Opinion
COE – The Road to Inequality
Opinion: The Certificate of Entitlement (COE) system, initially designed with social equity in mind, has evolved to favor the wealthy, making cars in Singapore the most expensive globally.
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The Certificate of Entitlement (COE) system has helped to control the car population. But other than that, there isn’t much going for it.
Cars here are by far the most expensive in the world, and the system as it is now, is not socially equitable, i.e., it favours the rich at the expense of the poor.
When it was introduced in 1990, the system, at least, had some semblance of social equity, perhaps to solicit buy-in for the new system.
For passenger cars, there were six categories instead of the current 3: Cat 1 for engine capacity less than 1000cc; Cat 2 for 1001 to 1600cc; Cat 3 for 1601 to 2000cc; Cat 4 for 2000cc and above; Cat 7 Open Category and Cat 8 for Weekend Cars.
The classifications, being specific and detailed, meant that buyers in each category were competing for similar cars with buyers in the same socio-economic class.
In other words, each class was allotted its share of COEs, and they competed amongst themselves for the right to own a car.
As a result, there was a reasonable difference between the premiums for the categories, reflecting the buying power of the different socio-economic classes, with Cat 1 being the least expensive, Cat 2 slightly more expensive, then Cat 3 and then Cat 4. The premium for the Open Cat is usually similar to Cat 4 as it is usually used to register the more expensive cars.
Thus, a rich man could drive his Lexus without affecting the right of a man of modest means to drive his humble Suzuki Swift.
The specific classifications, in effect, protected the poor from the rich in an auction system that always favours the latter. However, this equitable arrangement did not last long.
In 1999, the government merged Cat 1 with Cat 2 to form Cat A, for mass-market cars with engine capacity up to 1600cc, and Cat 3 with Cat 4 to form Cat B, for luxury cars with engine capacity above 1600cc.
The reason given was that the market in some categories was too small, resulting in unstable COE premiums.
The merging of the categories eroded the protection of car owners in the lower socio-economic class, but worse was to come.
With technological advancement, turbo-charged engines below 1600cc became more powerful, so that powerful luxury cars including the Lotus ELISE, Mercedes-Benz C180, Mazda RX8, BMW 118i, Volvo S60, and the Citroen DS5 were classified in Cat A, resulting in premiums for Cat A and Cat B aligning.
In January 2013, premiums for Category A were $92,100, just $4,500 below Category B prices at the same tender.
Former Transport Minister Lui Tuck Yew, aware of the unfairness, imposed a maximum power output of 97kW for Category A, pushing the bigger and more luxurious cars to Category B.
By 2022, the gap between Category A and Category B premiums had widened to slightly more than $30,000, restoring some semblance of social equity, after all, an average wage earner buying a mass market car should not be paying the same premium as a very rich businessman buying a luxury car.
However, it didn’t last long.
In May 2022, the then-Transport Minister, Mr S. Iswaran, increased the maximum power output of electric vehicles in Category A from 97kW to 110kW. As a result, many luxury EVs from Category B migrated to Category A, doubling the number of EV models from 10 to 20, including models like the assembled-in-Singapore IONIQ 5.
The Minister, in a Committee of Supply session in parliament in March 2022 offered this reason, in a rather convoluted way:
“We earlier introduced the EV Early Adoption Incentive to reduce the gap in upfront costs. However, the cost differential remains for certain mass market EVs because they fall within Category B COEs along with bigger internal combustion engine (ICE) cars. One reason for this is the Maximum Power Output (MPO) criterion.
“We introduced the criterion of 97kW in 2013, in addition to an engine capacity of 1,600cc or less, for Category A cars. That was to address the market trend then, when many luxury petrol cars with smaller but turbo-charged engines could draw on Category A COEs. Introducing the 97kW MPO threshold shifted these turbo-charged luxury cars into Category B.”
However, mass-market electric cars in international markets tend to have a MPO of 110kW or lower. Locally, more mass-market electric vehicle models with an MPO above 97kW have been introduced in the last year.…. MOT has reviewed the MPO threshold between Category A and B COEs for electric cars. We will be increasing the Category A MPO threshold for electric cars from 97kW to 110kW”.
Mr Iswaran must have been aware that increasing the MPO of EVs in Category A would result in the merging of Category A and B premiums because he cited the rationale for introducing the MPO of 97kW in 2013 and said that the cost differential between EVs in Category B and Category A still remains, implying that it should be narrowed.
Is it possible that Mr Iswaran wakes up one day and decide to help car distributors sell more cars? Highly unlikely. What is more likely is that the distributors/manufacturers will lobby the government to change the rules to favour them. The government should consider these requests, but at the same time, it must also consider how they will affect the welfare of the ordinary people.
But clearly, the welfare of the ordinary people is not a consideration for him, and since parliament did not object, I think it is reasonable to say, it is also not a consideration for the government.
As a result of aggressive bidding in Category A, the premium shot up to $94,010 in April 2024, just $7,991 shy of the Category B premium.
With the encroachment of luxury cars in Category A, the categorization of Category A and Category B COEs has lost its purpose and has become practically meaningless. Such a system is always going to favour the rich car owners, and discriminate against the bread-and-butter car owners.
Whenever there is a price shock – for example, when Uber entered the Singapore market in 2013 and bought a lot of cars or when car dealers started capitalizing on a financing loophole to lease out many private hire vehicles (PHVs) a few years back, which is still continuing today; or when the government incentivized the adoption of electric cars – car owners in the lower socio-economic class would find themselves priced out and would have to leave the market when their COE expires.
Thus, by and by, only the fairly rich, and the rich, can own a car.
To add salt to the wound, Open Category COEs, which can be used to register all types of vehicles except motorcycles, is almost always used for luxury cars. Thus, the rich have another category of COE that caters to their needs.
The question is this: In land-scarce Singapore, should the allocation of COE be based on need or privilege?
If it should be based on need, then there is a good case to be made that people in the lower socio-economic class need a car, as much as, if not more than, people in the higher socio-economic class. A car is needed to ferry young children, old folks and the infirm for work and family outings. Who is to say that only the rich have such needs, but the poor don’t?
And if need is the yardstick, and if we still want to keep the COE system, then we need to bring back the old COE categorization that has a category for very humble cars, so that the poor is protected from the rich.
If, on the other hand, we think that owning a car is a privilege, that only the rich can own a car, then we might as well just group Cat A and Cat B together, and for good measure, throw in a lot of COEs from the Open Cat since they are almost always used for luxury cars.
The way the government manages the COE is a reflection of how it governs the country. Despite its rhetoric about having the backs of all Singaporeans, its policies ultimately favor the rich, oftentimes at the expense of the poor, leading to a very unequal society.
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Opinion
Means testing or Mean Testing? Are Singapore’s housing grants unfair to middle-income families?
Singapore’s public housing system is often praised for affordability, yet the disparity in housing grants raises questions. Middle-income families face steep declines in grants as incomes rise, receiving far less support than lower-income groups for BTO flats.
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Singapore’s public housing system is often lauded as a model of efficiency and affordability. However, when it comes to housing grants, particularly for the middle-income group, one cannot help but question whether the current system is truly fair.
The disparity in grants between different income groups, especially those buying Build-To-Order (BTO) flats versus resale flats, raises concerns about whether the middle-income segment is being systematically disadvantaged.
The Middle-Income Squeeze
The Enhanced CPF Housing Grant (EHG) is structured in a way that gradually decreases the grant amount as household income increases. While this might seem equitable on the surface, the steep reduction in grants for households earning between S$4,000 and S$9,000 reveals a deeper issue. These middle-income families receive significantly less support despite still facing substantial housing costs.
For instance, a family with a monthly household income of S$1,500 can receive up to S$120,000 in EHG, making a substantial difference in affordability. However, as income rises, the grant amount rapidly declines. A family earning S$5,000 receives just S$65,000—nearly half of what lower-income families receive. For those earning between S$8,501 and S$9,000, the grant amount is reduced to a mere S$5,000.
According to the Singapore Department of Statistics, among resident-employed households, the median monthly household income from work (excluding employer CPF contributions) grew by 10.8 per cent in nominal terms, from S$8,904 in 2022 to S$9,646 in 2023. This places the middle-income range squarely within the median income bracket, yet these families continue to receive significantly less support through housing grants.
This “middle-income squeeze” leaves families in this income bracket in a precarious position. They earn too much to qualify for substantial grants but not enough to comfortably afford rising housing costs, particularly in a high-cost city like Singapore.
The disparity in grant amounts becomes even more glaring when considering that these middle-income families, while receiving minimal grants for BTO flats, could potentially receive up to S$110,000 in grants if the family that doesn’t exceed S$14,000 in household income opts for a resale flat instead.
This discrepancy suggests that the current grant structure may be inadvertently favouring wealthier households.
The Unfairness of “Means Testing”
The term “means testing” is often used to justify such disparities, suggesting that those with higher incomes should receive fewer subsidies.
However, this principle seems to be turned on its head when it comes to housing grants. Why is it that those who can afford to buy more expensive resale flats are receiving significantly more grants than those opting for BTO flats, which are typically seen as more affordable options?
Consider a household with an income of S$9,001 to S$14,000. If they decide to purchase a resale flat, they can receive up to S$110,000 in housing grants, comprising the CPF Housing Grant (CHG) of S$80,000 and the Proximity Housing Grant (PHG) of S$30,000. On the other hand, if the same household opts for a BTO flat, they would receive no grants at all.
This stark contrast highlights a troubling aspect of the current system: higher-income households buying resale flats are awarded significantly more government support than those purchasing BTO flats, which are meant to be the more affordable and accessible option for Singaporeans.
One particularly puzzling aspect of the current grant system is the Proximity Housing Grant (PHG) and the CPF Housing Grant (CHG), which are only available for those buying resale flats.
The government promotes the PHG as a way to encourage families to stay close together and support each other across generations, yet it is unclear why this grant, along with the CHG, is not extended to those purchasing BTO flats. The absence of these grants for BTO buyers adds to the sense of inequity.
In this context, the system appears less like “means testing” and more like “mean testing,” where middle-income families are left with fewer resources to purchase their homes. This approach not only places a heavier financial burden on these families but also raises questions about the equity of the entire housing grant system.
The Consequence of the Sliding Scale and Loan Restrictions
The sliding scale of the EHG, while intended to provide more support to those with lower incomes, inadvertently penalizes middle-income families who do not qualify for sufficient grants yet face the same challenges of homeownership.
For example, a family earning S$9,000 receives just S$5,000 in grants—a negligible amount compared to the S$110,000 a resale flat buyer in the same income bracket might receive through other grant combinations.
Adding to this burden, the recent tightening of the HDB loan-to-value (LTV) limit to 75% further complicates the situation for middle-income families.
With a lower LTV ratio, these families now have to come up with a larger downpayment, which is particularly challenging given the reduced grant amounts. This combination of lower grants and higher upfront costs places middle-income households at a significant disadvantage, making it more difficult for them to finance their homes.
Reverse Means Testing?
Arguably, the system as it stands resembles a form of “reverse means testing,” where wealthier families benefit more from government subsidies than their lower-income counterparts.
A family with a household income of S$9,001 receives no grant if they purchase a BTO flat, yet the same family could receive up to S$110,000 in grants if they choose a resale flat—provided they can afford the cash for the downpayment, which can run into hundreds of thousands of dollars in the resale market. This discrepancy suggests that the current grant structure may inadvertently favour those who are better off at the expense of those who are less financially secure.
The intent behind Singapore’s housing grants is to make homeownership more accessible and affordable, but the current system seems to fall short of this goal for middle-income families, with the distorted public housing system being patched up with grants and subsidies.
The significant disparity in grant amounts between BTO and resale flats, coupled with the exclusion of the PHG and CHG for BTO buyers, raises serious questions about the fairness of the system. The added pressure from the tightened LTV limits only exacerbates the financial burden on these households, making it even harder for them to achieve affordable homeownership.
As Singapore continues to refine its public housing policies, it is crucial that the needs of middle-income families are not overlooked.
These families, who are often squeezed between the lower-income groups that receive more substantial support and the higher-income groups that can afford private housing or resale flats, deserve a fairer share of the pie.
It is perhaps time to re-evaluate the current grant system to ensure that it truly supports all Singaporeans in their journey to homeownership rather than disadvantaging those in the middle of the BTO market.
Opinion
Singaporean voters and the ‘Battered Wife Syndrome’
Opinion: Singaporean voters, much like an abused spouse, remain trapped in a cycle of political dependence and fear. Clinging to the memory of a once-transformative party, they endure empty promises, fearing chaos without the People’s Action Party despite viable alternatives.
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In every election, a significant portion of Singaporean voters return to the ballot box and, with a trembling hand, check the box for the People’s Action Party (PAP).
It’s a ritual that has been repeated for decades, much like the pattern seen in those suffering from Battered Woman Syndrome, a psychological condition identified as a type of posttraumatic stress disorder (PTSD).
Coined by psychologist Lenore Walker, EdD, in her groundbreaking 1979 book The Battered Woman, this syndrome explains the psychological effects of living with prolonged trauma, particularly intimate partner violence.
While not classified as a mental illness itself, the syndrome often leads to PTSD, which is considered a mental illness. The cycle of abuse involves tension building, violent outbursts, apologies, promises to change, and the inevitable return to violence—a vicious cycle of control, manipulation, and fear.
The comparison may seem stark, but it bears relevance to the political experience of many Singaporeans. Like those suffering from Battered Woman Syndrome, they remain trapped in a cycle of political dependence, clinging to the hope that things might one day change.
Yet, election after election, they find themselves voting for the PAP, a party that bears little resemblance to the one that once led Singapore to prosperity.
The PAP of the past, under the leadership of the late Lee Kuan Yew and his contemporaries, was a transformative force.
This generation brought post-independence Singapore from a colonial port city to a global economic powerhouse, earning its citizens’ trust and loyalty. However, those leaders are long gone, and the party today operates in a very different context, with a new set of leaders, policies, and priorities.
As Lee Kuan Yew’s younger son, Lee Hsien Yang, once said, “Today’s PAP is no longer the PAP of my father. It has lost its way.”
Yet, like someone suffering from Battered Woman Syndrome, many Singaporeans continue to vote for the PAP, holding on to the memory of a party that no longer exists. They cling to the hope that this time, things might be different—that the promises made will be kept, and the “abuses” will stop.
But election after election, the reality hits hard: the promises to improve lives and provide support during challenging times remain unfulfilled, especially as the cost of living escalates and homeownership and retirement concerns grow due to policies like tax hikes—only temporarily relieved by measures (carrots) such as GST and CDC vouchers, which some see as a euphemism for food stamps. The relationship between the people and the party remains toxic, and in some ways, worsens over time.
In this analogy, the “abuse” is not physical but political and emotional. It manifests in the erosion of freedoms, the lack of genuine political competition, and the paternalistic attitude that suggests Singaporeans cannot be trusted to make decisions for themselves.
The cycle of control mirrors Walker’s description of Battered Woman Syndrome: tension builds, dissatisfaction grows, and yet, the same promises are made over and over with no real change.
Many voters, much like those trapped in abusive relationships, have been conditioned to believe that without the PAP, the country would fall into chaos, that their livelihoods would be at risk, and that alternatives are too dangerous or incompetent to consider.
This is where the PAP’s control turns into coercive control—a key feature of Battered Woman Syndrome. The party retains control over public discourse, media narratives, and financial policies, limiting the scope for political alternatives and isolating citizens from opposing viewpoints.
The manipulation doesn’t stop at control; it extends to gaslighting as well.
Like an abusive partner, the PAP continues to undermine its “spouse’s” confidence, telling Singaporeans that they are nothing without the party—creating crises through policies and media control, all while using taxpayers’ money to maintain that grip.
The party insists that only the PAP is qualified to govern while portraying those who offer a different vision for the country as untrustworthy or incompetent, even when evidence suggests otherwise. Much like an abuser convincing their partner that they are incapable of surviving alone, the PAP perpetuates the myth that Singapore would crumble without its leadership, despite having a world-class civil service capable of running on its own.
This gaslighting leaves many voters doubting their own judgment.
But here’s the truth that so many fail to see: Singapore, much like someone suffering from Battered Woman Syndrome, has options.
There are opposition parties that offer different visions for the country, leaders who are ready to step up and serve with integrity. However, even when presented with viable alternatives—opposition parties with clear policies and capable leaders—Singaporeans continue to cling to the familiar, fearful of the unknown.
The continued loyalty to the PAP, despite the abuses, is not a sign of strength or wisdom but of fear and conditioning—an unhealthy relationship where the victim has been made to believe they cannot survive on their own.
A key element in this perceived manipulation is the role of state media, such as Straits Times and Channel News Asia, which is heavily funded by taxpayers’ money—directly and indirectly.
For instance, the recent allocation of S$900 million to SPH Media Trust has raised concerns among some observers who view it as an extension of the ruling party’s influence over public discourse.
While the government has justified this funding as necessary to support media outreach and improve journalistic quality, critics argue that such funding can blur the lines for media outlets and raise concerns about potential bias. This can leave citizens unsure of what to trust, making it difficult to distinguish between factual reporting, opinion, or sheer propaganda.
Furthermore, it appears that the alienation of independent media voices may be another tactic used to maintain control.
The Online Citizen (TOC) was effectively forced out of Singapore after being required to reveal the details of its subscribers, and its financial lifelines were impacted by declarations of POFMA Declared Online Locations—possibly as part of an effort to silence independent voices that challenge the government and fact-check the narratives pushed by state-controlled media.
These actions would appear as attempts to remove dissenting opinions and limit the public’s access to alternative perspectives, seeking to reinforce the perception that the PAP is the only viable option, casting doubt on opposition parties and alternative views.
In any case, the public is left with little room to critically evaluate the realities of governance as state-controlled media continues to frame dissent as dangerous or uninformed.
Holding on to a past that no longer exists only perpetuates the suffering.
It’s time for voters to take a hard look at their options, especially in light of the upcoming General Election and the underwhelming performance of the 4G leadership in the PAP. Voters must weigh the promises against the reality, and make a choice that reflects their true interests and aspirations.
Like a battered woman who finally finds the courage to leave, Singaporean voters must find the strength to vote for change.
The path may be uncertain, and the fear of the unknown is real, but continuing to suffer under the illusion of security is far worse. Singapore deserves better, and so do its people.
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