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Re-categorise COEs to ensure more equitable distribution

I agree with Mr Ian Tan, in “Base COE on needs, not wants” (Feb 7), that our Certificate of Entitlement system has weaknesses and needs an urgent review. Fundamentally, the system is supposed to be regulated by its prices.

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Chew Eng Soo

I agree with Mr Ian Tan, in “Base COE on needs, not wants” (Feb 7), that our Certificate of Entitlement system has weaknesses and needs an urgent review. Fundamentally, the system is supposed to be regulated by its prices.

Demand is meant to be suppressed when prices are high and vice versa. Unfortunately, the system is currently affected by exceptional circumstances, which have distorted demand and the COE categories.

Firstly, the world and Singapore have seen unprecedented liquidity levels and cheap, easy credit. Demand remains strong despite high COE prices.

Secondly, the world and the Land Transport Authority are pushing for greener cars, and the industry has responded by launching many lower-capacity but turbocharged or hybrid cars. This has contributed to overall demand, with a bigger impact in Category A.

To correct this, we must adjust our system through cooling measures, like in property, that would be easy to administer, such as a maximum loan quantum of 40 to 50 per cent, to help regulate overall demand and reduce risks for many who might overcommit on debts.

A re-categorisation of COEs and their supply according to a car’s Open Market Value would ensure a more equitable distribution, with the rich paying more.

A system based on perceived needs, though, would be a nightmare to administer. Is a family with three children living within a five-minute walk to an MRT station perceived to have a higher need than an old couple with no children but living 30 minutes from an MRT station?

What about a young medical professional who must respond to emergencies but is 15 minutes away from public transport?

There are hundreds of permutations. How would one judge and who would judge the perceived needs? Such a system would also create unhappiness for many.

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