initially, usage restraint targeted only cars, but was later extended to include all classes of vehicles. Car ownership restraint began with measures that relied on high taxes and fees. These applied to import taxes, registration fees and Additional Registration Fees (ARF). The periodic tax and fee increases dampened the growth rate of car ownership from 1972 to 1989, but it became untenable to keep increasing taxes at regular intervals.
In August 1989, a Parliamentary Select Committee reviewed the adequacy of existing policies on demand management and examined the need for additional measures. Amongst other things, the committee recommended a quota system as a long- term solution to manage the orderly growth in vehicle numbers. The vehicle quota system came into being in May 1990. The cost of a new car is the sum of its open market value (OMV), registration fee, Goods and Services Tax, the import tax, ARF, vehicle quota premium and the car dealer’s mark- up.
The registration fee of $15 in 1968 was increased to $1,000 in 1980 and reduced to $140 in 1998, when the ERP was implemented. The GST, first introduced in 1994 at 3 per cent of OMV, was increased to 4 per cent in 2003 and 5 per cent in 2004.
The import tax of 30 per cent of OMV in 1968 was increased to 45 per cent in 1972, decreased to 31 per cent in 1998 (the year the ERP was introduced) and 20 per cent in 2002. The ARF, in existence since the 1950s at 10 per cent of OMV, was progressively increased from 1972 to 175 per cent in 1983, and then decreased since 1990 (the year the vehicle quota system was introduced) to 110 per cent in 2004.
Anyone registering a new car is required to hold a Certificate of Entitlement (COE). This vehicle quota system, which started as a monthly closed bidding system in 1990, was replaced with a fortnightly open bidding system in 2004.
In 2004, the car- to- population ratio in Singapore was 1:10. Although this ratio is high compared with that of other Asian countries, it is much lower than the ratio of 1:2 found in most developed countries. Having paid large sums upfront, car owners tend to drive frequently. They clock an average travel distance of 20,100 km annually, which is high when compared with drivers from cities similar in size and affluence to that of Singapore.
Singapore has consistently used vehicle demand management measures since the mid- 1970s to keep transport problems within tolerable levels.